FINANCIAL REVIEW最新文献

We examine how exposure to firm-level political risk (PRISK) affects corporate earnings management (EM). We present robust evidence that heightened PRISK leads to an increase in real earnings management (REM); however, we do not find consistent evidence supporting an increase in accrual earnings management (AEM). Our results remain robust when employing difference-in-differences (DiD), two-stage least squares (2SLS), propensity score matching (PSM), and additional methods designed to address endogeneity concerns. Additionally, we document that firm-level political polarization exposure (PPE) intensifies the PRISK-REM relationship. More interestingly, the financial market is relatively forgiving to firms that engage in REM activities in the face of both high PRISK and high PPE. Our findings provide novel insights into how PRISK shapes the financial reporting quality, and the critical role PPE plays in this relationship.

Using environmental violations data of listed firms in China from 2011 to 2018, we examine the effect of public attention on corporate environmental violations. Our findings suggest that public attention to the environment in the city where a firm is located can reduce the probability and frequency of the firm's environmental violations. Furthermore, this effect is more salient for firms that contribute more to the economy and those in cities with higher economic pressure. We identify three potential mechanisms: public environmental participation, governments’ environmental governance, and firms’ environmental awareness. Additional tests show that firms located in areas with higher public environmental attention experience a larger stock price impact and higher financial constraint after committing environmental violations. Finally, public environmental attention has a spillover effect on firms in adjacent cities. This paper reveals a new determinant of corporate environmental violations and provides important implications for environmental governance.

We analyze the racial gap in equity market participation using a two-part fractional regression and find that defined contribution (DC) plans provide a particularly powerful gateway to equities for Black households. Using a nonlinear decomposition, the Black–White gap is largely explained by differential endowments: foremost lower DC plan participation among Black households. Further analysis reveals that lower DC plan participation by Black households is driven primarily by limited access rather than participation decisions. More speculatively, labor market discrimination impeding Black households’ access to jobs that offer DC plans could reduce participation in equity markets.

This study examines the impact of CFO gender on the use of relationship lending. Building on gender socialization theory, we hypothesize that female CFOs, driven by communal values and a focus on stakeholder balance, are more inclined to utilize relationship lending to reduce conflicts between creditors and investors. We find that firms with female CFOs exhibit stronger lending relationships, including higher relationship loan frequency and amounts. These findings are robust to various model specifications, including difference-in-differences and instrumental variable approaches. Additionally, female CFOs are more likely to maintain borrowing relationships with lenders even after transitioning to different firms, suggesting female CFOs maintain personal relations with lenders. Loan purpose analysis shows that female CFOs avoid using relationship loans for risky activities such as mergers and acquisitions, takeovers, or leveraged buyouts. Collectively, these findings provide new evidence of the role of gender in shaping corporate financial practices and decision-making.

Proposing a new spillover/connectedness index based on data-determined structural vector autoregression (SVAR) with non-Gaussian residuals, this paper investigates nationwide housing market spillovers via transaction volumes among China's largest cities. Significant daily information transmission is documented across geographically dispersed cities, with a pattern that the first-tier cities generally play a more important role than others in the spillovers. Economic factors (e.g., income) and human capital (e.g., education) are significant determinants of the spillovers. The pattern based on the new spillover index is also substantially better explained by fundamentals than those based on the widely used Diebold-Yilmaz spillover index.