Pub Date : 2025-08-29DOI: 10.1016/j.asieco.2025.102018
Cangfeng Wang, Tian Wang
This paper examines the employment effects of R&D activity using firm-level data from two India surveys collected by the World Bank. To tackle the potential endogeneity, we use the innovation-reason indicator as the instrumental variable for R&D activity. Both OLS and IV estimates show three findings. First, consistent with the literature, R&D activity has significantly positive effect on employment of permanent workers. Second, different from the literature, R&D activity has no significant effect on the share of nonproduction workers in permanent employment. However, firms with R&D activity hire relatively more skilled production workers in permanent production employment than those without. Third, firms with R&D activity hire relatively less temporary workers than those without. The last two novel findings provide evidence of skill-biased technological change for populous less-developed countries like India.
{"title":"R&D activity, employment and employment composition: Evidence from India","authors":"Cangfeng Wang, Tian Wang","doi":"10.1016/j.asieco.2025.102018","DOIUrl":"10.1016/j.asieco.2025.102018","url":null,"abstract":"<div><div>This paper examines the employment effects of R&D activity using firm-level data from two India surveys collected by the World Bank. To tackle the potential endogeneity, we use the innovation-reason indicator as the instrumental variable for R&D activity. Both OLS and IV estimates show three findings. First, consistent with the literature, R&D activity has significantly positive effect on employment of permanent workers. Second, different from the literature, R&D activity has no significant effect on the share of nonproduction workers in permanent employment. However, firms with R&D activity hire relatively more skilled production workers in permanent production employment than those without. Third, firms with R&D activity hire relatively less temporary workers than those without. The last two novel findings provide evidence of skill-biased technological change for populous less-developed countries like India.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"101 ","pages":"Article 102018"},"PeriodicalIF":3.4,"publicationDate":"2025-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144989475","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-26DOI: 10.1016/j.asieco.2025.102026
Bhavesh Garg , Sayar Ahmad Shah , Janaka Edirisinghe
We investigate the monetary policy transmission mechanism in Sri Lanka, which is gradually transitioning towards a flexible inflation targeting framework and has adopted this approach on a de facto basis. Using monthly data from 2020 to 2023, the findings highlight the interest rate channel as playing a more significant role than the exchange rate channel in transmitting the policy interventions to the final output. Key results suggest that under a strict inflation targeting regime, monetary transmission is more potent compared to a flexible inflation targeting framework. Therefore, to enhance monetary policy effectiveness, Sri Lanka should focus on the robust implementation of an inflation-targeting regime.
{"title":"Revisiting monetary policy transmission in a new inflation targeting country","authors":"Bhavesh Garg , Sayar Ahmad Shah , Janaka Edirisinghe","doi":"10.1016/j.asieco.2025.102026","DOIUrl":"10.1016/j.asieco.2025.102026","url":null,"abstract":"<div><div>We investigate the monetary policy transmission mechanism in Sri Lanka, which is gradually transitioning towards a flexible inflation targeting framework and has adopted this approach on a <em>de facto</em> basis. Using monthly data from 2020 to 2023, the findings highlight the interest rate channel as playing a more significant role than the exchange rate channel in transmitting the policy interventions to the final output. Key results suggest that under a strict inflation targeting regime, monetary transmission is more potent compared to a flexible inflation targeting framework. Therefore, to enhance monetary policy effectiveness, Sri Lanka should focus on the robust implementation of an inflation-targeting regime.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"100 ","pages":"Article 102026"},"PeriodicalIF":3.4,"publicationDate":"2025-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144920073","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-24DOI: 10.1016/j.asieco.2025.102031
Lilian Li , Yuansong Zhang , Juntao Ye , Mingwang Cheng
This study investigates how government-conducted vocational training (GVT) shapes employment outcomes for rural-to-urban migrant workers in China through human and social capital frameworks. Using nationally representative survey data, we demonstrate that GVT participation raises workers' employment rate by 4.6 % and improves employment quality by 3.674, confirming expanded-capacity and enhanced-quality effects. Mechanistic evidence shows these impacts operate through strengthened vocational skills and expanded social networks. Moreover, GVT disproportionately benefits low-educated workers, further narrowing their employment gap relative to high-educated groups. This differential effectiveness positions GVT as a backstop protection mechanism in labor market stratification. Our findings underscore the necessity of developing precision training systems with modular skill certifications and network-building components. Policy designs should prioritize adaptable curricula for low-educated cohorts to maximize GVT's equalizing potential during China's economic transition.
