We examine whether investors value the disclosure of first-time standalone corporate social responsibility (CSR) reports, and whether market valuations differ between government-controlled and ...privately controlled firms. Using a matched sample of Chinese publicly listed firms, we find that CSR initiators have higher market valuations than matched CSR non-initiators, and CSR initiators controlled by the central and local governments have lower market valuations than CSR non-initiators and CSR initiators controlled by private shareholders. Additional analyses demonstrate that CSR initiators with high CSR reporting quality and perceived credibility have higher market valuations than CSR initiators with low CSR reporting quality and medium or low perceived credibility of CSR reporting. We do not find convincing evidence that CSR mandate, litigation risk, and prior stock returns affect market reactions to CSR reporting. Overall, we find that the market values standalone CSR reports, and that CSR reporting quality and perceived credibility are important factors in market valuation.
The determinants of risk disclosure in the annual reports of listed state-owned enterprises (SOEs) have yet to be fully explored. This paper examines the potential impact of the composition of the ...boards of directors and other company-specific features on risk disclosure levels. The presence of women on a board made a significant difference to risk disclosure, as did the age of board members. Board directors having an accounting or finance/business qualification affected risk disclosure negatively; company size and an internet visibility were positively related to risk disclosure. Although an Italian study, the lessons here will have application to academia and to practitioners, policy-makers and standard-setters worldwide.
Abstract
We examine how domestic distortions affect firms’ production strategies abroad by documenting two puzzling findings using Chinese firm-level data of manufacturing firms. First, private ...multinational corporations (MNCs) are less productive than state-owned MNCs, but they are more productive than state-owned enterprises overall. Second, there are disproportionately fewer state-owned MNCs than private MNCs. We build a model to rationalise these findings by showing that discrimination against private firms domestically incentivises them to produce abroad. The model shows that selection reversal is more pronounced in industries with more severe discrimination against private firms, which receives empirical support.
We examine the effects of audit quality on earnings management and cost of equity capital for two groups of Chinese firms: state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs). The ...differences in the nature of the ownership, agency relations and bankruptcy risks lead SOEs to have weaker incentives than NSOEs to engage in earnings management. As a result, the effect of audit quality in reducing earnings management will be greater for NSOEs than for SOEs. In addition, investors' pricing of information risk as reflected in the cost of equity capital will be more pronounced for NSOEs than for SOEs with high and low audit quality. We find empirical evidence consistent with these hypotheses. Our findings indicate that (1) while high-quality auditors play a governance role in China, that role is limited to a subset of firms, and (2) even under the same legal jurisdiction, the effects of audit quality (in the form of lower earnings management and cost of equity capital) vary across firms with different ownership structures. Our study extends prior research by focusing on the economic consequences of SOEs' and NSOEs' auditor choices and underscores the importance of controlling for ownership type when conducting audit research. PUBLICATION ABSTRACT
The change in the level of operating performance of state-owned enterprises (SOEs) under the constraint of climate policies is directly related to the success or failure of subsequent low-carbon ...development. In this study, taking the Low-carbon Pilot Program introduced in 2010 by the central government as an exogenous natural experiment, we investigate the impact of carbon regulation on the operating performance of SOEs by using the difference-in-differences (DID) strategy for the first time. We conduct a series of robustness tests on the estimated results, including a placebo test by changing the control group, a parallel trend test by advancing the introduction time of the policy, and an interference elimination of the self-selection bias by using the propensity score matching (PSM) method. Furthermore, we examine the heterogeneous effects with regard to carbon intensity reduction targets. Finally, we use the heterogeneous stochastic frontier analysis method to measure the technical efficiency and analyze the influential mechanism of carbon regulation on the performance of SOEs. The results show that the carbon regulation policy significantly reduces the operating performance of SOEs. Through a series of robustness tests, we find that this conclusion is reliable. The higher the carbon intensity reduction target set by the central government is, the greater the negative impact of the carbon regulation policy on the performance of SOEs will be. Under the constraints of climate policies, SOEs acquire additional credit resources and launch a great quantity of inefficient investment. These actions inhibit the improvement of firms' technical efficiency and reduce the operating performance of SOEs. Therefore, the central government should strive to promote R&D activities related to low-carbon technology and improve the technical efficiency of SOEs when introducing any low-carbon policy.
