Pub Date : 2022-01-02DOI: 10.1080/21697213.2022.2082721
Chao Dou, Xue Yang, Wei Liu, Rui Sun
ABSTRACT The phenomenon of corporate debt default has broken out in recent years, which highlights the importance of the macro situation to the stability of business operations. In this paper, the debt default of A-share listed companies in Shanghai and Shenzhen Stock Exchange from 2008 to 2018 are used as a sample to conduct a research from the perspective of independent directors with macro vision. The empirical results show that the larger the number and the higher the proportion of macro-background independent directors in bond issuing companies, the less debt default will be found; moreover, the relationships are stronger when enterprises face more economic uncertainty and higher systemic risk. Meanwhile, independent director with macro vision mainly reduces the company’s default risk. The above results not only provide new evidence for the advisory role of independent directors, but also supplement the influencing factors of debt default.
{"title":"Can independent directors with macro vision relieve debt default – from the perspective of independent director’s ‘advisory’ function","authors":"Chao Dou, Xue Yang, Wei Liu, Rui Sun","doi":"10.1080/21697213.2022.2082721","DOIUrl":"https://doi.org/10.1080/21697213.2022.2082721","url":null,"abstract":"ABSTRACT The phenomenon of corporate debt default has broken out in recent years, which highlights the importance of the macro situation to the stability of business operations. In this paper, the debt default of A-share listed companies in Shanghai and Shenzhen Stock Exchange from 2008 to 2018 are used as a sample to conduct a research from the perspective of independent directors with macro vision. The empirical results show that the larger the number and the higher the proportion of macro-background independent directors in bond issuing companies, the less debt default will be found; moreover, the relationships are stronger when enterprises face more economic uncertainty and higher systemic risk. Meanwhile, independent director with macro vision mainly reduces the company’s default risk. The above results not only provide new evidence for the advisory role of independent directors, but also supplement the influencing factors of debt default.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"10 1","pages":"73 - 94"},"PeriodicalIF":0.0,"publicationDate":"2022-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45567886","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}
Pub Date : 2022-01-02DOI: 10.1080/21697213.2022.2084008
Hongxian Zhen, S. Wang, Mingxiang Lian, Shijie Zheng
ABSTRACT This paper incorporates corporate targeted poverty alleviation behaviour into the bond pricing framework for the first time, using a sample of A-share listed companies that issued corporate bonds from 2016 to 2018 to study the impact and mechanism of targeted poverty alleviation behaviour on bond credit spreads. We find that bond-issuing companies’ targeted poverty alleviation behaviour can significantly reduce bond credit spreads, which are more pronounced in subsamples with higher credit risk and lower credit rating and of active participants. In addition, companies’ targeted poverty alleviation behaviour has improved corporate reputation and strategic resource acquisition and reduced information asymmetry and agency costs. Consequently, these results indicate that corporate targeted poverty alleviation is essentially embodied as value features, not tool features, and bond investors can identify the true motivations of engaged enterprises.
{"title":"Do bond investors attend to corporate targeted poverty alleviation?","authors":"Hongxian Zhen, S. Wang, Mingxiang Lian, Shijie Zheng","doi":"10.1080/21697213.2022.2084008","DOIUrl":"https://doi.org/10.1080/21697213.2022.2084008","url":null,"abstract":"ABSTRACT This paper incorporates corporate targeted poverty alleviation behaviour into the bond pricing framework for the first time, using a sample of A-share listed companies that issued corporate bonds from 2016 to 2018 to study the impact and mechanism of targeted poverty alleviation behaviour on bond credit spreads. We find that bond-issuing companies’ targeted poverty alleviation behaviour can significantly reduce bond credit spreads, which are more pronounced in subsamples with higher credit risk and lower credit rating and of active participants. In addition, companies’ targeted poverty alleviation behaviour has improved corporate reputation and strategic resource acquisition and reduced information asymmetry and agency costs. Consequently, these results indicate that corporate targeted poverty alleviation is essentially embodied as value features, not tool features, and bond investors can identify the true motivations of engaged enterprises.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"10 1","pages":"95 - 119"},"PeriodicalIF":0.0,"publicationDate":"2022-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43753362","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}
Pub Date : 2022-01-02DOI: 10.1080/21697213.2022.2082720
Jing Cai, Nan Xu, Yuan Feng, Nan Gao
ABSTRACT Using a dataset of listed non-state-owned enterprises in China, we show that politically connected firms have a greater difficulty in obtaining trade credit than non-connected firms. This credit discrimination against politically connected firms strengthens when firms locate in regions with lower-quality legal systems or suppliers have greater bargaining power. Further analysis suggests that the lower credit reputation of politically connected firms stems from suppliers’ concern about contract enforceability, that is, politically connected firms receive regulatory favours from government, which can create obstacles to the collection of trade credit through the legal system. Our study contributes to the existing literature by investigating the impact of political connections on informal financing activities, and by revealing the asymmetric influence of political connections on formal and non-formal financing channels.