{"title":"Who benefits from government-conducted vocational training? Evidence from employment of rural-to-urban migrant workers in China","authors":"Lilian Li , Yuansong Zhang , Juntao Ye , Mingwang Cheng","doi":"10.1016/j.asieco.2025.102031","DOIUrl":"10.1016/j.asieco.2025.102031","url":null,"abstract":"<div><div>This study investigates how government-conducted vocational training (GVT) shapes employment outcomes for rural-to-urban migrant workers in China through human and social capital frameworks. Using nationally representative survey data, we demonstrate that GVT participation raises workers' employment rate by 4.6 % and improves employment quality by 3.674, confirming expanded-capacity and enhanced-quality effects. Mechanistic evidence shows these impacts operate through strengthened vocational skills and expanded social networks. Moreover, GVT disproportionately benefits low-educated workers, further narrowing their employment gap relative to high-educated groups. This differential effectiveness positions GVT as a backstop protection mechanism in labor market stratification. Our findings underscore the necessity of developing precision training systems with modular skill certifications and network-building components. Policy designs should prioritize adaptable curricula for low-educated cohorts to maximize GVT's equalizing potential during China's economic transition.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"101 ","pages":"Article 102031"},"PeriodicalIF":3.4,"publicationDate":"2025-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144933729","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-23DOI: 10.1016/j.asieco.2025.102028
Vadakke Cholakkakath Sabeer
This paper re-examines the trade impact of emigrants from China and India, two of the largest countries in both global trade and emigration, by addressing methodological limitations in the existing literature and expanding the analysis through disaggregation by product categories and destination types. Using a structural gravity model estimated via Poisson Pseudo Maximum Likelihood (PPML), the study analyses both exports and imports, disaggregated by stages of processing. It draws on bilateral trade data from CEPII and WITS and migrant stock data from the United Nations (1990–2020). Contrary to prior studies, the results do not support a pro-export effect of emigrants from either country at the aggregate level, suggesting earlier findings may reflect methodological biases. However, Indian emigrants are positively associated with exports of consumer and capital goods, while Chinese emigrants show no significant effects across categories. Disaggregation by destination reveals that emigrants in developed countries are more strongly linked to trade-substituting dynamics, potentially reflecting roles in production relocation or import substitution. In contrast, Indian emigrants in developing destinations appear more pro-trade, operating through preference and information channels that ease access to foreign markets and technologies. The null aggregate effects underscore the importance of methodological rigor and suggest a need for targeted policy efforts to harness emigrant networks more effectively. Disaggregated evidence offers more nuanced insights to guide such strategies.
{"title":"International migration and trade: A comparative analysis of China and India","authors":"Vadakke Cholakkakath Sabeer","doi":"10.1016/j.asieco.2025.102028","DOIUrl":"10.1016/j.asieco.2025.102028","url":null,"abstract":"<div><div>This paper re-examines the trade impact of emigrants from China and India, two of the largest countries in both global trade and emigration, by addressing methodological limitations in the existing literature and expanding the analysis through disaggregation by product categories and destination types. Using a structural gravity model estimated via Poisson Pseudo Maximum Likelihood (PPML), the study analyses both exports and imports, disaggregated by stages of processing. It draws on bilateral trade data from CEPII and WITS and migrant stock data from the United Nations (1990–2020). Contrary to prior studies, the results do not support a pro-export effect of emigrants from either country at the aggregate level, suggesting earlier findings may reflect methodological biases. However, Indian emigrants are positively associated with exports of consumer and capital goods, while Chinese emigrants show no significant effects across categories. Disaggregation by destination reveals that emigrants in developed countries are more strongly linked to trade-substituting dynamics, potentially reflecting roles in production relocation or import substitution. In contrast, Indian emigrants in developing destinations appear more pro-trade, operating through preference and information channels that ease access to foreign markets and technologies. The null aggregate effects underscore the importance of methodological rigor and suggest a need for targeted policy efforts to harness emigrant networks more effectively. Disaggregated evidence offers more nuanced insights to guide such strategies.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"100 ","pages":"Article 102028"},"PeriodicalIF":3.4,"publicationDate":"2025-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144913029","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-22DOI: 10.1016/j.asieco.2025.102030
Runze Gong , Weixing Wu , Lina Zhang
We investigate the impact of economic disparity and cultural difference between destination and origin areas on the family migration of rural migrant workers. Based on the 2017 China Migrants Dynamic Survey (CMDS) data, our paper finds that economic disparity and cultural difference between the two regions have positive and negative impacts on the family migration of rural migrant workers, respectively. Specifically, economic disparity enhances the income and settlement intentions of rural migrant workers, whereas cultural difference reduces them. Our evidence suggests that the positive effect of the economic disparity on family-based migration is weaker in destinations with high hukou barriers and high housing prices. Conversely, the negative association between cultural difference and family migration of rural migrant workers is substantially weaker for migrants with greater social engagement and human capital.
