International Review of Finance最新文献

This study investigates the excess value implications of news about biodiversity risk for investors of diversified firms using a sample of 1019 US firms from 2001 to 2023. In a given year, more positive news about biodiversity risk increases the value of diversified firms relative to a benchmark portfolio of single-segment firms, especially for large-diversified firms. This diversification premium effect, that is, the excess value of diversified firms, in response to positive news about biodiversity risk, is non-linear, robust to several alternative specifications, and exists regardless of internal capital market efficiency, number of business segments, excess net income, and the climate change exposure of diversified firms. Our study highlights the potent role of diversified firms in exploiting biodiversity protection-related investment opportunities, as investors attach a relative premium to such firms.

Do capital market regulations improve the efficiency of allocation of capital to IPO firms? We answer this question by examining a regulation in India that allows IPO firms to seek investment from lead (anchor) institutional investors. Using a sample of 158 anchor investor-backed IPOs and 689 non-anchor IPOs from 2006 to 2020, we find that anchor-backed IPO firms are more profitable and sell at higher valuations. These IPOs raise more equity than non-anchor firms, and anchor-backed firms with higher productivity of capital raise more equity than other firms. We find that anchor-backed IPOs experience a significant improvement in profitability and Q over 4 years after the IPO. Anchor backing is associated with a lower probability of the stock being downgraded to lower categories of listing and less illiquidity. Our results suggest that capital market regulations can be effective in directing capital to firms with higher investment efficiency.

This paper delves into the influence of state ownership on green innovation in family firms using a sample of Chinese listed companies from 2008 to 2021. Our results show that state ownership significantly promotes family firms' green innovation performance. Intergenerational succession, CEO's green experience, and Confucian cultural atmosphere moderate this positive relationship significantly. Channel tests indicate that state ownership positively affects green innovation in family firms by enhancing their corporate social responsibility, facilitating their access to external resources, and improving their internal control quality. Cross-sectional analysis shows that the promoting effect of state ownership on green innovation is more prominent among family firms in non-heavily polluting industries, those with higher levels of information transparency, and those facing lower levels of market competition. These findings provide new insights into the reverse mixed-ownership reform in China and offer valuable guidance for family firms in formulating effective green innovation strategies.

Given the large variations in the evolution and the size of the responsible investing (RI) mutual fund sectors across countries, we examine factors affecting their growth. We find that the size of a country's RI fund industry, whether measured relative to the size of the conventional fund industry, total equity market capitalization, or relative to the country's GDP, is strongly related to the country's cultural norms, as measured by dimensions from Hofstede, World Values Survey, or GLOBE. The RI fund sector also increases with the country's wealth, as measured by the GDP per capita.

Studying the Chinese SEO market, we find that investors geographically closer to an SEO firm's headquarters tend to submit bids that align more closely with the final offer price and tend to win the auction with a higher likelihood, particularly for high-demand SEOs. This local advantage is especially pronounced when bidding on firms with high operational uncertainty, active earnings management, and limited visits from institutional investors and analysts. Additionally, local investors are more likely to conduct on-site visits to SEO firms before the offering process than their nonlocal counterparts. However, this local edge diminishes during the nationwide COVID-19 lockdown and with the establishment of efficient transportation links to SEO firms. Overall, the evidence suggests that proximity provides investors with a significant advantage to gain information.

Small businesses are important drivers of economic activity and job creation but face significant credit constraints. This study examines the joint impact of credit constraints and risk tolerance on a household's decision to become self-employed using data from the 2022 Survey of Consumer Finance (SCF), and in a novel way. First, it uncovers and then accounts for the large numbers of households that are truly credit constrained yet systematically overlooked with traditional measures of credit constraints based on loan rejections. Three hidden groups are identified– underfunded borrowers, discouraged borrowers, and priced-out borrowers– which collectively make up an actual majority of credit constrained borrowers. Second, the study isolates and estimates the independent impact of credit constraints and risk tolerance on self-employment, avoiding a persistent common omitted variables problem in the literature. The results show that credit constraints and risk aversion significantly limit business activities. The exclusion biases are quantified.

This paper examines the impact of CEOs' financial work experience on corporate supplier stability. We find that a firm's supplier stability decreases when it's CEO has financial work experience. The impact is more pronounced for firms with fewer local procurement and less analyst coverage, and firms with lower industry concentration and limited market power. We also find that the impact of financial work experience is weakened when the financial expert CEO is female or older. The investigation into influencing channels shows that CEOs' financial work experience decreases corporate supplier stability through an increase in corporate financial investments, a decrease in financial slack, and an increase in agency costs. Finally, we find that decreased supplier stability driven by CEOs' financial work experience increases corporate operating risk. Our findings highlight the costs of hiring financial expert CEOs from the perspective of supply chain.

This study introduces a novel perspective by examining the influence of clan culture on carbon emission intensity (CEI) in Chinese cities. Clan culture, as a traditional social organization, shapes the informal institutions within modern Chinese society. Empirical findings reveal that the strength of clan culture is significantly negatively correlated with local carbon emission intensity, with a one standard deviation increase in clan culture strength corresponding to a 10.21% reduction in CEI. Additionally, we find that clan culture amplifies the effectiveness of environmental regulations, especially after the 2017 green finance reforms and innovation, fostering environmentally conscious behaviors in communities. Our investigation further highlights that clan culture limits carbon-intensive industries, enhances government environmental awareness, improves policy implementation, and promotes green innovation. All these findings highlight the critical role of cultural factors in addressing environmental challenges and advancing sustainable practices.

This study examines the incentive effects of environmental regulations—penalties, subsidies, and taxes—on corporate environmental investments, considering financing constraints and executives’ political connections. Findings reveal that penalties and taxes are more effective for firms with weaker financing constraints, while subsidies benefit those facing greater constraints. Political connections weaken the impact of penalties but enhance subsidy access and effects. Tax compulsion strengthens incentives for politically connected firms, and tax rebate policy amplify penalties’ effectiveness. Executive compensation also channels penalties’ influence. The study highlights the complementary nature of regulatory tools and advocates a multifaceted approach combining cost-based, reward-based, and market-driven measures to promote environmental transformation.

We examine the impact of governance quality on the volatility of equity markets. Using a broad dataset of ADRs, we provide evidence that high quality governance in the home country is associated with reduced stock market volatility. The relationship is robust across various governance quality dimensions. To address endogeneity concerns, we examine the stability of Brazilian ADRs in response to a corruption event. The inverse governance-volatility relationship is clearly demonstrated by this event. The results support the conjecture that country governance quality is an important prerequisite for the stability of equity markets.