{"title":"Political connections and informal financing: use of trade credit in China","authors":"Jing Cai, Nan Xu, Yuan Feng, Nan Gao","doi":"10.1080/21697213.2022.2082720","DOIUrl":"https://doi.org/10.1080/21697213.2022.2082720","url":null,"abstract":"ABSTRACT Using a dataset of listed non-state-owned enterprises in China, we show that politically connected firms have a greater difficulty in obtaining trade credit than non-connected firms. This credit discrimination against politically connected firms strengthens when firms locate in regions with lower-quality legal systems or suppliers have greater bargaining power. Further analysis suggests that the lower credit reputation of politically connected firms stems from suppliers’ concern about contract enforceability, that is, politically connected firms receive regulatory favours from government, which can create obstacles to the collection of trade credit through the legal system. Our study contributes to the existing literature by investigating the impact of political connections on informal financing activities, and by revealing the asymmetric influence of political connections on formal and non-formal financing channels.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"10 1","pages":"26 - 48"},"PeriodicalIF":0.0,"publicationDate":"2022-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46689606","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}
Pub Date : 2022-01-02DOI: 10.1080/21697213.2022.2091062
Chenyu Cui, Guihua He, Deren Xie
ABSTRACT Information is key to decision-making and is a major determinant of investment performance. We hypothesise that as analysts are constrained by their research resources, they collect information with more externalities. Measuring information externalities as a stock’s fundamental correlations with other stocks in the same industry, we find that stocks with high information externalities get more analyst coverage, more (high-quality) analyst reports, and more site visits than those with low information externalities. At the analyst level, we find consistent evidence that individual analysts allocate more effort to firms with high information externalities in their stock portfolios. Consequently, we further demonstrate that stocks with high information externalities are associated with less information delay and are priced more efficiently.
{"title":"Information externalities, analyst research resource allocation, and stock pricing efficiency","authors":"Chenyu Cui, Guihua He, Deren Xie","doi":"10.1080/21697213.2022.2091062","DOIUrl":"https://doi.org/10.1080/21697213.2022.2091062","url":null,"abstract":"ABSTRACT Information is key to decision-making and is a major determinant of investment performance. We hypothesise that as analysts are constrained by their research resources, they collect information with more externalities. Measuring information externalities as a stock’s fundamental correlations with other stocks in the same industry, we find that stocks with high information externalities get more analyst coverage, more (high-quality) analyst reports, and more site visits than those with low information externalities. At the analyst level, we find consistent evidence that individual analysts allocate more effort to firms with high information externalities in their stock portfolios. Consequently, we further demonstrate that stocks with high information externalities are associated with less information delay and are priced more efficiently.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"10 1","pages":"1 - 25"},"PeriodicalIF":0.0,"publicationDate":"2022-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41351853","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}
Pub Date : 2022-01-02DOI: 10.1080/21697213.2022.2082722
Jingru Wang, Hongjian Wang, Xing Liu, Qingyuan Li
ABSTRACT Based on the exogenous shock of the bank lending interest rate ceiling deregulation in China, this paper uses a difference-in-differences model and studies how credit availability affects classification shifting from the perspective of formal debt contract formation. We find that high-risk firms’ classification shifting degree is higher after the bank lending interest rate ceiling deregulation. Cross-sectional heterogeneity tests show that the impact of the deregulation on classification shifting is stronger when the level of financing constraints is higher, the diversity of financing channels is lower, the bank’s need for information is higher, and the bank’s monitoring is higher. Mechanism tests further show that the deregulation enables high-risk firms to increase borrowing through classification shifting. We use the unique setting of China interest rate liberalisation to scientifically identify the debt financing motivation for classification shifting. This study expands and enriches the institutional determinants of accounting information production.
