This study examines how firms in typhoon‐prone areas respond to the political costs of typhoon strikes. We found that such firms tend to engage in downward earnings management after a typhoon strike. Various robustness tests support our findings: cross‐sectional variation tests indicate that this tendency is strong in cities with high governmental intervention and incentives for political leaders and in firms with high political connections and visibility. Further analysis reveals that typhoon strikes enhance earnings management by intensifying fiscal pressure. Finally, this study provides a precise evaluation of the adverse effects of typhoons and complements the existing literature on the political cost hypothesis.
{"title":"Typhoon strikes, political costs and earnings management","authors":"Jun Du, Xinhui Dai, Bo Yan","doi":"10.1111/acfi.13263","DOIUrl":"https://doi.org/10.1111/acfi.13263","url":null,"abstract":"This study examines how firms in typhoon‐prone areas respond to the political costs of typhoon strikes. We found that such firms tend to engage in downward earnings management after a typhoon strike. Various robustness tests support our findings: cross‐sectional variation tests indicate that this tendency is strong in cities with high governmental intervention and incentives for political leaders and in firms with high political connections and visibility. Further analysis reveals that typhoon strikes enhance earnings management by intensifying fiscal pressure. Finally, this study provides a precise evaluation of the adverse effects of typhoons and complements the existing literature on the political cost hypothesis.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"103 35","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140678769","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 evaluated the effect of an exogenous shock on municipal government debt financing reform on corporate innovation for a sample of Chinese‐listed firms from 2009 to 2019. The results show that this reform stimulates corporate innovation capacity, and the effect is more pronounced in non‐state‐owned and financially constrained firms. We attribute these findings to reduced external financing costs and the crowding‐out effect of a firm's real estate investment. Our results are robust to alternative variable definitions, model specifications, and estimation techniques and provide novel evidence concerning the role of municipal government financing in corporate innovation.
{"title":"From red tape to innovation: How does municipal government financing reform affect corporate R&D activities?","authors":"Kai Wu, Dingyao Guo","doi":"10.1111/acfi.13256","DOIUrl":"https://doi.org/10.1111/acfi.13256","url":null,"abstract":"We evaluated the effect of an exogenous shock on municipal government debt financing reform on corporate innovation for a sample of Chinese‐listed firms from 2009 to 2019. The results show that this reform stimulates corporate innovation capacity, and the effect is more pronounced in non‐state‐owned and financially constrained firms. We attribute these findings to reduced external financing costs and the crowding‐out effect of a firm's real estate investment. Our results are robust to alternative variable definitions, model specifications, and estimation techniques and provide novel evidence concerning the role of municipal government financing in corporate innovation.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"126 23","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140709008","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 firm‐level climate risk exposure (CRE) on the debt concentration choices of Chinese listed companies over the period 2010–2021. Our findings suggest that CRE prompts firms to choose debt structures with higher concentration, and this relationship holds true for both physical and transition risks. Further analysis reveals that this effect is more pronounced among firms with higher default risk, restricted access to capital, and lower accounting quality. Our findings remain solid to a battery of robustness tests. Collectively, our study sheds light on the economic consequences of through the lens of firms' debt concentration adjustments.
{"title":"Climate risk exposure and debt concentration: Evidence from Chinese listed companies","authors":"Wuqi Song, Wenshuai Xu, Wenzhou Qu, Xu Gong","doi":"10.1111/acfi.13255","DOIUrl":"https://doi.org/10.1111/acfi.13255","url":null,"abstract":"We examine the impact of firm‐level climate risk exposure (CRE) on the debt concentration choices of Chinese listed companies over the period 2010–2021. Our findings suggest that CRE prompts firms to choose debt structures with higher concentration, and this relationship holds true for both physical and transition risks. Further analysis reveals that this effect is more pronounced among firms with higher default risk, restricted access to capital, and lower accounting quality. Our findings remain solid to a battery of robustness tests. Collectively, our study sheds light on the economic consequences of through the lens of firms' debt concentration adjustments.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"17 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140743815","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 analyse the capital market consequences of stock market liberalisation in a quasi‐natural experiment setting, where Mainland‐Hong Kong Stock Connect Programs allow foreign investors to trade in the Chinese stock market. Utilising difference‐in‐differences estimations, we observe improved stock liquidity, driven by direct liquidity provision and indirect signals to domestic investors. Particularly notable are the effects on eligible stocks without previous exposure to foreign investors, characterised by high corporate transparency and investor protection. The resulting liquidity enhancements reduce equity costs, ultimately elevating firm value. In short, our study highlights the positive influence of stock market liberalisation on the capital market.
