Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103865
Yuzhang Wang , Shuo Wang , Xinjie Wang
In response to the escalating challenges of climate change and carbon emissions, China introduced its Low-Carbon City Pilot (LCCP) policy in 2010, aiming to foster green economic transitions through localized low-carbon development initiatives. Based on this policy and utilizing the data from Chinese listed companies between 2007 and 2023, this paper examines its critical role in promoting green mergers and acquisitions (green M&A). The results show that the LCCP generates dual external pressures—by enhancing government environmental attention and raising public environmental awareness—which drive companies to enhance their environmental compliance through green M&A. Heterogeneity tests indicate that the policy’s effect on promoting green M&A is more pronounced in mature firms, state-owned enterprises, firms in heavily polluting industries, and firms located in non-resource-based cities. Furthermore, the analysis reveals that while green M&A positively impacts green innovation, external policy pressures lead to a “crowding-out effect,” where strategic responses to these pressures limit green innovation investment.
{"title":"Green mergers and acquisitions in corporate low-carbon transition: A driving mechanism based on dual external pressures","authors":"Yuzhang Wang , Shuo Wang , Xinjie Wang","doi":"10.1016/j.iref.2025.103865","DOIUrl":"10.1016/j.iref.2025.103865","url":null,"abstract":"<div><div>In response to the escalating challenges of climate change and carbon emissions, China introduced its Low-Carbon City Pilot (LCCP) policy in 2010, aiming to foster green economic transitions through localized low-carbon development initiatives. Based on this policy and utilizing the data from Chinese listed companies between 2007 and 2023, this paper examines its critical role in promoting green mergers and acquisitions (green M&A). The results show that the LCCP generates dual external pressures—by enhancing government environmental attention and raising public environmental awareness—which drive companies to enhance their environmental compliance through green M&A. Heterogeneity tests indicate that the policy’s effect on promoting green M&A is more pronounced in mature firms, state-owned enterprises, firms in heavily polluting industries, and firms located in non-resource-based cities. Furthermore, the analysis reveals that while green M&A positively impacts green innovation, external policy pressures lead to a “crowding-out effect,” where strategic responses to these pressures limit green innovation investment.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103865"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151090","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103848
Samar S. Alharbi , Muhammad Naveed , Shoaib Ali , Faten Moussa
Using the TVP-VAR model, this study examines the connectedness between green cryptocurrencies and the individual components of the ESG (Environmental, Social, and Governance) stocks. Our sample period runs from November 10, 2017, to September 12, 2023. Our results indicate a moderate level of return and volatility transmission between green cryptocurrencies and ESG stocks. In line with theoretical argumentation, cryptocurrencies act as receivers of both return and volatility spillovers from the system, while stocks are the main transmitters. Our dynamic results show a substantial rise in total return and volatility connectedness of the system during the outset of the COVID-19 and Russia-Ukraine conflict, suggesting that global event amplifies the system connectedness. Moreover, the time-varying net results also exhibit a similar pattern, where the role of each asset changes during the turmoil period. Finally, our portfolio analysis suggests that green cryptocurrencies provide diversification to green stocks during both normal and turbulent periods. Additionally, they also emerge as effective hedges against ESG stocks across all market conditions. However, the hedge ratio increased during the COVID-19 pandemic, suggesting hedging becomes more expensive during turbulent periods. Our findings provide valuable insights for portfolio managers and policymakers regarding asset allocation, risk management, and the evolving dynamics between green cryptocurrencies and ESG stocks in an increasingly interconnected financial landscape.