{"title":"Credit availability and classification shifting: based on the quasi-natural experiment of the bank lending interest rate ceiling deregulation","authors":"Jingru Wang, Hongjian Wang, Xing Liu, Qingyuan Li","doi":"10.1080/21697213.2022.2082722","DOIUrl":"https://doi.org/10.1080/21697213.2022.2082722","url":null,"abstract":"ABSTRACT Based on the exogenous shock of the bank lending interest rate ceiling deregulation in China, this paper uses a difference-in-differences model and studies how credit availability affects classification shifting from the perspective of formal debt contract formation. We find that high-risk firms’ classification shifting degree is higher after the bank lending interest rate ceiling deregulation. Cross-sectional heterogeneity tests show that the impact of the deregulation on classification shifting is stronger when the level of financing constraints is higher, the diversity of financing channels is lower, the bank’s need for information is higher, and the bank’s monitoring is higher. Mechanism tests further show that the deregulation enables high-risk firms to increase borrowing through classification shifting. We use the unique setting of China interest rate liberalisation to scientifically identify the debt financing motivation for classification shifting. This study expands and enriches the institutional determinants of accounting information production.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"10 1","pages":"49 - 72"},"PeriodicalIF":0.0,"publicationDate":"2022-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42760575","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}
{"title":"Best paper award announcement","authors":"Shangkun Liang","doi":"10.1080/21697213.2022.2125612","DOIUrl":"https://doi.org/10.1080/21697213.2022.2125612","url":null,"abstract":"M&A corporate management favourable auditors audit performance commitment attestation their hypotheses. compromising external auditors’ monitoring by employing multiple auditors on various services.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"10 1","pages":"145 - 145"},"PeriodicalIF":0.0,"publicationDate":"2022-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41525804","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}
Pub Date : 2022-01-02DOI: 10.1080/21697213.2022.2086027
Bingyi Huang, Yuting Huang
ABSTRACT This paper is the first empirical study of the economic consequences of the adoption of the employee director system in China from the perspective of the investment efficiency of enterprises, that is, based on empirical study of China’s capital market in order to test the relationship between employee directors and the investment efficiency of listed companies. The results show that employee directors can improve the investment efficiency of listed companies effectively, and this relationship is more significant for state-owned enterprises and enterprises in product markets with low levels of competition. Further research shows that employee directors can restrain not only overinvestment but can also reduce underinvestment. Employee directors can restrain the overinvestment behaviour of state-owned enterprises effectively and reduce underinvestment by non-state-owned enterprises. In product markets with low levels of competition, employee directors can restrain overinvestment, while in product markets with high levels of competition, employee directors can reduce underinvestment.
{"title":"Does employee representation affect corporate investment efficiency? Evidence from China’s capital market","authors":"Bingyi Huang, Yuting Huang","doi":"10.1080/21697213.2022.2086027","DOIUrl":"https://doi.org/10.1080/21697213.2022.2086027","url":null,"abstract":"ABSTRACT This paper is the first empirical study of the economic consequences of the adoption of the employee director system in China from the perspective of the investment efficiency of enterprises, that is, based on empirical study of China’s capital market in order to test the relationship between employee directors and the investment efficiency of listed companies. The results show that employee directors can improve the investment efficiency of listed companies effectively, and this relationship is more significant for state-owned enterprises and enterprises in product markets with low levels of competition. Further research shows that employee directors can restrain not only overinvestment but can also reduce underinvestment. Employee directors can restrain the overinvestment behaviour of state-owned enterprises effectively and reduce underinvestment by non-state-owned enterprises. In product markets with low levels of competition, employee directors can restrain overinvestment, while in product markets with high levels of competition, employee directors can reduce underinvestment.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"10 1","pages":"120 - 144"},"PeriodicalIF":0.0,"publicationDate":"2022-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46158378","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}
Pub Date : 2021-10-02DOI: 10.1080/21697213.2022.2078271
Changli Zeng, Jiangtao Li, Haoran Xu, Mian Zhang
ABSTRACT We examine the impact of party organisation construction of accounting firms on audit quality. We find that although there is no relationship between the party membership status of auditors and audit quality, the audit quality of party-member auditors significantly improves after accounting firms strengthen party organisation construction. Additional analyses show that the positive impact of auditor party membership on audit quality does not generate a contagious effect in the presence of party organisation construction. Moreover, cross-section results show that the impact of party organisation construction on audit quality is more pronounced in Non-Big4 audit firms, and in audit firms having a higher proportion of party-member partners/employees. Finally, we find that party organisation construction of accounting firms plays a more significant role in improving audit quality in state-owned firms. We believe our paper to be the first to investigate the governance role of party organisation construction in accounting firms.
{"title":"The power of belief: party organization construction of accounting firms and audit quality","authors":"Changli Zeng, Jiangtao Li, Haoran Xu, Mian Zhang","doi":"10.1080/21697213.2022.2078271","DOIUrl":"https://doi.org/10.1080/21697213.2022.2078271","url":null,"abstract":"ABSTRACT We examine the impact of party organisation construction of accounting firms on audit quality. We find that although there is no relationship between the party membership status of auditors and audit quality, the audit quality of party-member auditors significantly improves after accounting firms strengthen party organisation construction. Additional analyses show that the positive impact of auditor party membership on audit quality does not generate a contagious effect in the presence of party organisation construction. Moreover, cross-section results show that the impact of party organisation construction on audit quality is more pronounced in Non-Big4 audit firms, and in audit firms having a higher proportion of party-member partners/employees. Finally, we find that party organisation construction of accounting firms plays a more significant role in improving audit quality in state-owned firms. We believe our paper to be the first to investigate the governance role of party organisation construction in accounting firms.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"9 1","pages":"433 - 468"},"PeriodicalIF":0.0,"publicationDate":"2021-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44756579","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}
Pub Date : 2021-10-02DOI: 10.1080/21697213.2021.2023725
Yun Ye, Song Chen, Yuqiang Cao, Hongjian Wang
ABSTRACT This study examines the exogenous institutional impact of minimum wage policy on enterprise financialization in China. Empirical results show that an increased minimum wage significantly promotes the financialization of real enterprises. Moreover, the impact is more pronounced in enterprises characterised by a more significant profit margin gap between tangible and financial assets and higher degrees of labour-intensiveness. Further tests reveal that the promotional effect of the minimum wage on the financialization of labour-intensive enterprises tends to be more substantial under the following circumstances: (i) a smaller gap exists between an enterprise’s average wage and the local minimum wage; (ii) an enterprise finds it more challenging to pass on costs to the market; (iii) following the implementation of the Labour Contract Law. Further investigation indicates that raising the minimum wage exacerbates the adverse effects of enterprise financialization on corporate value.