{"title":"Regional disparity, cultural difference and family migration of rural migrant workers","authors":"Runze Gong , Weixing Wu , Lina Zhang","doi":"10.1016/j.asieco.2025.102030","DOIUrl":"10.1016/j.asieco.2025.102030","url":null,"abstract":"<div><div>We investigate the impact of economic disparity and cultural difference between destination and origin areas on the family migration of rural migrant workers. Based on the 2017 China Migrants Dynamic Survey (CMDS) data, our paper finds that economic disparity and cultural difference between the two regions have positive and negative impacts on the family migration of rural migrant workers, respectively. Specifically, economic disparity enhances the income and settlement intentions of rural migrant workers, whereas cultural difference reduces them. Our evidence suggests that the positive effect of the economic disparity on family-based migration is weaker in destinations with high hukou barriers and high housing prices. Conversely, the negative association between cultural difference and family migration of rural migrant workers is substantially weaker for migrants with greater social engagement and human capital.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"100 ","pages":"Article 102030"},"PeriodicalIF":3.4,"publicationDate":"2025-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144892038","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-21DOI: 10.1016/j.asieco.2025.102029
Dongxia Wei
Migrants may acquire non-cognitive skills during their early life in cities, which are crucial for entrepreneurship. Using individual-level data from the 2017 China Migrants Dynamic Survey, we demonstrate that migrants arrive in cities at a younger age are more likely to engage in entrepreneurial activities and subsequently gain higher income. This effect is robust across groups with various education, Hukou types, genders, and industrial sectors, and more pronounced in cities with higher administrative ranks, a larger number of enterprises, and higher settlement threshold, or among migrants entering different dialect areas. The mechanism analysis shows that it is driven by improving migrants’ non-cognitive abilities through city life experience at a younger age, including social activity, social integration, open-mindedness, and development motive.
{"title":"Learning to be an entrepreneur in cities","authors":"Dongxia Wei","doi":"10.1016/j.asieco.2025.102029","DOIUrl":"10.1016/j.asieco.2025.102029","url":null,"abstract":"<div><div>Migrants may acquire non-cognitive skills during their early life in cities, which are crucial for entrepreneurship. Using individual-level data from the 2017 China Migrants Dynamic Survey, we demonstrate that migrants arrive in cities at a younger age are more likely to engage in entrepreneurial activities and subsequently gain higher income. This effect is robust across groups with various education, <em>Hukou</em> types, genders, and industrial sectors, and more pronounced in cities with higher administrative ranks, a larger number of enterprises, and higher settlement threshold, or among migrants entering different dialect areas. The mechanism analysis shows that it is driven by improving migrants’ non-cognitive abilities through city life experience at a younger age, including social activity, social integration, open-mindedness, and development motive.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"101 ","pages":"Article 102029"},"PeriodicalIF":3.4,"publicationDate":"2025-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144933730","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-20DOI: 10.1016/j.asieco.2025.102027
Chuanzhi Ye
Changes in the global economic situation since 2020 have exacerbated the volatility of China's macroeconomic growth from 2020 to 2023, providing conditions for empirical research on corporate finance using natural experiments. This paper selects the period from 2018 to 2023 as the research period. Based on the sensitivity of industries to macroeconomic fluctuations, 2327 sample companies listed on the Shanghai and Shenzhen stock exchanges during this period are divided into defensive industries and cyclical industries. This paper empirically studies the impact of macroeconomic fluctuations on the cash holdings of listed companies in defensive and cyclical industries. The research results show that the cash holdings of defensive industries remain stable during the entire macroeconomic fluctuation period, while cyclical industries significantly increase their cash holdings compared to economically stable periods. The trade-off theory and the precautionary motive for cash can well explain the cash holdings of listed companies in defensive and cyclical industries during economic fluctuations.
