Search

This paper investigates the impact of Internet infrastructure construction on enterprise transformation and upgrading and the underlying mechanisms using a progressive double difference model based on a quasi-natural experiment of the Chinese government's "broadband China" policy by matching A-share listed companies and city panel data from 2008–2019 in Shanghai and Shenzhen. The conclusions show that the "broadband China" policy can significantly promote the transformation and upgrading of enterprises in pilot cities. However, its effect shows a diminishing marginal contribution, and the policy is more effective for traditional manufacturing industries during the implementation period. Enhancing human capital and reducing internal transaction costs are two important channels for Internet infrastructure construction to help enterprises transform and upgrade. Combined with the life cycle theory, we find that the "broadband China" policy has the most significant impact on changing and upgrading enterprises in the growth and maturity stages, especially those in the manufacturing industry, but not those in the maturity and decline stages of the service industry. Finally, a series of robustness tests using Monte Carlo simulation, entropy balance method, and instrumental variables method, excluding other factors, show that the findings are still robust. [ABSTRACT FROM AUTHOR]

The paper aims to investigate the possible dual causality between exchange rates and stock indices of China and ASEAN using Structural Vector Auto-Regressive Model (SVAR). The paper has analysed the dynamic relationships between the Yuan and the Shanghai Composite Index and Shenzhen Stock Index in the context of China's third largest trading bloc, i.e., ASEAN, after the Asian Financial Crisis of 1997. The Asian Financial Crisis of 1997–98 had an adverse impact on stock indices and the currencies of ASEAN countries. It was also expected that a devaluation of the Yuan would follow soon, thus plummeting investors' confidence in the Chinese markets. Further research was needed to explore the complex relationship between financial and forex markets in the context of China and ASEAN. The focus of this paper is to explore such relationship with the focus on China. The results of the model confirm the dual causality between the two variables of interest in China. It concludes that a positive financial shock does have a small but significant impact upon the Yuan, whereas a positive exchange rate shock has a high and a significant impact upon the Shanghai and Shenzhen Composite Indices. The paper finds the effect of monetary and demand shocks upon the Yuan and stock market indices to be insignificant. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between business strategy and sustainability of Chinese SMEs and how the environmental uncertainty may affect this relationship. It analyses the impact of active and passive business strategies on firms' sustainability and tests the potential moderating role of economic policy uncertainty in this relationship. The empirical analysis is performed by employing fixed-effect and GMM estimations on data collected from 937 Chinese A-share non-financial companies listed on the Shanghai and Shenzhen stock exchanges from 2010 to 2021. The results show that the high-risk active business strategy of innovation and new market development is associated with greater business sustainability, and this relationship is stronger for SMEs than for non-SMEs in China. Moreover, higher economic policy uncertainty strengthens the positive relationship between active business strategy and firm sustainability, implying that in periods of higher environmental uncertainty firms which pursue active business strategy achieve greater business sustainability. These findings are useful for devising business strategy and can assist in formulating policy initiatives seeking to ensure sustainable development of SMEs in China. [ABSTRACT FROM AUTHOR]

With the increasing emphasis of the government on the importance of Party organisations in China's state-owned enterprises (SOEs), we need to pay more attention to its role in the operation of enterprises. As the research on board of directors emphasises the central position of the chairman, this paper focuses on the top leader of the Party organisation, namely the Party Committee Secretary. Based on upper echelon theory, this paper proposes the relationship between the technology background of a Party Committee Secretary and firm's innovation efficiency, and how this relationship is moderated by position duality and environment dynamism. Using the data of China's listed SOEs which issue A-shares in Shenzhen and Shanghai stock exchanges from 2014 to 2016 and operate in the manufacturing industry, the main effect and moderating effects are tested. We find that the existence of a Party Committee Secretary with technology background positively affects the SOE's innovation efficiency. In addition, this relationship is strengthened by environment dynamism. Our conclusions not only enrich literature about upper echelon theory and determinants of firm's innovation, but also are helpful for improving corporate governance in developing countries. [ABSTRACT FROM AUTHOR]

Based on the difference-in-difference (DID) methodology, this paper empirically investigates the impact of the current anti-corruption campaign on the share of labour income in China. Using a firm-level data on Chinese corporations listed on Shanghai and Shenzhen Stock Exchanges from 2009 to 2015, we find that the campaign contributes to the rise in the labour income share, while there is considerable heterogeneity. The magnitude of the effect depends on firm's ownership and market power. This paper advances the existing studies examining the nexus between corruption and income distribution from a novel perspective. [ABSTRACT FROM AUTHOR]

