Using a sample of listed Chinese companies from 2012 to 2020, we investigate the impact of registration of defensive trademarks on corporate innovation. We find that firms with a higher number of defensive trademarks engage in less innovation. The mechanism tests show that defensive trademarks reduce innovation by increasing firm market share, and further tests show that the negative effect is more pronounced for firms with resource constraints and state‐owned enterprises. Our findings indicate a substitutive effect of defensive trademarks on corporate innovation, which is a win‐by‐defence strategy adopted by firms in market share competition.
{"title":"Win by defence: The impact of defensive trademarks on corporate innovation","authors":"Xuechao Li, Dejun Wu, Yucheng Wu","doi":"10.1111/acfi.13280","DOIUrl":"https://doi.org/10.1111/acfi.13280","url":null,"abstract":"Using a sample of listed Chinese companies from 2012 to 2020, we investigate the impact of registration of defensive trademarks on corporate innovation. We find that firms with a higher number of defensive trademarks engage in less innovation. The mechanism tests show that defensive trademarks reduce innovation by increasing firm market share, and further tests show that the negative effect is more pronounced for firms with resource constraints and state‐owned enterprises. Our findings indicate a substitutive effect of defensive trademarks on corporate innovation, which is a win‐by‐defence strategy adopted by firms in market share competition.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":" 2","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141372119","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As contemporary asset‐pricing models have expanded to include new factors, the empirical literature has carefully studied the time‐series fit of competing model specifications. In contrast, comparison of the roles played by characteristics and factor loadings in explaining cross‐sectional return variation has received less attention. This paper re‐examines the characteristics versus covariance debate. The findings overwhelmingly support the characteristics explanation. Firm size, book‐to‐market, profitability and investment characteristics are important for understanding differences in returns, over and above how a stock loads on common risk factors. Portfolios designed to be a pure play on a given characteristic generate economically significant trading profits.
{"title":"An examination of the characteristics versus covariance debate for contemporary asset‐pricing models: Australian evidence","authors":"Philip Gray, Manapon Limkriangkrai, Wenyuan Xu","doi":"10.1111/acfi.13279","DOIUrl":"https://doi.org/10.1111/acfi.13279","url":null,"abstract":"As contemporary asset‐pricing models have expanded to include new factors, the empirical literature has carefully studied the time‐series fit of competing model specifications. In contrast, comparison of the roles played by characteristics and factor loadings in explaining cross‐sectional return variation has received less attention. This paper re‐examines the characteristics versus covariance debate. The findings overwhelmingly support the characteristics explanation. Firm size, book‐to‐market, profitability and investment characteristics are important for understanding differences in returns, over and above how a stock loads on common risk factors. Portfolios designed to be a pure play on a given characteristic generate economically significant trading profits.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"38 15","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141103761","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Applying a novel high‐dimensional frequency‐domain‐based spillover index approach, this paper explores low‐frequency versus high‐frequency housing price spillovers among 70 Chinese cities. Intensive interactions among these cities were dominated by high‐frequency spillovers around the end of 2015, while low‐frequency spillovers have dominated since 2016. This coincided with dramatic changes in government policies, particularly the abolition of the ‘one‐child’ policy. Furthermore, city‐level economic factors were the primarily significant determinants of high‐frequency housing price spillovers within several months, while education was a major determinant of low‐frequency housing price spillovers in China, which was consistent with the distinction between work‐based and education‐based migration in China.
{"title":"Low‐ frequency versus high‐frequency housing price spillovers in China","authors":"Jian Yang, Zheng Li, Ziliang Yu","doi":"10.1111/acfi.13269","DOIUrl":"https://doi.org/10.1111/acfi.13269","url":null,"abstract":"Applying a novel high‐dimensional frequency‐domain‐based spillover index approach, this paper explores low‐frequency versus high‐frequency housing price spillovers among 70 Chinese cities. Intensive interactions among these cities were dominated by high‐frequency spillovers around the end of 2015, while low‐frequency spillovers have dominated since 2016. This coincided with dramatic changes in government policies, particularly the abolition of the ‘one‐child’ policy. Furthermore, city‐level economic factors were the primarily significant determinants of high‐frequency housing price spillovers within several months, while education was a major determinant of low‐frequency housing price spillovers in China, which was consistent with the distinction between work‐based and education‐based migration in China.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"28 22","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141109644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine the impact of non‐controlling shareholder activism on the effectiveness of executive compensation contract, particularly focusing on the over‐appointment of directors in A‐share firms listed on the Shanghai and Shenzhen Stock Exchanges from 2008 to 2021. We discover that such over‐appointments by non‐controlling shareholders significantly promote executive pay‐for‐performance sensitivity of these enterprises. This effect becomes even more pronounced in enterprises that display a weaker government intervention and media attention. Further mechanism analysis indicates that over‐appointments improve the effectiveness of compensation contract by improving the quality of accounting information and restraining executives' opportunistic behaviour. Our further research finds that over‐appointments by non‐controlling shareholders can effectively reduce executive compensation stickiness, while significantly increasing the absolute salary level of executives. There is no evidence to suggest that independent directors increase executive pay‐for‐performance sensitivity.