{"title":"The impact of macroeconomic fluctuations on cash holdings of listed companies in China","authors":"Chuanzhi Ye","doi":"10.1016/j.asieco.2025.102027","DOIUrl":"10.1016/j.asieco.2025.102027","url":null,"abstract":"<div><div>Changes in the global economic situation since 2020 have exacerbated the volatility of China's macroeconomic growth from 2020 to 2023, providing conditions for empirical research on corporate finance using natural experiments. This paper selects the period from 2018 to 2023 as the research period. Based on the sensitivity of industries to macroeconomic fluctuations, 2327 sample companies listed on the Shanghai and Shenzhen stock exchanges during this period are divided into defensive industries and cyclical industries. This paper empirically studies the impact of macroeconomic fluctuations on the cash holdings of listed companies in defensive and cyclical industries. The research results show that the cash holdings of defensive industries remain stable during the entire macroeconomic fluctuation period, while cyclical industries significantly increase their cash holdings compared to economically stable periods. The trade-off theory and the precautionary motive for cash can well explain the cash holdings of listed companies in defensive and cyclical industries during economic fluctuations.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"100 ","pages":"Article 102027"},"PeriodicalIF":3.4,"publicationDate":"2025-08-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144879419","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the relationship between internet usage and poverty rates in Indonesia by presenting a Two-Sector, Two-Region model, where both urban and rural areas have industrial and agricultural sectors. Using panel data from 2009 to 2022, we classified Indonesia’s 32 provinces as urban or rural areas to analyze whether increased internet usage impacts poverty alleviation differently between these regions. Poverty alleviation in Indonesia was directly correlated with rising internet usage. However, this alleviation is situated primarily in urban areas. This finding aligns closely with the predictions of our model. Internet penetration is near saturation in urban areas, where the industrial sector dominates, limiting its overall effect. Conversely, in rural areas, where the agricultural sector is more prevalent and there remains significant capacity for Internet penetration, increased Internet usage is expected to impact poverty reduction substantially. These results suggest that, particularly in provinces with low urbanization rates, the expansion of Internet infrastructure can serve as an effective tool for poverty alleviation policies.
{"title":"The internet and poverty alleviation in Indonesia: Urban-rural disparities in a dual economy","authors":"Kazuhiko Yokota , Yui Komaki , Ayano Komori , Saki Nagasawa , Satoshi Okuaki","doi":"10.1016/j.asieco.2025.102024","DOIUrl":"10.1016/j.asieco.2025.102024","url":null,"abstract":"<div><div>This study investigates the relationship between internet usage and poverty rates in Indonesia by presenting a Two-Sector, Two-Region model, where both urban and rural areas have industrial and agricultural sectors. Using panel data from 2009 to 2022, we classified Indonesia’s 32 provinces as urban or rural areas to analyze whether increased internet usage impacts poverty alleviation differently between these regions. Poverty alleviation in Indonesia was directly correlated with rising internet usage. However, this alleviation is situated primarily in urban areas. This finding aligns closely with the predictions of our model. Internet penetration is near saturation in urban areas, where the industrial sector dominates, limiting its overall effect. Conversely, in rural areas, where the agricultural sector is more prevalent and there remains significant capacity for Internet penetration, increased Internet usage is expected to impact poverty reduction substantially. These results suggest that, particularly in provinces with low urbanization rates, the expansion of Internet infrastructure can serve as an effective tool for poverty alleviation policies.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"100 ","pages":"Article 102024"},"PeriodicalIF":3.4,"publicationDate":"2025-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144893382","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-18DOI: 10.1016/j.asieco.2025.102020
Aslı Togan , Sübidey Togan
The paper argues that the attainment and maintenance of external debt sustainability is challenging, and that it is not a choice. A country whose government fails to respect external debt sustainability would eventually default on its external debt. But in the case of default the penalty is the inability to borrow in international markets, and hence the cost of defaulting could be extremely high. The paper emphasizes the importance of having a functioning external debt governance system that will reduce the probability of explosive debt trajectories over time requiring solutions to the following three issues. First, in policy circles minds should be clear about the importance of achieving sustainability of external debt. Second, policy makers have to agree on the way to attain external debt sustainability. Based on empirical analysis, the paper recommends implementing legal reforms, reducing inflation, and devaluing when necessary the real exchange rate. Finally, the country needs to find a way to translate the concept of external debt sustainability into policy technicality. In particular, such a translation requires the development of an institution that when established will enable the country to avoid facing external debt problems over time. The paper proposes the creation of an independent public advisory body, the External Debt Council, equipped with adequate resources to ensure sustainable debt management, and building and sustaining social consensus in the society on the achievement of external debt sustainability that will bind not only the officials in the present government but also the officials in future governments.
