Journal of International Financial Management & Accounting最新文献

Industrial policy plays a crucial role in economic development and is gaining increasing attention. While previous literature has demonstrated the positive impact of these policies on economic and industrial growth, their environmental impact remains unclear. Using establishment-level data, we investigate how Chinese provincial industrial policies affect corporate pollution levels. We find that establishments encouraged by provincial industrial policies exhibit significantly higher sulfur dioxide (SO₂) emissions. This effect is mainly driven by: (1) lower risks of environmental penalties, (2) increased use of cost-effective but polluting energy sources, and (3) reduced investments in environmental technologies. The impact of provincial industrial policies on a firm's emissions is more pronounced under certain conditions: when local governments face substantial economic pressures; when government officials are locally promoted or have a high probability of political promotion; when firms are economically important or state-owned; when firms lack rigorous external oversight; and when firms operate in environments with higher citizen environmental participation. Our findings suggest that industrial policies aimed at rapid economic growth may conflict with environmental goals, providing insights for policymakers on balancing economic development and environmental protection in emerging economies.

This paper examines the influence of state-controlling shareholders on the tax avoidance behavior of listed Chinese state-owned enterprises (CSOEs). Using a data set comprising 14,645 firm-year observations from 2003 to 2022, we find that subsidiaries significantly reduce tax avoidance when state-controlling shareholders are required to remit gains to the government under the State-owned Capital Gains Handover System. Following the reform, these subsidiaries also experience declines in cash holdings and financial performance. We attribute these outcomes to increased shifting pressure from controlling shareholders and motivation to meet performance evaluations. Additional analyses reveal that this effect is more pronounced in firms with lower separation between ownership and control, weaker financing constraints, higher operational risks, and stronger internal controls. Furthermore, we observe that most cash flows are diverted through connected transactions. Finally, our findings indicate that subsidiaries that fail to adjust their aggressive tax practices after the reform face declines in firm value. By highlighting the pivotal role of state-controlling shareholders in shaping corporate tax strategies, this study contributes to the literature on state ownership, corporate governance, and tax avoidance.

How does happiness—an important nonmonetary benefit—affect executives' monetary compensation? Although previous studies have shown that some nonmonetary benefits—such as living quality, air pollution, and corporate social recognition—significantly affect managerial compensation, little is known about the impact of happiness on executive pay. Using a sample of Chinese companies from the year 2008 to 2021, we analyze happiness data at the city level to explore the relationship between happiness and corporate executive compensation. The results show that local happiness is significantly and negatively related to executive compensation. This finding remains robust when analyzed using alternative measures of variables and different estimation methods and when controlled for endogeneity concerns. We also document that executive needs and talent migration are channels through which happiness affects executive compensation. The additional heterogeneity analyses reveal that the negative relationship between happiness and executive compensation is more pronounced if a firm has strong bargaining power or is not state-owned. The findings in this study highlight the importance of nonmonetary incentives in designing executive compensation packages and motivating executives.

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The growing concern over sustainable development has raised critical questions about the role of environmental, social, and governance (ESG) performance in shaping organizational outcomes. While prior research underscores the importance of ESG, there is limited understanding of its impact on firm risk, particularly under varying levels of environmental uncertainty. Using a data set of 9201 observations from Chinese listed companies on the Shanghai and Shenzhen Stock Exchanges from 2006 to 2022, this study investigates how ESG performance influences firm risk and the moderating effect of environmental uncertainty. Our findings reveal that ESG performance reduces firm risk by lowering environmental penalties, easing financing constraints, enhancing corporate reputation, and improving access to government subsidies. Additionally, environmental uncertainty strengthens the negative impact of ESG performance on firm risk. These results highlight the critical role of ESG performance in mitigating corporate risk and offer practical implications for firms, investors, and policymakers seeking to align corporate strategies with sustainable economic development goals.

This study assesses the effect of CEOs' financial background characteristics on corporate risk-taking. Although previous studies have extensively examined how CEOs' financial background characteristics influence firm behavior, few have focused on their effects on corporate risk-taking. Using a sample of 26,084 firm-year observations of 3468 listed firms in China between 2008 and 2020, we examine whether CEOs' background characteristics, particularly having a financial background, affect corporate risk-taking. We find that a CEO with a financial background tends to adopt higher levels of corporate risk-taking. Moreover, our findings suggest that these CEOs increase corporate risk-taking by alleviating financing constraints, fostering the integration of industrial and financial capital, and promoting the financialization of enterprises. Overall, our findings contribute to the literature on the relationship between executives' financial backgrounds and corporate risk-taking by offering insights from the perspective of CEOs' experience. These results have important implications for firms in terms of executive selection, management team optimization, and fostering greater integration between industry and finance.

Economic policy uncertainty (EPU) significantly impacts capital markets and financial activities. Prior studies present inconsistent results regarding the effect of EPU on stock price crash risk, possibly due to the usage of a macro-level EPU index that assumes homogeneity in its effects across diverse firms. Using data from Chinese A-share listed firms from 2008 to 2019, we adopt a text-based method to measure firm-specific economic policy uncertainty (FEPU) and examine its impact on future stock price crashes. We find that FEPU mitigates crash risk through two channels: monitoring enhancement and conservatism promotion, which deter the accumulation of negative information. The mitigating effect of FEPU is more pronounced for firms with greater managerial stock option incentives, overconfident CEOs, and higher reliance on government subsidies. Overall, our study highlights the crucial role of FEPU in reducing the expected costs of managerial information manipulation and managing stock return tail risks.

This study investigates the impact of managerial linguistic disclosures on institutional trading behaviors during earnings conference calls from 2006 to 2016. Utilizing the linguistic Fog decomposition methodology on textual analysis, it analyzes how the linguistic complexity of managerial communication influences institutional ownership changes. Findings indicate that both obfuscation and informativeness of managerial discourse significantly affect institutional trading, with effects varying based on the informativeness of post-call analyst reports. This impact is more pronounced under conditions of earnings quality uncertainty, suggesting a heightened reliance on managerial cues by institutional investors during such periods. Additionally, the study differentiates responses among investor types: transient investors are more sensitive to linguistic cues, while dedicated and quasi-indexer investors focus on the informational content of disclosures. These insights enhance understanding of how managerial communication and analyst report informativeness shape institutional trading behaviors through linguistic complexity's influence on institutional ownership.