Pub Date : 2026-03-07DOI: 10.1016/j.frl.2026.109778
Chuanli Cai
Amid the rapidly developing digital economy, digital transformation (DT) reshapes corporate operational models and significantly affects earnings management practices. This study systematically examines DT’s mechanisms and effects on corporate earnings management (CEM). Our theoretical framework identifies two key mediating mechanisms of increased information manipulation convenience and heightened regulatory difficulty, illustrating how DT systematically expands the CEM scope. Furthermore, the study explores the heterogeneity of this impact across different firm characteristics. Notably, DT amplifies CEM for nonstate-owned enterprises (non-SOEs), firms with lower governance quality, and those with higher tax burdens, whereas the effect is insignificant for SOEs, firms with higher governance quality, and those with lower tax burdens. These findings enrich the theoretical understanding of CEM concerning DT and provide practical guidance for regulators to improve financial governance systems, enhance regulatory acceptability, and design more targeted policies.
{"title":"Unexpected effect of digital transformation on corporate earnings management","authors":"Chuanli Cai","doi":"10.1016/j.frl.2026.109778","DOIUrl":"https://doi.org/10.1016/j.frl.2026.109778","url":null,"abstract":"Amid the rapidly developing digital economy, digital transformation (DT) reshapes corporate operational models and significantly affects earnings management practices. This study systematically examines DT’s mechanisms and effects on corporate earnings management (CEM). Our theoretical framework identifies two key mediating mechanisms of increased information manipulation convenience and heightened regulatory difficulty, illustrating how DT systematically expands the CEM scope. Furthermore, the study explores the heterogeneity of this impact across different firm characteristics. Notably, DT amplifies CEM for nonstate-owned enterprises (non-SOEs), firms with lower governance quality, and those with higher tax burdens, whereas the effect is insignificant for SOEs, firms with higher governance quality, and those with lower tax burdens. These findings enrich the theoretical understanding of CEM concerning DT and provide practical guidance for regulators to improve financial governance systems, enhance regulatory acceptability, and design more targeted policies.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"199 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2026-03-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147392301","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-06DOI: 10.1016/j.frl.2026.109772
Young Jae Choi, Xiang Gao
We investigate whether legislators use equity trading as a form of political expression. Using comprehensive congressional transaction data, we document a robust gender-based asymmetry: male legislators allocate significantly more capital to firms with greater female board representation, whereas female legislators exhibit no comparable pattern. Exploiting California Senate Bill 826 and geographic variation in the local supply of female directors as sources of exogenous variation in board gender composition, we identify a causal effect on legislators’ investment activity. The evidence supports a signaling mechanism: male legislators—especially Democrats, those facing imminent elections, and those representing female-majority constituencies—use observable portfolio choices to signal support for gender diversity, rather than trading on superior firm performance or lower risk associated with gender-diverse boards. Overall, our findings suggest that for U.S. legislators, the stock market functions not only as a venue for wealth accumulation but also as a stage for identity signaling.
{"title":"When Portfolios Speak: Identity Signaling in Congressional Trading","authors":"Young Jae Choi, Xiang Gao","doi":"10.1016/j.frl.2026.109772","DOIUrl":"https://doi.org/10.1016/j.frl.2026.109772","url":null,"abstract":"We investigate whether legislators use equity trading as a form of political expression. Using comprehensive congressional transaction data, we document a robust gender-based asymmetry: male legislators allocate significantly more capital to firms with greater female board representation, whereas female legislators exhibit no comparable pattern. Exploiting California Senate Bill 826 and geographic variation in the local supply of female directors as sources of exogenous variation in board gender composition, we identify a causal effect on legislators’ investment activity. The evidence supports a signaling mechanism: male legislators—especially Democrats, those facing imminent elections, and those representing female-majority constituencies—use observable portfolio choices to signal support for gender diversity, rather than trading on superior firm performance or lower risk associated with gender-diverse boards. Overall, our findings suggest that for U.S. legislators, the stock market functions not only as a venue for wealth accumulation but also as a stage for identity signaling.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"8 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2026-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147392350","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-06DOI: 10.1016/j.frl.2026.109771
An Chen, Maria Hinken, Gunter Löffler
Issuers of sustainability-linked bonds (SLBs) face higher coupons or other negative consequences if a key performance indicator misses a sustainability target. Within a Merton-type model, we derive closed-form default probabilities for debt structures that incorporate SLBs and compare these probabilities to those associated with conventional debt. The comparison yields a critical correlation threshold ρ∗: If the correlation between asset values and the key performance indicator exceeds ρ∗, the SLB strictly lowers default risk. In typical cases that we examine, the correlation threshold is close to zero, and changes in default probabilities are rather small.