{"title":"Sailing towards sustainability: Connectedness between ESG stocks and green cryptocurrencies","authors":"Samar S. Alharbi , Muhammad Naveed , Shoaib Ali , Faten Moussa","doi":"10.1016/j.iref.2025.103848","DOIUrl":"10.1016/j.iref.2025.103848","url":null,"abstract":"<div><div>Using the TVP-VAR model, this study examines the connectedness between green cryptocurrencies and the individual components of the ESG (Environmental, Social, and Governance) stocks. Our sample period runs from November 10, 2017, to September 12, 2023. Our results indicate a moderate level of return and volatility transmission between green cryptocurrencies and ESG stocks. In line with theoretical argumentation, cryptocurrencies act as receivers of both return and volatility spillovers from the system, while stocks are the main transmitters. Our dynamic results show a substantial rise in total return and volatility connectedness of the system during the outset of the COVID-19 and Russia-Ukraine conflict, suggesting that global event amplifies the system connectedness. Moreover, the time-varying net results also exhibit a similar pattern, where the role of each asset changes during the turmoil period. Finally, our portfolio analysis suggests that green cryptocurrencies provide diversification to green stocks during both normal and turbulent periods. Additionally, they also emerge as effective hedges against ESG stocks across all market conditions. However, the hedge ratio increased during the COVID-19 pandemic, suggesting hedging becomes more expensive during turbulent periods. Our findings provide valuable insights for portfolio managers and policymakers regarding asset allocation, risk management, and the evolving dynamics between green cryptocurrencies and ESG stocks in an increasingly interconnected financial landscape.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103848"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151757","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103840
Aishat Dolaeva , Uliana Beliaeva , Dmitry Grigoriev , Alexander Semenov , Maciej Rysz
This study investigates several factors influencing the well-known price/earnings ratio (P/E), with particular emphasis on investor sentiment scores obtained from textual data using natural language processing models. Data consisting of various economic indicators and user-generated text messages from the social network Twitter were collected for several established firms that were categorized into two sectors. Sentiment scores from the textual data were obtained using the BERT and FinBERT language models and shown to exhibit a high level of accuracy. Fixed and random effect regression models considering panel data comprising the economics indicators and sentiment scores were constructed and revealed statistically significant influences of sentiment on the P/E ratio in one sector. A Long Short-Term Memory recurrent neural network model was then used to forecast the P/E ratio over a one year interval, which produced highly accurate results. Our analysis demonstrates the significance of investor sentiment as a factor in P/E ratio forecasting, emphasizing its contribution alongside other fundamental factors.
{"title":"Analyzing and forecasting P/E ratios using investor sentiment in panel data regression and LSTM models","authors":"Aishat Dolaeva , Uliana Beliaeva , Dmitry Grigoriev , Alexander Semenov , Maciej Rysz","doi":"10.1016/j.iref.2025.103840","DOIUrl":"10.1016/j.iref.2025.103840","url":null,"abstract":"<div><div>This study investigates several factors influencing the well-known price/earnings ratio (P/E), with particular emphasis on investor sentiment scores obtained from textual data using natural language processing models. Data consisting of various economic indicators and user-generated text messages from the social network Twitter were collected for several established firms that were categorized into two sectors. Sentiment scores from the textual data were obtained using the BERT and FinBERT language models and shown to exhibit a high level of accuracy. Fixed and random effect regression models considering panel data comprising the economics indicators and sentiment scores were constructed and revealed statistically significant influences of sentiment on the P/E ratio in one sector. A Long Short-Term Memory recurrent neural network model was then used to forecast the P/E ratio over a one year interval, which produced highly accurate results. Our analysis demonstrates the significance of investor sentiment as a factor in P/E ratio forecasting, emphasizing its contribution alongside other fundamental factors.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103840"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151281","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103864
Muhammad Shahzad Ijaz , Shoaib Ali , Anna Min Du , Mahrukh Khurram
We use event study methodology to examine how the Palestine-Israel Conflict affected equities, metals, energy, fiat, and crypto currencies. The findings highlight the susceptibility of the stock markets in Germany, the United Arab Emirates, Bahrain, and Kuwait to geopolitical shocks by demonstrating notable negative abnormal returns on the event day. This observation is more evident in areas which have direct economic connections to the belligerent nations. Conversely, the fiat and cryptocurrency markets, along with metals and oil, exhibit insignificant abnormal returns, with the exception of a strong reaction observed in Ethereum and oil prices. These findings highlight the fluctuating levels of sensitivity across diverse asset classes as markets beyond Palestine's trading partners demonstrate resilience to the war. Overall, our work underscores the significance of assessing contagion risk especially in areas affected by geopolitical instability. It also holds implications for policymakers and investors to contemplate the geopolitical situation while evaluating market risks and portfolio diversification strategies amid political tensions.