{"title":"The capital market consequences of stock market liberalisation: Evidence from Mainland‐Hong Kong Stock Connect Programs in China","authors":"Renhui Fu, Fang Gao, Yi Zhao","doi":"10.1111/acfi.13251","DOIUrl":"https://doi.org/10.1111/acfi.13251","url":null,"abstract":"We analyse the capital market consequences of stock market liberalisation in a quasi‐natural experiment setting, where Mainland‐Hong Kong Stock Connect Programs allow foreign investors to trade in the Chinese stock market. Utilising difference‐in‐differences estimations, we observe improved stock liquidity, driven by direct liquidity provision and indirect signals to domestic investors. Particularly notable are the effects on eligible stocks without previous exposure to foreign investors, characterised by high corporate transparency and investor protection. The resulting liquidity enhancements reduce equity costs, ultimately elevating firm value. In short, our study highlights the positive influence of stock market liberalisation on the capital market.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"49 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140755410","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}
Although Chinese regulatory authorities view corporate asset‐backed securitisation as a powerful tool for deleveraging, its effectiveness remains unexamined. Employing a look‐through approach to data from nonfinancial corporate asset‐backed securitisation transactions in China, we identify the actual originators and examine the impact of corporate asset‐backed securitisation on their leverage ratios. Regrettably, we find that corporate asset‐backed securitisation significantly increases the leverage ratio. This result holds true across both state‐owned and non‐state‐owned enterprises, as well as large‐scale and small‐scale enterprises. Finally, this study reveals that the effect of corporate asset‐backed securitisation on the leverage ratio is partially mediated by internal financing capacity.
{"title":"Can asset‐backed securitisation reduce corporate leverage? Evidence from China","authors":"Ronghui Pang, Yanan Zhang, Jianbiao Li, Shaopeng Xie","doi":"10.1111/acfi.13254","DOIUrl":"https://doi.org/10.1111/acfi.13254","url":null,"abstract":"Although Chinese regulatory authorities view corporate asset‐backed securitisation as a powerful tool for deleveraging, its effectiveness remains unexamined. Employing a look‐through approach to data from nonfinancial corporate asset‐backed securitisation transactions in China, we identify the actual originators and examine the impact of corporate asset‐backed securitisation on their leverage ratios. Regrettably, we find that corporate asset‐backed securitisation significantly increases the leverage ratio. This result holds true across both state‐owned and non‐state‐owned enterprises, as well as large‐scale and small‐scale enterprises. Finally, this study reveals that the effect of corporate asset‐backed securitisation on the leverage ratio is partially mediated by internal financing capacity.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":" 952","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140383004","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}
Essi Nousiainen, Mikko Ranta, M. Ylinen, Marko Järvenpää
The purpose of this paper is to develop and validate a text‐based measure of innovation using latent Dirichlet allocation on a sample of 45,409 10‐K filings from US listed companies. We expect that the text‐based innovation measure is associated with innovation and can be used to measure innovation for companies without patents or significant research and development expenditures. The empirical results are consistent with these assumptions, but reveal that thorough initial testing is required to ensure robustness. This study extends the research on innovation measurement and company disclosures, and provides a new method for assessing innovation using company disclosures.
