How do big customers influence bank loans in China? The role of state ownership and political connections

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Abstract

Firms with big customers are associated with not only high operational efficiency but also high operational risks. We study the effect of big customers on various aspects of bank loan contracts using a manually collected contract-level dataset from China over the period of 2001–2016. We find that, big customers help firms obtain lower borrowing interest rates, longer loan duration, and larger loan amounts, though this is accompanied by more restrictive borrowing conditions. We further find that state ownership and political connections are important considerations when banks make loan decisions to firms with big customers. Overall, our results show how benefits and costs of big customers are evaluated by banks and priced into bank loan contract terms.

Upbeat or Off‐the‐Mark? How Work Rhythms Affect Strategic Change

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Abstract

This study examines how organizational members cope with new work rhythms that are brought about by a strategic organizational change. Based on a two-year qualitative case study of a major strategic change in a research unit at a university that encouraged academics to embody an upbeat, energetic work rhythm, we identify four different modes of engaging with rhythms (syncing, tuning, figuring, and settling). We found that individual academics engaged rhythmically in different ways to meet this expected way of working and with discernible consequences for how they participated in the strategic change and ultimately were able to support the change, or not. Based on our study findings, we conceptualize a process model of rhythmic coping that highlights a central but often overlooked part of strategic change with significant implications for the success of a change as well as for the continued health and well-being of employees.

Gambling culture and internal control extensiveness

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Abstract

While cultural traits in a firm's location impact corporate operation, the role of local cultures on a firm's internal control effectiveness (ICE) remains unclear. Using data from a sample of Chinese firms from 2009 to 2019, we examine how the gambling culture in Chinese provinces where firms are located impacts the firms' ICE. We use per capita lottery sales of the provinces to proxy for gambling culture in China and find that firms raise their ICE in environments with strong gambling cultures. The results are robust to five components of ICE (control environment, risk assessment, control activity, information and communication, and internal monitoring), alternative metrics of gambling metrics, and after accounting for endogeneity. A mediating analysis also shows that firms in regions with a strong gambling culture engage in risky activities, which increases their ICE. Additional analyses suggest that the effect is more salient for firms with poor internal corporate governance, firms located in poor legal environments, firms with poor audit quality, or firms with more local external stakeholders, echoing that ICE and monitoring are partial substitutes.