{"title":"Analyzing financial market reactions to the Palestine-Israel conflict: An event study perspective","authors":"Muhammad Shahzad Ijaz , Shoaib Ali , Anna Min Du , Mahrukh Khurram","doi":"10.1016/j.iref.2025.103864","DOIUrl":"10.1016/j.iref.2025.103864","url":null,"abstract":"<div><div>We use event study methodology to examine how the Palestine-Israel Conflict affected equities, metals, energy, fiat, and crypto currencies. The findings highlight the susceptibility of the stock markets in Germany, the United Arab Emirates, Bahrain, and Kuwait to geopolitical shocks by demonstrating notable negative abnormal returns on the event day. This observation is more evident in areas which have direct economic connections to the belligerent nations. Conversely, the fiat and cryptocurrency markets, along with metals and oil, exhibit insignificant abnormal returns, with the exception of a strong reaction observed in Ethereum and oil prices. These findings highlight the fluctuating levels of sensitivity across diverse asset classes as markets beyond Palestine's trading partners demonstrate resilience to the war. Overall, our work underscores the significance of assessing contagion risk especially in areas affected by geopolitical instability. It also holds implications for policymakers and investors to contemplate the geopolitical situation while evaluating market risks and portfolio diversification strategies amid political tensions.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103864"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151280","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-09DOI: 10.1016/j.iref.2025.103862
Wangying Xie , Yun Qing , Lixia Tao , Wenyu Li , Chuanhao Wen
In the context of China's ecological civilization initiative, understanding the spatial spillover effects of environmental regulation on ecological industrialization in the upper reaches of the Yangtze River is essential for fostering a synergistic relationship between environmental regulation and industrial development. This synergy promotes the supply of high-quality ecological products and supports the transformation of “lucid waters and lush mountains” into “gold and silver mountains.” Drawing on data from 47 cities in the region between 2005 and 2022, this study employs the global Moran's I index, local Moran's I scatter plots, the spatial Durbin model, and spatial effect decomposition methods to explore these spillover effects. The results show that command-and-control, market-based, and public participation environmental regulations all exhibit significant spatial spillover effects on ecological industrialization. Threshold effect tests further reveal that the impact of environmental regulation on ecological industrialization varies according to per capita GDP levels. Mechanism analysis highlights green technological innovation as a key driver of the positive effects of environmental regulation on ecological industrialization. These findings provide novel theoretical insights into the spatial effects and mechanisms underlying the interaction between environmental regulation and ecological industrialization.
{"title":"Spatial spillover effects of environmental regulation on ecological industrialization: Evidence from the upper reaches of the Yangtze River","authors":"Wangying Xie , Yun Qing , Lixia Tao , Wenyu Li , Chuanhao Wen","doi":"10.1016/j.iref.2025.103862","DOIUrl":"10.1016/j.iref.2025.103862","url":null,"abstract":"<div><div>In the context of China's ecological civilization initiative, understanding the spatial spillover effects of environmental regulation on ecological industrialization in the upper reaches of the Yangtze River is essential for fostering a synergistic relationship between environmental regulation and industrial development. This synergy promotes the supply of high-quality ecological products and supports the transformation of “lucid waters and lush mountains” into “gold and silver mountains.” Drawing on data from 47 cities in the region between 2005 and 2022, this study employs the global Moran's I index, local Moran's I scatter plots, the spatial Durbin model, and spatial effect decomposition methods to explore these spillover effects. The results show that command-and-control, market-based, and public participation environmental regulations all exhibit significant spatial spillover effects on ecological industrialization. Threshold effect tests further reveal that the impact of environmental regulation on ecological industrialization varies according to per capita GDP levels. Mechanism analysis highlights green technological innovation as a key driver of the positive effects of environmental regulation on ecological industrialization. These findings provide novel theoretical insights into the spatial effects and mechanisms underlying the interaction between environmental regulation and ecological industrialization.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103862"},"PeriodicalIF":4.8,"publicationDate":"2025-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151677","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-08DOI: 10.1016/j.iref.2025.103846
Chaoping Qi , Yu Ma , Meng Du , Xiaoxian Ma , Yuan Xu , Xiangjun Zhou
Climate change is becoming an important factor affecting inflation. This study uses data from 101 countries between 2006 and 2019, employing the GMM method to analyze the impact of climate change on inflation rates, with the climate risk index published by Germanwatch as the primary explanatory variable and the inflation rate as the dependent variable. The results show that climate change can significantly increase the inflation rate in the short term, but not in the long term. Climate change is more likely to increase the price level in low-income countries than in developed countries. Further research shows that the central bank's interest rate policy and food price play mediating roles in climate change affecting inflation. Specifically, climate risk impacts the economy, and the central bank reduces the interest rate to stimulate the economy, causing inflation. Climate change also impacts food supplies, and rising food prices drives inflation. Therefore, the policy implication of this paper is that attention should be given to the short-term impact of climate change on inflation. Additionally, central banks should avoid significant reductions in interest rates in the short term and take measures to curb rising food prices to address climate change.