{"title":"The cost shock, margin gap and enterprise financialization: An exogenous shock based on minimum wage","authors":"Yun Ye, Song Chen, Yuqiang Cao, Hongjian Wang","doi":"10.1080/21697213.2021.2023725","DOIUrl":"https://doi.org/10.1080/21697213.2021.2023725","url":null,"abstract":"ABSTRACT This study examines the exogenous institutional impact of minimum wage policy on enterprise financialization in China. Empirical results show that an increased minimum wage significantly promotes the financialization of real enterprises. Moreover, the impact is more pronounced in enterprises characterised by a more significant profit margin gap between tangible and financial assets and higher degrees of labour-intensiveness. Further tests reveal that the promotional effect of the minimum wage on the financialization of labour-intensive enterprises tends to be more substantial under the following circumstances: (i) a smaller gap exists between an enterprise’s average wage and the local minimum wage; (ii) an enterprise finds it more challenging to pass on costs to the market; (iii) following the implementation of the Labour Contract Law. Further investigation indicates that raising the minimum wage exacerbates the adverse effects of enterprise financialization on corporate value.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"9 1","pages":"490 - 525"},"PeriodicalIF":0.0,"publicationDate":"2021-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48697101","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}
Pub Date : 2021-10-02DOI: 10.1080/21697213.2022.2082718
Y. Quan, Cong Zhou, Rongjiang Bao, Lindsay Long
ABSTRACT The number of annual report comment letters (ARCLs) has been increasing over the years with the stock exchanges continuously strengthening ex-post supervision. Focusing on the financial expertise of board secretaries, who are directly responsible for disclosure, we thoroughly explore whether such expertise can impact regulatory inquiries. We document that financial expert board secretaries significantly reduces the likelihood, frequency, and characters of firms’ receipt of ARCLs and the likelihood of firms’ delay of responses to ARCLs. Further, we find that the influence of financial expert board secretaries on ARCLs mainly exists in the non-state-owned enterprises, enterprises with a poor governance environment, and enterprises in which board secretaries enjoy a higher organizational status. The mechanism test results show that financial expert board secretaries can reduce the accrual-based earnings management. Overall, this research reveals board secretaries’ disciplinary effects on regulatory inquiries and provides detailed analysis helping understand board secretaries’ role in disclosure.
{"title":"Do board secretaries with financial expertise reduce regulatory inquiries? Empirical evidence based on the China stock exchange’s annual report comment letter","authors":"Y. Quan, Cong Zhou, Rongjiang Bao, Lindsay Long","doi":"10.1080/21697213.2022.2082718","DOIUrl":"https://doi.org/10.1080/21697213.2022.2082718","url":null,"abstract":"ABSTRACT The number of annual report comment letters (ARCLs) has been increasing over the years with the stock exchanges continuously strengthening ex-post supervision. Focusing on the financial expertise of board secretaries, who are directly responsible for disclosure, we thoroughly explore whether such expertise can impact regulatory inquiries. We document that financial expert board secretaries significantly reduces the likelihood, frequency, and characters of firms’ receipt of ARCLs and the likelihood of firms’ delay of responses to ARCLs. Further, we find that the influence of financial expert board secretaries on ARCLs mainly exists in the non-state-owned enterprises, enterprises with a poor governance environment, and enterprises in which board secretaries enjoy a higher organizational status. The mechanism test results show that financial expert board secretaries can reduce the accrual-based earnings management. Overall, this research reveals board secretaries’ disciplinary effects on regulatory inquiries and provides detailed analysis helping understand board secretaries’ role in disclosure.","PeriodicalId":37215,"journal":{"name":"China Journal of Accounting Studies","volume":"9 1","pages":"571 - 592"},"PeriodicalIF":0.0,"publicationDate":"2021-10-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48001691","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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