{"title":"When do sustainability–linked bonds lower default risk? A correlation threshold","authors":"An Chen, Maria Hinken, Gunter Löffler","doi":"10.1016/j.frl.2026.109771","DOIUrl":"https://doi.org/10.1016/j.frl.2026.109771","url":null,"abstract":"Issuers of sustainability-linked bonds (SLBs) face higher coupons or other negative consequences if a key performance indicator misses a sustainability target. Within a Merton-type model, we derive closed-form default probabilities for debt structures that incorporate SLBs and compare these probabilities to those associated with conventional debt. The comparison yields a critical correlation threshold <mml:math altimg=\"si1.svg\" display=\"inline\"><mml:msup><mml:mrow><mml:mi>ρ</mml:mi></mml:mrow><mml:mrow><mml:mo>∗</mml:mo></mml:mrow></mml:msup></mml:math>: If the correlation between asset values and the key performance indicator exceeds <mml:math altimg=\"si1.svg\" display=\"inline\"><mml:msup><mml:mrow><mml:mi>ρ</mml:mi></mml:mrow><mml:mrow><mml:mo>∗</mml:mo></mml:mrow></mml:msup></mml:math>, the SLB strictly lowers default risk. In typical cases that we examine, the correlation threshold is close to zero, and changes in default probabilities are rather small.","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"14 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2026-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147392351","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-05DOI: 10.1016/j.frl.2026.109759
Yang Song, Xinzi Lin, Jiaqi Yan, Tingting Li
{"title":"Digital Finance Development, Urban Space Aggregation, and Consumption Upgrading: An Empirical Test Based on Spatial Econometric Models","authors":"Yang Song, Xinzi Lin, Jiaqi Yan, Tingting Li","doi":"10.1016/j.frl.2026.109759","DOIUrl":"https://doi.org/10.1016/j.frl.2026.109759","url":null,"abstract":"","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"283 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2026-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147359883","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-05DOI: 10.1016/j.frl.2026.109758
Bilal Hafeez, Onur Kemal Tosun, Arman Eshraghi
{"title":"The Market Value of Political Alignment: Recent U.S. Evidence","authors":"Bilal Hafeez, Onur Kemal Tosun, Arman Eshraghi","doi":"10.1016/j.frl.2026.109758","DOIUrl":"https://doi.org/10.1016/j.frl.2026.109758","url":null,"abstract":"","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"37 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2026-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147360801","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-05DOI: 10.1016/j.frl.2026.109744
Zhao Liang, Jung-Woo Yang, Bang Zheng
{"title":"The Non-linear Relationship Between Education and Consumption: Evidence from Household Finance Survey","authors":"Zhao Liang, Jung-Woo Yang, Bang Zheng","doi":"10.1016/j.frl.2026.109744","DOIUrl":"https://doi.org/10.1016/j.frl.2026.109744","url":null,"abstract":"","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"47 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2026-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147360483","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-03DOI: 10.1016/j.frl.2026.109737
Inés Jiménez, Andrés Mora-Valencia, Javier Perote
{"title":"Asymmetric effects on asymmetry: The resilience of ESG indices","authors":"Inés Jiménez, Andrés Mora-Valencia, Javier Perote","doi":"10.1016/j.frl.2026.109737","DOIUrl":"https://doi.org/10.1016/j.frl.2026.109737","url":null,"abstract":"","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"52 1","pages":""},"PeriodicalIF":10.4,"publicationDate":"2026-03-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147359885","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-23DOI: 10.1016/j.frl.2026.109570
Xiaowei Zhang , Jiayin Liu , Fan Wang
Using green patent data from Chinese A-share listed companies spanning 2010–2024, this study takes China’s initial 2017 climate-resilient city pilot policy implementation as a quasinatural experiment to examine the impact of the pilot policy on enterprises’ green technological innovation (GTI) and its underlying mechanism using a difference-in-differences model. Notably, the policy significantly promotes enterprises’ GTI, mainly by strengthening regional environmental regulation and alleviating enterprises’ financing constraints,with a long-term driving effect. Heterogeneity analysis demonstrates that the policy’s effect on enterprises’ GTI is primarily reflected in green invention patents. In addition, large-scale, state-owned, and high-market development enterprises and those in high-pollution industries are more affected. Our conclusions provide empirical evidence and valuable insights for China to refine the climate-resilient city pilot policy to strike a balance between adaptation and mitigation, as well as other countries to implement or improve similar policies.