{"title":"Impacts of climate change on inflation: An analysis based on long and short term effects and pass-through mechanisms","authors":"Chaoping Qi , Yu Ma , Meng Du , Xiaoxian Ma , Yuan Xu , Xiangjun Zhou","doi":"10.1016/j.iref.2025.103846","DOIUrl":"10.1016/j.iref.2025.103846","url":null,"abstract":"<div><div>Climate change is becoming an important factor affecting inflation. This study uses data from 101 countries between 2006 and 2019, employing the GMM method to analyze the impact of climate change on inflation rates, with the climate risk index published by Germanwatch as the primary explanatory variable and the inflation rate as the dependent variable. The results show that climate change can significantly increase the inflation rate in the short term, but not in the long term. Climate change is more likely to increase the price level in low-income countries than in developed countries. Further research shows that the central bank's interest rate policy and food price play mediating roles in climate change affecting inflation. Specifically, climate risk impacts the economy, and the central bank reduces the interest rate to stimulate the economy, causing inflation. Climate change also impacts food supplies, and rising food prices drives inflation. Therefore, the policy implication of this paper is that attention should be given to the short-term impact of climate change on inflation. Additionally, central banks should avoid significant reductions in interest rates in the short term and take measures to curb rising food prices to address climate change.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103846"},"PeriodicalIF":4.8,"publicationDate":"2025-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151086","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-08DOI: 10.1016/j.iref.2025.103850
Hui Fu , Qianqian Liu , Yunbi An , Jun Yang , Heng Xiong
This study investigates the impact of IPO suspensions on the matching relationship between venture capital firms (VCs) and startups in China's venture capital market. We find that IPO suspensions significantly improve the degree of matching between VCs and startups. This effect is particularly pronounced for lower-quality VCs and startups with limited growth potential. Moreover, the positive impact of IPO suspensions on matching is stronger when VCs are domestic or state-backed, when VCs and startups are located in the same region, or when startups are in the middle or late stages of development. Our analysis reveals that IPO suspensions reduce VCs' risk-taking behavior and facilitate information exchange in the venture capital market, thereby enhancing the matching process. These findings provide novel evidence on the role of government policy interventions, such as IPO suspensions, in shaping the investment and financing activities of VCs and startups in China's venture capital market.
{"title":"Exit disruption and matching in venture capital markets: Evidence based on IPO suspensions in China","authors":"Hui Fu , Qianqian Liu , Yunbi An , Jun Yang , Heng Xiong","doi":"10.1016/j.iref.2025.103850","DOIUrl":"10.1016/j.iref.2025.103850","url":null,"abstract":"<div><div>This study investigates the impact of IPO suspensions on the matching relationship between venture capital firms (VCs) and startups in China's venture capital market. We find that IPO suspensions significantly improve the degree of matching between VCs and startups. This effect is particularly pronounced for lower-quality VCs and startups with limited growth potential. Moreover, the positive impact of IPO suspensions on matching is stronger when VCs are domestic or state-backed, when VCs and startups are located in the same region, or when startups are in the middle or late stages of development. Our analysis reveals that IPO suspensions reduce VCs' risk-taking behavior and facilitate information exchange in the venture capital market, thereby enhancing the matching process. These findings provide novel evidence on the role of government policy interventions, such as IPO suspensions, in shaping the investment and financing activities of VCs and startups in China's venture capital market.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103850"},"PeriodicalIF":4.8,"publicationDate":"2025-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151110","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-08DOI: 10.1016/j.iref.2025.103855
Huiting Lin , Jiayu Wen , Wei Li , Yurun He
Corporate strategic alliances play a vital role in promoting factor flows and resource sharing, thereby enabling firms to gain a competitive advantage. Using alliance data from Chinese A-share listed firms from 2009 to 2022, we find that engagement in strategic alliances enhances corporate ESG performance. We attribute these outcomes to the resource-enriching effect and the monitoring effect. Following the formation of strategic alliances, we observe a substantial reduction in firms' financial constraints and managerial myopia, as well as an enhancement in firm innovation and external attention. Moreover, the effect is more pronounced when strategic alliances are formed between strong entities. Additionally, the strategic alliance has a more positive effect on ESG performance when partners are non-enterprise organizations, or the type is an equity strategic alliance. Finally, our test shows that enhancing corporate ESG performance resulting from strategic alliances can reduce stock volatility and elevate firm value. Overall, our findings enrich the literature on the economic consequences of strategic alliances and the drivers of corporate ESG, offering novel insights for companies to overcome their resource constraints and enhance ESG performance.
