International Review of Finance最新文献

Extensive research has documented the benefits of agricultural production loans, yet limited studies address the impacts of liquidity constraints during harvest season due to loan repayment obligations. This study examines how agricultural production loans influence farmers' crop storage decisions. Based on a theoretical two-period household model, we demonstrate that the net effect of such loans on grain storage behavior is ambiguous, contingent upon the relative dominance of liquidity constraint relief versus production enhancement incentives. Utilizing data from the China National Fixed-Point Survey (2004–2014), our empirical analysis using fixed-effect models corroborates the theoretical predictions. Specifically, we find that agricultural production loans negatively affect wheat storage and the storage-to-output ratio for wheat. Conversely, these loans positively correlate with storage levels and storage-to-output ratios for maize and soybeans. Additionally, our results indicate a negative impact on rice storage but no significant effect on the rice storage-to-output ratio. Further analysis reveals that, compared with wheat and rice, maize and soybeans have a higher output return of capital input. Furthermore, we find agricultural production loans raise household income and consumption.

This paper examines the effect of corporate governance on the relationship between performance and market competition. We use changes in import tariffs as exogenous shocks to product market competition to examine how the effect of these shocks on performance varies with corporate governance. We find that elevated product market competition due to import tariff cuts results in significant performance deterioration for firms with strong corporate governance, but little effect or even a significant positive effect on performance for firms with poor governance. We further find that these effects are much stronger for nonexporting firms and small firms because they do not have the opportunity/resources to soften the impact of increased competitive pressure. Our findings suggest that elevated market competition helps to reduce managerial entrenchment/slack, which can offset the adverse effects of increased competitive pressure, especially for nonexporting firms and small firms. The findings lend support to the hypothesis that managerial slack is inversely related to industry competitive pressure and, hence, that product market competition and internal corporate governance are substitutes for each other.

This paper addresses firm fraud detection by synergizing domain knowledge with machine learning through heuristic and explainable feature construction. Unlike traditional approaches that focus on algorithmic improvements, our method introduces a set of features based on earnings management analysis, providing factors influencing firm fraudulent behavior. Empirical results using a firm-year dataset from China demonstrate better classification accuracy of fraud detection compared to machine learning models with raw financial statement features alone. Additionally, the results remain robust with different false positive rates, observation periods, and firm groups. This domain knowledge-enhanced machine learning method, with alternative features for fraud detection, leads to more transparent regulation and the potential for similar counterfeit detection applications in China and beyond.

We propose a model of corporate governance that characterizes the optimal managerial compensation scheme when the board of directors can monitor by auditing. The results reveal a significant substitution effect such that when monitoring is sufficiently weak, the optimal compensation depends on performance, but as it grows stronger, the incentive power of compensation declines. When monitoring is sufficiently strong, however, the compensation gives the manager full insurance. These properties are consistent with the reduction in executive pay-performance sensitivity observed after U.S. regulatory reforms aimed at improving corporate internal control.

In this study, we investigate the informativeness of the non-financial environmental, social, and governance (ESG) information provided by various intermediaries including firms, the media, and ESG rating agencies, to financial analysts. By analyzing cross-sectional ESG data from various sources related to 56 countries, we find that ESG information plays a crucial role in shaping analyst forecasts. More importantly, we examine the interaction between internally and externally sourced information on affecting analysts. Our results suggest that while ESG information from the media attenuates the impact of firms' ESG disclosures on reducing analysts' forecast errors and dispersion, information from ESG rating agencies increases this impact. We also find that globally implemented mandatory ESG disclosure regulations significantly increase the effect of ESG information from all three sources on analysts. In countries with a stronger stakeholder orientation, financial analysts tend to derive greater relative benefits from ESG information obtained from various sources. Overall, the findings of this study support the conclusion that both externally and internally sourced ESG information is of significant value for financial analysts, and the implementation of mandatory ESG disclosure requirements in a country increases this significance.

This study examines the transmission of monetary policy shocks on stock market returns, liquidity, expected inflation, and inflation under varying economic policy uncertainty (EPU) levels in the Indian context. Using a Smooth Transition VAR model, we find that contractionary monetary policy increases illiquidity and decreases returns during the high EPU regime but has minimal effects during the low EPU regime. Additionally, monetary policy effectively curtails expected inflation and inflation in a low EPU regime more than in a high EPU regime. The results emphasize monetary policy transmission via expectation channels over asset pricing channels.

This paper examines illegal insider trading in Australian equity markets, focusing on whether such trades leave observable footprints in prices and returns. We compile a hand-collected dataset of identified insider-trading incidents. Using an event-study design, we find minimal footprints for earnings announcements and a small negative price effect for M&A deals. A detection-controlled estimation (DCE) model reveals that while 17.79% of M&A announcements likely involve insider trading, regulators detect only 29.59%. Thus, relying solely on detected trades understates insider trading's broader impact. Our results highlight stealthy trading tactics and the need for enhanced surveillance to combat hidden illegal trades.

We estimate the enduring momentum probabilities of past winners and losers continuing as future winners and losers by incorporating a comprehensive set of firm characteristics. Our results reveal that combining the price momentum signals and enduring momentum probabilities generates returns double those of the traditional price momentum strategy. Furthermore, the robust performance of the enduring momentum strategy cannot be fully attributed to factors such as seasonality, limits to arbitrage, and transaction costs.

We develop a dynamic investment model that incorporates agency conflicts, considering the impact of rare disaster and carbon emission reduction. This model elucidates the effects of carbon emission reduction on capital investment, asset pricing, and welfare. Our findings indicate that optimal carbon emission reduction level increases with disaster risk, volatility, and risk aversion. Furthermore, in comparison to the inaction scenario, carbon emission reduction leads to underinvestment, enhances Tobin's $��q�$, increases risk-free rate, and decreases risk premium. This introduces a non-monotonic relationship among capital investment, risk-free rate, risk premium with disaster risk. Lastly, carbon emission reduction mitigates the cost for the outside shareholder to address agency conflicts.

We compare the impact of broad-based equity incentives and government R&D subsidies on the efficiency of corporate innovation. Chinese corporations that offer broad-based incentives for employees and managers demonstrate greater R&D investment efficiency, as evidenced by a higher ratio of innovation outputs to cost allocation. Conversely, firms receiving government R&D subsidies demonstrate lower efficiency. Accounting for endogenous treatments in a multi-treatment framework, we suggest an information-sharing environment is critical for efficient capital allocation. Government agencies will likely provide subsidies based on information different from what firm headquarters might have, while broad-based incentive programs encourage employee coordination, enhancing efficiency and project quality. To signal project quality, firms with broad-based incentives capitalize a higher proportion of R&D costs than subsidized firms. We also find that combining broad-based incentives and subsidies might not create synergies.