我们研究了非控股股东激进主义对高管薪酬合同有效性的影响，尤其关注了 2008 年至 2021 年期间在上海和深圳证券交易所上市的 A 股公司的董事超额任命情况。我们发现，非控股股东的超额任命会显著提高这些企业高管的薪酬绩效敏感性。这种效应在政府干预和媒体关注较弱的企业中更为明显。进一步的机制分析表明，超额任命通过提高会计信息质量和抑制高管的机会主义行为，提高了薪酬合同的有效性。我们的进一步研究发现，非控股股东的超额任命可以有效降低高管薪酬粘性，同时显著提高高管的绝对薪酬水平。没有证据表明独立董事提高了高管薪酬与业绩挂钩的敏感性。
{"title":"Non‐controlling shareholder activism and executive pay‐for‐performance sensitivity: Evidence from the over‐appointment of directors in the Chinese market","authors":"Shengnan Li, Jiaqi Wang, Xinya Zheng, Chiyun Zhu","doi":"10.1111/acfi.13270","DOIUrl":"https://doi.org/10.1111/acfi.13270","url":null,"abstract":"We examine the impact of non‐controlling shareholder activism on the effectiveness of executive compensation contract, particularly focusing on the over‐appointment of directors in A‐share firms listed on the Shanghai and Shenzhen Stock Exchanges from 2008 to 2021. We discover that such over‐appointments by non‐controlling shareholders significantly promote executive pay‐for‐performance sensitivity of these enterprises. This effect becomes even more pronounced in enterprises that display a weaker government intervention and media attention. Further mechanism analysis indicates that over‐appointments improve the effectiveness of compensation contract by improving the quality of accounting information and restraining executives' opportunistic behaviour. Our further research finds that over‐appointments by non‐controlling shareholders can effectively reduce executive compensation stickiness, while significantly increasing the absolute salary level of executives. There is no evidence to suggest that independent directors increase executive pay‐for‐performance sensitivity.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"119 31","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141115420","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We construct a measure of public gambling sentiment using the Baidu index and empirically examine the influence of temporal fluctuations in gambling sentiment on the performance of lottery‐type stocks. The empirical findings reveal that heightened gambling sentiment correlates with increased selling volume, short‐term order imbalances and liquidity in the lottery‐type stock market, while diminishing abnormal returns, including the initial returns of IPOs. We attribute this to investors' gambling mentality stemming from the accumulation of wealth rather than the pursuit of excitement, as they view lotteries and lottery‐related stocks as interchangeable investment options.
{"title":"The individual motivation of investors' gambling mentality: Empirical evidence from gambling sentiment and lottery‐type stocks","authors":"Zewei Long, Wei Wang, Haohua Li, Xinghao Huang","doi":"10.1111/acfi.13271","DOIUrl":"https://doi.org/10.1111/acfi.13271","url":null,"abstract":"We construct a measure of public gambling sentiment using the Baidu index and empirically examine the influence of temporal fluctuations in gambling sentiment on the performance of lottery‐type stocks. The empirical findings reveal that heightened gambling sentiment correlates with increased selling volume, short‐term order imbalances and liquidity in the lottery‐type stock market, while diminishing abnormal returns, including the initial returns of IPOs. We attribute this to investors' gambling mentality stemming from the accumulation of wealth rather than the pursuit of excitement, as they view lotteries and lottery‐related stocks as interchangeable investment options.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"61 15","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140975140","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the influence of organisation capital on inventory efficiency. While the importance of human capital in enhancing operational efficiency is widely recognised, the effect of organisation capital has not been well documented in existing research. Our findings reveal a positive effect of organisation capital on inventory efficiency. We also identify underlying mechanisms that contribute to the positive impact of organisation capital on inventory efficiency. These include increased innovation, improved employee orientation and reduced financial constraints. Furthermore, our analysis shows that organisation capital strengthens the positive relation between inventory efficiency and firm performance.
{"title":"The impact of organisation capital on inventory efficiency","authors":"Tongxia Li, Chun Lu, Lei Xu","doi":"10.1111/acfi.13272","DOIUrl":"https://doi.org/10.1111/acfi.13272","url":null,"abstract":"This study examines the influence of organisation capital on inventory efficiency. While the importance of human capital in enhancing operational efficiency is widely recognised, the effect of organisation capital has not been well documented in existing research. Our findings reveal a positive effect of organisation capital on inventory efficiency. We also identify underlying mechanisms that contribute to the positive impact of organisation capital on inventory efficiency. These include increased innovation, improved employee orientation and reduced financial constraints. Furthermore, our analysis shows that organisation capital strengthens the positive relation between inventory efficiency and firm performance.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"52 15","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140975195","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using data for 2016–2021 on a sample of Chinese non‐financial firms, this study documents a positive association between the use of hedge accounting and audit fees and finds that the new requirements under International Financial Reporting Standards 9 (IFRS 9) help mitigate this positive relationship. Channel analyses show that the new hedge accounting requirements mitigate earnings volatility and accruals management, which results in audit fee reductions. Further, the post‐IFRS 9 audit fee decrease is greater among large audit firms, firms in regions with higher marketisation levels and firms with better corporate governance.