{"title":"Using machine learning and 10‐K filings to measure innovation","authors":"Essi Nousiainen, Mikko Ranta, M. Ylinen, Marko Järvenpää","doi":"10.1111/acfi.13245","DOIUrl":"https://doi.org/10.1111/acfi.13245","url":null,"abstract":"The purpose of this paper is to develop and validate a text‐based measure of innovation using latent Dirichlet allocation on a sample of 45,409 10‐K filings from US listed companies. We expect that the text‐based innovation measure is associated with innovation and can be used to measure innovation for companies without patents or significant research and development expenditures. The empirical results are consistent with these assumptions, but reveal that thorough initial testing is required to ensure robustness. This study extends the research on innovation measurement and company disclosures, and provides a new method for assessing innovation using company disclosures.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":" 8","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140384086","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}
Cultural features may exert significant impact on firm behaviour. Through a sample of listed A‐share firms on the Shanghai and Shenzhen Stock Exchanges, we find that Confucian culture may significantly lower firms' cost stickiness. Our mechanism tests suggest that ideologies of self‐discipline and prudence embedded in Confucian culture may mitigate agency issues as well as overestimation of firm earnings. Furthermore, such impact is more pronounced among firms of lower shareholding by institutional investors or of weak internal control, which suggests that Confucian culture may help rectify the imperfection of corporate governance. Lower cost stickiness may also reduce firm risk.
文化特征可能对企业行为产生重大影响。通过对沪深证券交易所 A 股上市公司的抽样调查，我们发现儒家文化可能会显著降低企业的成本粘性。我们的机制检验表明，儒家文化中蕴含的自律和谨慎的意识形态可能会缓解代理问题以及对公司收益的高估。此外，这种影响在机构投资者持股比例较低或内部控制薄弱的公司中更为明显，这表明儒家文化可能有助于纠正公司治理的不完善。较低的成本粘性也可能降低公司风险。
{"title":"Confucian culture and cost stickiness","authors":"Ailing Pan, Hui Wang, Lei Xu","doi":"10.1111/acfi.13247","DOIUrl":"https://doi.org/10.1111/acfi.13247","url":null,"abstract":"Cultural features may exert significant impact on firm behaviour. Through a sample of listed A‐share firms on the Shanghai and Shenzhen Stock Exchanges, we find that Confucian culture may significantly lower firms' cost stickiness. Our mechanism tests suggest that ideologies of self‐discipline and prudence embedded in Confucian culture may mitigate agency issues as well as overestimation of firm earnings. Furthermore, such impact is more pronounced among firms of lower shareholding by institutional investors or of weak internal control, which suggests that Confucian culture may help rectify the imperfection of corporate governance. Lower cost stickiness may also reduce firm risk.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"18 6","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140226852","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}
Based on daily data from 2013 to 2022, this study examines the spillover effects of volatility between cloud stocks and other asset classes (global stocks, treasury bonds, gold and crude oil) using the VAR connectedness approach. The results show that there is a significant spillover effect from global stocks and crude oil markets to the cloud stock market. The spillover effects become stronger whenever there are shocks such as economic crisis, turbulence in the international financial markets, COVID‐19 and global inflation. However, nearly 91% of the variations of cloud stocks come from within, suggesting that the diversification/hedging value of cloud stocks is potentially high.