{"title":"Reforming external debt governance in Turkey to reach external debt sustainability","authors":"Aslı Togan , Sübidey Togan","doi":"10.1016/j.asieco.2025.102020","DOIUrl":"10.1016/j.asieco.2025.102020","url":null,"abstract":"<div><div>The paper argues that the attainment and maintenance of external debt sustainability is challenging, and that it is not a choice. A country whose government fails to respect external debt sustainability would eventually default on its external debt. But in the case of default the penalty is the inability to borrow in international markets, and hence the cost of defaulting could be extremely high. The paper emphasizes the importance of having a functioning external debt governance system that will reduce the probability of explosive debt trajectories over time requiring solutions to the following three issues. First, in policy circles minds should be clear about the importance of achieving sustainability of external debt. Second, policy makers have to agree on the way to attain external debt sustainability. Based on empirical analysis, the paper recommends implementing legal reforms, reducing inflation, and devaluing when necessary the real exchange rate. Finally, the country needs to find a way to translate the concept of external debt sustainability into policy technicality. In particular, such a translation requires the development of an institution that when established will enable the country to avoid facing external debt problems over time. The paper proposes the creation of an independent public advisory body, the External Debt Council, equipped with adequate resources to ensure sustainable debt management, and building and sustaining social consensus in the society on the achievement of external debt sustainability that will bind not only the officials in the present government but also the officials in future governments.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"101 ","pages":"Article 102020"},"PeriodicalIF":3.4,"publicationDate":"2025-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145049591","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-18DOI: 10.1016/j.asieco.2025.102025
Yuanling Li , Xuetong Hu , Xudong Liu , Zhongliang Dai , Zhongyi Xiao
This study explores the relationship between the integration of Confucian ethical norms into audit firm culture and the incidence of corporate financial restatements. By proposing two competing theoretical frameworks, we analyze the differing impacts of the five core Confucian virtues on the probability of restatements. Using panel data from Chinese listed companies between 2009 and 2021, we find a significant negative correlation between the Confucian ethical values of audit firms and the frequency of financial restatements by their clients. After addressing endogeneity issues through an instrumental variable approach and conducting sensitivity analysis with alternative variable specifications, this relationship remains robust. Mechanism analysis reveals that Confucian philosophy effectively mitigates financial restatement behavior in audit firms through three key channels: corporate transparency, audit quality, and organizational resilience.
{"title":"The role of Confucianism in audit firms in mitigating corporate financial restatements","authors":"Yuanling Li , Xuetong Hu , Xudong Liu , Zhongliang Dai , Zhongyi Xiao","doi":"10.1016/j.asieco.2025.102025","DOIUrl":"10.1016/j.asieco.2025.102025","url":null,"abstract":"<div><div>This study explores the relationship between the integration of Confucian ethical norms into audit firm culture and the incidence of corporate financial restatements. By proposing two competing theoretical frameworks, we analyze the differing impacts of the five core Confucian virtues on the probability of restatements. Using panel data from Chinese listed companies between 2009 and 2021, we find a significant negative correlation between the Confucian ethical values of audit firms and the frequency of financial restatements by their clients. After addressing endogeneity issues through an instrumental variable approach and conducting sensitivity analysis with alternative variable specifications, this relationship remains robust. Mechanism analysis reveals that Confucian philosophy effectively mitigates financial restatement behavior in audit firms through three key channels: corporate transparency, audit quality, and organizational resilience.</div></div>","PeriodicalId":47583,"journal":{"name":"Journal of Asian Economics","volume":"100 ","pages":"Article 102025"},"PeriodicalIF":3.4,"publicationDate":"2025-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144895070","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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