{"title":"Hedge accounting, IFRS 9, and audit fees: Evidence from China","authors":"Jin Jiang, Rui Ye","doi":"10.1111/acfi.13268","DOIUrl":"https://doi.org/10.1111/acfi.13268","url":null,"abstract":"Using data for 2016–2021 on a sample of Chinese non‐financial firms, this study documents a positive association between the use of hedge accounting and audit fees and finds that the new requirements under International Financial Reporting Standards 9 (IFRS 9) help mitigate this positive relationship. Channel analyses show that the new hedge accounting requirements mitigate earnings volatility and accruals management, which results in audit fee reductions. Further, the post‐IFRS 9 audit fee decrease is greater among large audit firms, firms in regions with higher marketisation levels and firms with better corporate governance.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141015309","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
US multinational firms typically invert either through a pure form or by merging with foreign entities. Our research documents that pure inversions increase inverting firms' cost of equity, while merger inversions decrease it. These results remain robust across different measures of the cost of equity. We also demonstrate that the 2004 tax reform is ineffective in reducing US multinational firms' tendency to invert. Instead, it prompts firms to shift from pure inversions to merger inversions, which are less value‐enhancing due to their lower tax benefits. It is unlikely that the legislators had foreseen these outcomes.
{"title":"Corporate inversion, cost of equity and ineffective tax reform","authors":"Liu Hong, Tianpeng Zhou","doi":"10.1111/acfi.13264","DOIUrl":"https://doi.org/10.1111/acfi.13264","url":null,"abstract":"US multinational firms typically invert either through a pure form or by merging with foreign entities. Our research documents that pure inversions increase inverting firms' cost of equity, while merger inversions decrease it. These results remain robust across different measures of the cost of equity. We also demonstrate that the 2004 tax reform is ineffective in reducing US multinational firms' tendency to invert. Instead, it prompts firms to shift from pure inversions to merger inversions, which are less value‐enhancing due to their lower tax benefits. It is unlikely that the legislators had foreseen these outcomes.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"140 11","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140668686","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study explores the influence of air pollution on the corporate bond market in China. An air pollution premium is documented, whereby bonds issued in more polluted areas are associated with higher offering yields at issue in the primary market and higher yield spreads in the secondary market. The statistically and economically significant air pollution premium is robust to a battery of sensitivity checks. The air pollution premium is associated with rising investor attention to climate risk in financial markets.
{"title":"The impact of air pollution on cost of debt: Evidence from corporate bond markets","authors":"Xiaolu Hu, Angel Zhong, Youdan Cao, Wenlan Wang","doi":"10.1111/acfi.13257","DOIUrl":"https://doi.org/10.1111/acfi.13257","url":null,"abstract":"This study explores the influence of air pollution on the corporate bond market in China. An air pollution premium is documented, whereby bonds issued in more polluted areas are associated with higher offering yields at issue in the primary market and higher yield spreads in the secondary market. The statistically and economically significant air pollution premium is robust to a battery of sensitivity checks. The air pollution premium is associated with rising investor attention to climate risk in financial markets.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"28 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140665848","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates announcement effects and longer‐term performance associated with the Forbes' America's Best Banks survey release. Although the market reacted positively to the announcement, the overall event window effects were insignificant. Raw and risk‐adjusted returns are statistically insignificant over longer‐time horizons. Investors cannot just use the Best Banks list to earn positive announcement window returns. However, a direct relation exists between movement in survey rank and subsequent accounting profitability measures, suggesting investors may benefit from monitoring movements on the Best Banks list. We also find support for a size effect as smaller, matched sample banks have higher Jensen's alphas than the Forbes larger Best Banks.
{"title":"Forbes Magazine's America's Best Banks: Are they best for investors?","authors":"G. Filbeck, Dianna C. Preece, Xin Zhao","doi":"10.1111/acfi.13259","DOIUrl":"https://doi.org/10.1111/acfi.13259","url":null,"abstract":"This paper investigates announcement effects and longer‐term performance associated with the Forbes' America's Best Banks survey release. Although the market reacted positively to the announcement, the overall event window effects were insignificant. Raw and risk‐adjusted returns are statistically insignificant over longer‐time horizons. Investors cannot just use the Best Banks list to earn positive announcement window returns. However, a direct relation exists between movement in survey rank and subsequent accounting profitability measures, suggesting investors may benefit from monitoring movements on the Best Banks list. We also find support for a size effect as smaller, matched sample banks have higher Jensen's alphas than the Forbes larger Best Banks.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"102 31","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140678644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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