{"title":"Impact of China’s climate-resilient city pilot policy on enterprises’ green technological innovation","authors":"Xiaowei Zhang , Jiayin Liu , Fan Wang","doi":"10.1016/j.frl.2026.109570","DOIUrl":"10.1016/j.frl.2026.109570","url":null,"abstract":"<div><div>Using green patent data from Chinese A-share listed companies spanning 2010–2024, this study takes China’s initial 2017 climate-resilient city pilot policy implementation as a quasinatural experiment to examine the impact of the pilot policy on enterprises’ green technological innovation (GTI) and its underlying mechanism using a difference-in-differences model. Notably, the policy significantly promotes enterprises’ GTI, mainly by strengthening regional environmental regulation and alleviating enterprises’ financing constraints,with a long-term driving effect. Heterogeneity analysis demonstrates that the policy’s effect on enterprises’ GTI is primarily reflected in green invention patents. In addition, large-scale, state-owned, and high-market development enterprises and those in high-pollution industries are more affected. Our conclusions provide empirical evidence and valuable insights for China to refine the climate-resilient city pilot policy to strike a balance between adaptation and mitigation, as well as other countries to implement or improve similar policies.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"92 ","pages":"Article 109570"},"PeriodicalIF":6.9,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146075700","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-09DOI: 10.1016/j.frl.2026.109498
Hongzhou Yuan , Jianye Liang
This paper employs data from the 2018, 2020, and 2022 China Family Panel Studies (CFPS) to examine the impact of household financial asset accumulation and consumption upgrading on residents' subjective well-being. The research findings are as follows: First, household financial asset accumulation significantly enhances residents' subjective well-being; second, consumption upgrading significantly increases residents' subjective well-being; third, consumption upgrading serves as a mediating factor in the relationship between household financial asset accumulation and residents' subjective well-being; fourth, the impact of household financial asset accumulation on residents' subjective well-being demonstrates heterogeneity between urban and rural residents; fifth, the effect of consumption upgrading on residents' subjective well-being also differs between urban and rural residents.
{"title":"Can the accumulation of household financial assets and consumption upgrading enhance residents' subjective well-being?","authors":"Hongzhou Yuan , Jianye Liang","doi":"10.1016/j.frl.2026.109498","DOIUrl":"10.1016/j.frl.2026.109498","url":null,"abstract":"<div><div>This paper employs data from the 2018, 2020, and 2022 China Family Panel Studies (CFPS) to examine the impact of household financial asset accumulation and consumption upgrading on residents' subjective well-being. The research findings are as follows: First, household financial asset accumulation significantly enhances residents' subjective well-being; second, consumption upgrading significantly increases residents' subjective well-being; third, consumption upgrading serves as a mediating factor in the relationship between household financial asset accumulation and residents' subjective well-being; fourth, the impact of household financial asset accumulation on residents' subjective well-being demonstrates heterogeneity between urban and rural residents; fifth, the effect of consumption upgrading on residents' subjective well-being also differs between urban and rural residents.</div></div>","PeriodicalId":12167,"journal":{"name":"Finance Research Letters","volume":"91 ","pages":"Article 109498"},"PeriodicalIF":6.9,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145973766","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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