本研究基于 2013 年至 2022 年的每日数据，采用 VAR 连接性方法研究了云股票与其他资产类别（全球股票、国债、黄金和原油）之间的波动溢出效应。结果表明，全球股市和原油市场对云股票市场存在显著的溢出效应。当出现经济危机、国际金融市场动荡、COVID-19 和全球通胀等冲击时，溢出效应会变得更强。然而，云股近 91% 的变化来自内部，这表明云股的分散/套期保值价值很高。
{"title":"Volatility spillovers of cloud stocks: Evidence from China using the dynamic connectedness approach","authors":"Lichao Lin, A. Cheung, Wan‐Lin Yan","doi":"10.1111/acfi.13248","DOIUrl":"https://doi.org/10.1111/acfi.13248","url":null,"abstract":"Based on daily data from 2013 to 2022, this study examines the spillover effects of volatility between cloud stocks and other asset classes (global stocks, treasury bonds, gold and crude oil) using the VAR connectedness approach. The results show that there is a significant spillover effect from global stocks and crude oil markets to the cloud stock market. The spillover effects become stronger whenever there are shocks such as economic crisis, turbulence in the international financial markets, COVID‐19 and global inflation. However, nearly 91% of the variations of cloud stocks come from within, suggesting that the diversification/hedging value of cloud stocks is potentially high.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"349 14‐15","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-03-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140227990","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}
Our study investigates whether credible commitment to corporate green behaviours influences corporate finance. Specifically, using the unique setting Green Manufacturing (GM) program in China, we examine whether and how green manufacturing certification (GMC) endorsed by the government could lead to an increase in firms' bank loan financing. We find that GMC increases bank loan financing, mainly through alleviation of banks' concerns of information risk and default risk potentially arising from environmental risk. Heterogeneity analyses show that the positive effect of GMC on bank loan financing is more pronounced for non‐state‐owned enterprises, firms in polluting industries, in less eco‐friendly regions, and in Green Finance Pilot Program regions. Our findings suggest that the government plays an important role in discerning and endorsing corporate green behaviours, and thus directing banks' financial resource allocation decisions.
{"title":"Actions speak louder than words: Can credible green commitment facilitate bank loan financing? Evidence from China","authors":"Yuan Sun, Lisheng Yu","doi":"10.1111/acfi.13237","DOIUrl":"https://doi.org/10.1111/acfi.13237","url":null,"abstract":"Our study investigates whether credible commitment to corporate green behaviours influences corporate finance. Specifically, using the unique setting Green Manufacturing (GM) program in China, we examine whether and how green manufacturing certification (GMC) endorsed by the government could lead to an increase in firms' bank loan financing. We find that GMC increases bank loan financing, mainly through alleviation of banks' concerns of information risk and default risk potentially arising from environmental risk. Heterogeneity analyses show that the positive effect of GMC on bank loan financing is more pronounced for non‐state‐owned enterprises, firms in polluting industries, in less eco‐friendly regions, and in Green Finance Pilot Program regions. Our findings suggest that the government plays an important role in discerning and endorsing corporate green behaviours, and thus directing banks' financial resource allocation decisions.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"28 7","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139963278","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 the impact of teamwork on analysts' ability to balance accuracy and timeliness. Surprisingly, team analysts demonstrate a lower ability compared to individual analysts. This trade‐off ability is even worse in diverse teams. Further, we find that Confucianism negatively affects this ability. However, this ability significantly improves when star analysts serve on the analyst team, or when analyst team members come from the province where the covered firm is headquartered, or when analyst team members graduate from the same college. Overall, these findings suggest that it is crucial to consider the two performance dimensions simultaneously.
{"title":"A balancing act between accuracy and timeliness: Evidence from analyst forecasts in China","authors":"Lining Han, Bin Qiu, Xixi Yang, Yiwei Zhao","doi":"10.1111/acfi.13233","DOIUrl":"https://doi.org/10.1111/acfi.13233","url":null,"abstract":"This paper investigates the impact of teamwork on analysts' ability to balance accuracy and timeliness. Surprisingly, team analysts demonstrate a lower ability compared to individual analysts. This trade‐off ability is even worse in diverse teams. Further, we find that Confucianism negatively affects this ability. However, this ability significantly improves when star analysts serve on the analyst team, or when analyst team members come from the province where the covered firm is headquartered, or when analyst team members graduate from the same college. Overall, these findings suggest that it is crucial to consider the two performance dimensions simultaneously.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":" 36","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139789237","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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