{"title":"Strategic alliances and corporate ESG performance","authors":"Huiting Lin , Jiayu Wen , Wei Li , Yurun He","doi":"10.1016/j.iref.2025.103855","DOIUrl":"10.1016/j.iref.2025.103855","url":null,"abstract":"<div><div>Corporate strategic alliances play a vital role in promoting factor flows and resource sharing, thereby enabling firms to gain a competitive advantage. Using alliance data from Chinese A-share listed firms from 2009 to 2022, we find that engagement in strategic alliances enhances corporate ESG performance. We attribute these outcomes to the resource-enriching effect and the monitoring effect. Following the formation of strategic alliances, we observe a substantial reduction in firms' financial constraints and managerial myopia, as well as an enhancement in firm innovation and external attention. Moreover, the effect is more pronounced when strategic alliances are formed between strong entities. Additionally, the strategic alliance has a more positive effect on ESG performance when partners are non-enterprise organizations, or the type is an equity strategic alliance. Finally, our test shows that enhancing corporate ESG performance resulting from strategic alliances can reduce stock volatility and elevate firm value. Overall, our findings enrich the literature on the economic consequences of strategic alliances and the drivers of corporate ESG, offering novel insights for companies to overcome their resource constraints and enhance ESG performance.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103855"},"PeriodicalIF":4.8,"publicationDate":"2025-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151084","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-08DOI: 10.1016/j.iref.2025.103854
Ziqi Wang , Dan Peng , Qunxi Kong , Feifei Tan
This study empirically examines the influence of digital infrastructure development on corporate investment efficiency within the context of the Broadband China policy. The study analyses a sample of Chinese listed companies from 2007 to 2021 using a difference-in-differences model, supplemented by propensity score matching and the IV methodology to assess the policy's effects on inefficient investment, overinvestment, and underinvestment. The findings indicate that the Broadband China policy significantly enhances corporate investment efficiency by mitigating the negative effects of inefficient investment and overinvestment behaviors. The effects are more pronounced in regions with more developed infrastructure. The heterogeneity analysis reveals considerable variation in the policy's impact between provincial capitals and non-capital cities, with firms located in provincial capitals deriving greater benefits from the policy. The mechanism analysis demonstrates that management efficiency mediates the policy's influence on corporate investment behavior. These findings provide theoretical and empirical support for the government's efforts to refine its digital infrastructure policies and optimize regional economic development strategies. Based on the results, we propose differentiated policy recommendations to enhance management efficiency through digital infrastructure development and address regional disparities. Future research could expand the dataset and investigate the broader implications of digital infrastructure on other corporate behaviors, such as innovation capacity and market competitiveness.