This study investigates the impact of investors' online searching on the pricing efficiency of the capital market from the perspective of stock price synchronization. Using the Chinese firms listed in the Shanghai and Shenzhen Stock Exchanges from 2013 to 2019, we find that the more investors' online searches there are, the less serious the stock price synchronization issue is. Consistent with the notion that online search facilitates the inclusion of more company-specific information in stock prices, we find that the effect of investors' online searching on weakening the company's stock price synchronization is more pronounced for companies with worse stock liquidity and higher separation of control rights and cash flow rights. Moreover, we demonstrate that investors' online searching can weaken stock price synchronization by reducing irrational herding behavior. A further examination of the herding behavior of different investors reveals that online searching mainly plays a role in reducing the herding behavior of individual investors. Collectively, these results indicate that online searching is important for investors to gain greater access to valuable information. [ABSTRACT FROM AUTHOR]

To evaluate the carbon disclosure quality of China's Shenzhen-Shanghai listed companies and its impact on investor protection, this paper constructs an evaluation index framework for carbon disclosure quality. The content analysis and principal component factor analysis methods were used to calculate the index score of the carbon disclosure quality, while empirical research on investor protection indexes was carried out by the method of variance weighting. This study found that an improvement in carbon disclosure quality can effectively protect the interests of investors, especially those of controlling shareholders and minority shareholders, but the degree of protection of large shareholders' interests decreases with the improvement in the quality of carbon disclosure. [ABSTRACT FROM AUTHOR]

This paper examines whether the market-making system helps to improve the price discovery ability of New Third Board (NTB) market in China. We first estimate the time-varying coefficients error correction models, then apply common factor weight method to quantify the time-varying price discovery contributions, and finally explore the impacts of trading volume and volatility to price discovery contributions. Empirical results show that both markets have time-varying characteristic in terms of the magnitudes and directions of the equilibrium price adjustment due to error correction term. The Shanghai Composite Index, SZSE Component Index, and SME Index are found to lead in price discovery, while NTB exhibits the leadership on the GEM Index. Volume and volatility have significant influence on the price discovery contribution. The NTB contribution is positively related to its own trading activity, negatively related to the trading activity of Shanghai and Shenzhen stock markets, while negatively correlated with the volatility of both markets. In comparison, trading activity of SZSE Component Index and volatility of GEM Index have the greatest negative impacts on the contribution of NTB market. As an important part of China's multi-level capital market, the pricing mechanism of the NTB market needs further to be improved. [ABSTRACT FROM AUTHOR]

We develop a valuation model of companies under financing constraints and investment time lags. Moreover, we investigate the specific time lag effect of investment on company value through Panel-VAR models using data from 622 companies listed on the Shanghai and Shenzhen stock exchanges in China from 2011–2019. The impact of cash flow and debt financing cost on company value is also dissected. The results indicate a one-period time lag effect for the investment. Cash flow is more valuable to finance-constrained companies than to non-financing constrained companies. The debt financing costs of finance-constrained companies is positively related to company value. [ABSTRACT FROM AUTHOR]

Followinggaige kaifang, the twin strategy of reform and opening up, Shenzhen has been designated as a Special Economic Zone. The city appeared to have bright future and would serve as the growth engine in China. Despite having an impressive record of economic development since 1979, the prestige of Shenzhen as a commercial centre has always been overshadowed by Shanghai and Hong Kong. A breakthrough finally came when the State Council of China decided to develop Qianhai, a town near Shenzhen, into an international commercial centre. However, shortly after, the China (Shanghai) Pilot Free Trade Zone representing an unprecedented degree of openness in relation to foreign investment and international trade was launched. No one seems to remember the once-hopeful Qianhai area. The aim of this paper is to examine the path of development of the two leading commercial centres in China amidst the wider context of Chinese economic reform. A common issue facing both cities is, although the state generally has no problem in outlining a vision of reform, a translation of this vision into actual credible measures that could be implemented is often problematic. [ABSTRACT FROM AUTHOR]

This study investigates the influence of analyst coverage on corporate leverage adjustment (CLA) in China. We analyzed 26,673 firm-year observations from the Shanghai and Shenzhen stock exchanges from 2000 to 2020 and found that analyst coverage had a negative impact on CLA, which was stronger in firms with poor performance. We posit that analyst forecast divergence and pressure-induced managerial myopia are possible mechanisms through which analyst coverage influences CLA. Our study contributes to the dynamic trade-off model literature by demonstrating that analyst coverage is also a determinant of CLA. Furthermore, our findings help regulators and investors to comprehensively understand the role of analysts in emerging markets. [ABSTRACT FROM AUTHOR]

This article proposes a general framework of a Markov Switching GARCH model with a mixture of truncated Gaussian to model asset returns with price limits in China. Theoretically, while retaining many convenient statistical properties of the Gaussian distribution, the proposed model also assumes a flexible time-varying volatility structure to accommodate the feature of the return data under price restrictions in China, such as the clusters near the bounds (due to the 'bound effect'). Empirically, we apply the model to eight representative stocks from Shanghai and Shenzhen stock markets in China. Lastly, we find that our proposed model dominates the conventional volatility models in terms of Value-at-Risk measures. [ABSTRACT FROM AUTHOR]