Emerging Markets Review最新文献

We examine the role of regulatory arbitrage via wealth management products (WMPs) in the determination of lending rates in China. We find WMP yields are positively associated with lending rates whereas the effect of WMP scale varies across bank size. For the big-5 state-owned banks, the negative “transfer-effect” of high-risk high-yield loans into shadow bank credit dominates the positive “funding-cost-effect” of banks becoming more dependent on wholesale funding. For smaller banks, the positive funding-cost effect dominates. Our study provides insights into the role of regulatory arbitrage on asset structure and profit margins in the interest of banks and the regulators.

China adopted amendments allowing companies to redact filings without prior approval in 2016. Leveraging this change as a quasi-nature experiment, we explore whether managers utilize redacted information to withhold bad information in the more lenient regulatory environment. Our investigation uncovers a significant shift in managerial behavior: Since 2016, managers incline to employ redactions to obscure negative news rather than safeguarding proprietary data. Furthermore, we find that the poorer firm performance and a higher cost of equity are associated with the redacted disclosures after 2016, suggesting that investors perceive an increase in firm-specific risk attributed to withholding bad news through redactions.

We posit that geopolitical events that elevate investor risk prompt equity investors to shift capital from emerging markets to safer mature markets, raising the cost of equity capital for firms in emerging economies. Using a sample of 55,900 observations spanning 19 economies from 1987 to 2018, we find that higher geopolitical risk increases the cost of equity capital, on average. We further find that this effect is moderated by country-level institutional context (constraints on the executive branch of government and regulatory arrangements) and firm-level factors (cross-listing in the U.S. and foreign sales).

This study examines whether analysts' informativeness and activities change following regulatory reforms strengthening market surveillance in Korea. Only star analysts provide firm-specific information, particularly for firms with characteristics favored by fund managers. However, such information provision is only significant before the equity market reforms. After the reforms, star analysts tend to cover more financially stable firms with larger sizes, higher earnings, higher stock liquidity, and lower leverage. Difference-in-differences analyses confirm that the synchronicity of chaebol firms with brokerage firms is lower than those without brokerages, indicating that the reforms' effect is mitigated for those with chaebol-affiliated analysts.

We examine the association between board centrality and corporate environmental disclosure using hand-collected data from Chinese-listed firms in heavily polluting industries. We find that board centrality has a positive effect on corporate environmental disclosure. We also show that this positive effect emanates from the critical role of the board in monitoring and resource distribution, and its incentive to promote information transparency. Our results, which are robust to a set of robustness checks, have important implications for both regulators and investors.

This study investigates the impact of state ownership and corporate governance mechanisms on the default risk in China since the sanctioning of default of state-owned firms in 2014. We find a positive relationship between inside ownership and default risk for both state-owned and non-state-owned firms. Institutional ownership serves as a monitoring mechanism that reduces default risk, irrespective of state ownership. Non-state-owned firms with CEO duality have higher default probabilities. Larger boards and more independent boards reduce the default probabilities of state-owned firms. Pandemic effects are less severe for state-owned firms.

Looking at Brazilian privatisations between 1991 and 2018, we investigate how net privatisation prices react to restructuring policies that are implemented before the sale as well as to private ownership structures that emerge at the sale. We innovate by accounting for restructuring and ownership at the same time and also by exploring a unique dataset that covers 139 transactions, mainly built through fieldwork. The paper provides policymakers with a “do's and don'ts” checklist to extract higher value from the sale. The checklist can be used as a policy guideline for new privatisations in Brazil and potentially in other emerging economies.

We examine intraday emerging currency jumps in response to domestic and foreign macroeconomic news announcements, as well as US senior officials' speeches. We use the robust-to-jump volatility estimator to estimate currency jumps. We provide evidence that both emerging currency jumps and cojumps exhibit significant and pronounced responses to US monetary policy and real activity news releases. Moreover, we find that domestic monetary policy and economic real activity data, and senior Federal Reserve officials' speeches, trigger significant jumps in emerging currencies, leading to large currency fluctuations that would disrupt market stability, undermining economic resilience and potentially diminishing ESG ratings.

We investigate the determinants of Venture Capital (VC) firms' activity in Latin America. Using more than 10 thousand funding rounds from 2002 to 2020, we found that the status of the firm determines more frequent and larger deals. Non-redundant connections increase the odds of investing, but redundant ones explain larger amounts. Younger firms participate in more deals, but mature firms invest larger amounts. Geographic proximity explains more investments, but institutional differences (regulatory quality and rule of law) explain larger rounds. We show that forecasting models with those features are useful for asset allocation and investment promotion.

Starting in the 1970s, the US government offered tax credits to US corporations doing business in Puerto Rico under Internal Revenue Code (IRC) Section 936. Firms in the pharmaceutical industry accounted for 50% of tax credits and 20% of employment. The tax credit program was eliminated in 2006, creating a natural experiment on the impact of eliminating corporate tax credits on establishments with high levels of intangible assets such as pharmaceuticals and medical devices. We use panel data on establishments 1990–2017 and a difference in difference methodology to measure the impact of the elimination of the tax credit program. Probability of survival of all manufacturing establishments declined from 90% three years before the elimination of IRC Section 936 to close to 50% three years after. Survival rates of all manufacturing establishments declined during the phaseout and elimination of the tax credit program. Pharmaceutical and medical devices establishments experienced an additional 3.5 to 6.2% decline. Approximately two thirds of the 33% decline in pharmaceutical and medical devices establishments in Puerto Rico can be attributed to the elimination of the tax credit program.