{"title":"Digital infrastructure and economic growth: Evidence from corporate investment efficiency","authors":"Ziqi Wang , Dan Peng , Qunxi Kong , Feifei Tan","doi":"10.1016/j.iref.2025.103854","DOIUrl":"10.1016/j.iref.2025.103854","url":null,"abstract":"<div><div>This study empirically examines the influence of digital infrastructure development on corporate investment efficiency within the context of the Broadband China policy. The study analyses a sample of Chinese listed companies from 2007 to 2021 using a difference-in-differences model, supplemented by propensity score matching and the IV methodology to assess the policy's effects on inefficient investment, overinvestment, and underinvestment. The findings indicate that the Broadband China policy significantly enhances corporate investment efficiency by mitigating the negative effects of inefficient investment and overinvestment behaviors. The effects are more pronounced in regions with more developed infrastructure. The heterogeneity analysis reveals considerable variation in the policy's impact between provincial capitals and non-capital cities, with firms located in provincial capitals deriving greater benefits from the policy. The mechanism analysis demonstrates that management efficiency mediates the policy's influence on corporate investment behavior. These findings provide theoretical and empirical support for the government's efforts to refine its digital infrastructure policies and optimize regional economic development strategies. Based on the results, we propose differentiated policy recommendations to enhance management efficiency through digital infrastructure development and address regional disparities. Future research could expand the dataset and investigate the broader implications of digital infrastructure on other corporate behaviors, such as innovation capacity and market competitiveness.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103854"},"PeriodicalIF":4.8,"publicationDate":"2025-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151747","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-07DOI: 10.1016/j.iref.2025.103845
Lei Ruan, Jianing Li, Siqi Huang
Environmental, social, and governance (ESG) ratings serve as an important reference for investors, enabling them to assess the fundamental information of companies and make investment decisions, thereby enhancing capital market pricing efficiency. Frequent adjustments to ESG ratings will bring incremental information to the capital market. However, the mechanism of this information affecting capital market pricing efficiency remains unclear. Therefore, this paper empirically investigates the impact of ESG rating adjustments on capital market pricing efficiency. It explores the underlying mechanisms, using Chinese A-share listed companies from 2010 to 2023 as a case study. The findings reveal a significant negative relationship between ESG rating adjustments and capital market pricing efficiency. Specifically, the greater the degree of ESG rating adjustment, the more pronounced the phenomenon of asset mispricing, leading to a reduction in capital market pricing efficiency. This conclusion holds robust after conducting a series of endogeneity and robustness tests. Mechanistic analysis suggests that ESG rating adjustments exacerbate the degree of information asymmetry and diminish analyst forecast quality, which in turn impairs asset pricing efficiency. Heterogeneity analysis further indicates that the negative impact of ESG rating adjustments on capital market pricing efficiency is more pronounced in non-state-owned firms, firms with no significant internal control deficiencies, firms operating in polluting industries, and firms located in the eastern and central regions.
{"title":"ESG rating adjustment and capital market pricing efficiency: Evidence from China","authors":"Lei Ruan, Jianing Li, Siqi Huang","doi":"10.1016/j.iref.2025.103845","DOIUrl":"10.1016/j.iref.2025.103845","url":null,"abstract":"<div><div>Environmental, social, and governance (ESG) ratings serve as an important reference for investors, enabling them to assess the fundamental information of companies and make investment decisions, thereby enhancing capital market pricing efficiency. Frequent adjustments to ESG ratings will bring incremental information to the capital market. However, the mechanism of this information affecting capital market pricing efficiency remains unclear. Therefore, this paper empirically investigates the impact of ESG rating adjustments on capital market pricing efficiency. It explores the underlying mechanisms, using Chinese A-share listed companies from 2010 to 2023 as a case study. The findings reveal a significant negative relationship between ESG rating adjustments and capital market pricing efficiency. Specifically, the greater the degree of ESG rating adjustment, the more pronounced the phenomenon of asset mispricing, leading to a reduction in capital market pricing efficiency. This conclusion holds robust after conducting a series of endogeneity and robustness tests. Mechanistic analysis suggests that ESG rating adjustments exacerbate the degree of information asymmetry and diminish analyst forecast quality, which in turn impairs asset pricing efficiency. Heterogeneity analysis further indicates that the negative impact of ESG rating adjustments on capital market pricing efficiency is more pronounced in non-state-owned firms, firms with no significant internal control deficiencies, firms operating in polluting industries, and firms located in the eastern and central regions.</div></div>","PeriodicalId":14444,"journal":{"name":"International Review of Economics & Finance","volume":"98 ","pages":"Article 103845"},"PeriodicalIF":4.8,"publicationDate":"2025-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151087","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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