•We explore the effect of the Low-carbon Pilot Program on operating performance of SOEs.•We investigate the influential mechanism and heterogeneous effects.•Carbon regulation exerts a negative effect on operating performance.•The negative effect becomes more serious with the increase in carbon intensity reduction targets.•The negative effect is caused by low technical efficiency.
Regulation of state-owned enterprises (SOEs) - Trans-Pacific Partnership (TPP) - whether current rules address the issues surrounding SOEs - whether the current gaps are addressed - negotiations in ...other mega-national agreements - evaluation of existing rules and new rules.
This paper finds that compared with non-state-owned firms, Chinese state-owned enterprises controlled by province, city, and county governments (local SOEs) are more likely to hire small auditors ...within the same region (small local auditors). In regions with less developed institutions, SOEs controlled by central government (central SOEs) also have such a tendency. However, the tendency of local and central SOEs to hire small local auditors is attenuated as the institutions develop. This auditor choice pattern is likely to be explained by SOEs’ lack of demand for large or non-local auditors, small local auditors’ superior local knowledge, and SOEs’ collusion incentives.
We use institutional-related theories and a unique natural experiment that enables an exogenous test of the influence of controlling shareholders on managerial accountability to corporate fraud. In ...China, prior to the Split Share Structure Reform (SSSR), state shareholders held restricted shares that could not be traded. This restriction mitigated state-owned enterprise controlling shareholders' incentives to monitor managers. The data examined show the SSSR strengthens incentives of stateowned enterprise controlling shareholders to replace fraudulent management. Our findings support the view that economic incentives are important to promote corporate governance and deter fraud.
Using a sample of Chinese listed firms for the period of 2004-2010, this study examines the impact of religion on corporate philanthropic giving. Based on hand-collected data of religion and ...corporate philanthropic giving, we provide strong and robust evidence that religion is significantly positively associated with Chinese listed firms' philanthropic giving. This finding is consistent with the view that religiosity has remarkable effects on individual thinking and behavior, and can serve as social norms to influence corporate philanthropy. Moreover, religion and corporate philanthropic giving have a significantly weaker (less pronounced) positive association for state-owned enterprises than for non-state-owned enterprises. The results are robust to a variety of sensitivity tests. Our results highlight religious influence on corporate philanthropic giving in contemporary China, an old traditional country with a typical communist economy.
Promoting technological innovations by environmental regulation is one of the essential means to achieve green transformation. This study investigates the effect of environmental regulation on ...technological innovations based on the provincial panel data of industrial sectors in China during the years 2005–2015. The two-way fixed-effect panel data model is used to investigate the marginal and heterogeneous impacts empirically. Results indicate a U-shaped relationship between environmental regulation and technological innovations. In the short-term, environmental regulation has an “offsetting effect” on the research and innovation capacity of China's industrial sector. However, with the deepening of environmental regulation, it forces the industry to reduce the cost of pollution control by improving technological innovation capacity, thus creating a “compensation effect”. Results also show that environmental regulation policies changed the location and industry selection of foreign capital, which weakened the positive effect of FDI on technological innovations, indicating the “pollution shelter” effect. From the perspective of different types of enterprises, due to the higher cost of energy conservation and emission reduction, environmental regulation is detrimental to the technological innovations of state-owned enterprises. In particular, we find that industries with a higher degree of market competition and higher human capital investment tend to have stronger technological innovation capabilities.
•There is a U-shaped relationship between environmental regulation and technological innovations.•FDI and market competition promotes technological innovations.•Environmental regulation has heterogeneous impacts on technological innovation.
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