Pub Date : 2025-07-23DOI: 10.1016/j.ememar.2025.101341
Yuyang Chen , Shuyi Zhu
This study investigates how the integrity atmosphere in a firm's local area affects the firm's cost of equity. Using the Credit Demonstration City Construction program in China as a quasi-natural experiment, we find that firms headquartered in pilot cities enjoy lower equity financing costs following implementation of the program. The results can be attributed to improved information-disclosure quality, decreased agency costs, and better corporate social responsibility performance. Further analyses show that the reduction in the cost of equity is significant for firms whose monitoring environments are weak and those that operate in industries that depend heavily on equity financing.
{"title":"Integrity atmosphere and the cost of equity: Evidence from China","authors":"Yuyang Chen , Shuyi Zhu","doi":"10.1016/j.ememar.2025.101341","DOIUrl":"10.1016/j.ememar.2025.101341","url":null,"abstract":"<div><div>This study investigates how the integrity atmosphere in a firm's local area affects the firm's cost of equity. Using the Credit Demonstration City Construction program in China as a quasi-natural experiment, we find that firms headquartered in pilot cities enjoy lower equity financing costs following implementation of the program. The results can be attributed to improved information-disclosure quality, decreased agency costs, and better corporate social responsibility performance. Further analyses show that the reduction in the cost of equity is significant for firms whose monitoring environments are weak and those that operate in industries that depend heavily on equity financing.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101341"},"PeriodicalIF":5.6,"publicationDate":"2025-07-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144704837","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-21DOI: 10.1016/j.ememar.2025.101333
Felipe Beltrán
This paper analyzes how monetary policy surprises in the U.S. affect emerging market economies (EMs) by focusing on the transmission through the real exchange rate (RER) and country spreads (EMBI). To do so, I disentangle U.S. interest rate movements between both a pure monetary policy shock and an information shock; while the former is constructed based on high-frequency movements of interest rates around Federal Open Market Committee (FOMC) announcements, the latter builds from employment releases. I quantify the relative impacts using a structural VAR (SVAR) model with external instruments. The results suggest that a pure monetary policy shock produces a persistent appreciation of the RER in the U.S. coupled with an increase of the EMBI, which induces contractionary effects in the real sector of EMs. In contrast, an information shock does not necessarily produce such contractionary effects in EMs. These results contribute to the literature by identifying the specific drivers behind Fed announcements and its transmission channels to EMs.
{"title":"Global monetary policy surprises and their transmission to emerging market economies: An external VAR analysis","authors":"Felipe Beltrán","doi":"10.1016/j.ememar.2025.101333","DOIUrl":"10.1016/j.ememar.2025.101333","url":null,"abstract":"<div><div>This paper analyzes how monetary policy surprises in the U.S. affect emerging market economies (EMs) by focusing on the transmission through the real exchange rate (RER) and country spreads (EMBI). To do so, I disentangle U.S. interest rate movements between both a pure monetary policy shock and an information shock; while the former is constructed based on high-frequency movements of interest rates around Federal Open Market Committee (FOMC) announcements, the latter builds from employment releases. I quantify the relative impacts using a structural VAR (SVAR) model with external instruments. The results suggest that a pure monetary policy shock produces a persistent appreciation of the RER in the U.S. coupled with an increase of the EMBI, which induces contractionary effects in the real sector of EMs. In contrast, an information shock does not necessarily produce such contractionary effects in EMs. These results contribute to the literature by identifying the specific drivers behind Fed announcements and its transmission channels to EMs.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101333"},"PeriodicalIF":5.6,"publicationDate":"2025-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144679630","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-18DOI: 10.1016/j.ememar.2025.101338
Adrian Alter, Bashar Hlayhel, Thomas Kroen, Thomas Piontek
This paper assesses the state and resilience of corporate and banking sectors in the Middle East and North Africa (MENA) in a “higher-for-longer” interest rate environment using granular micro data to conduct the first cross-country corporate and banking sector stress tests for the MENA region. The results suggest that corporate sector debt at risk may increase sizably from 13.5 in 2023 to nearly 33 % of total corporate debt by the end of 2025. Banking systems would be broadly resilient in an adverse scenario featuring higher interest rates, corporate sector stress, and rising liquidity pressures with Tier-1 capital ratios declining by 3.4 percentage points in the Gulf Cooperation Council (GCC) countries and 4.5 % age points in non-GCC MENA countries. In the cross-section of banks, there are pockets of vulnerabilities as banks with higher ex-ante vulnerabilities and state-owned banks suffer greater losses. While manageable, the capital losses in the adverse scenario could limit lending and adversely impact growth.
{"title":"Are higher interest rates a concern for financial stability in MENA?","authors":"Adrian Alter, Bashar Hlayhel, Thomas Kroen, Thomas Piontek","doi":"10.1016/j.ememar.2025.101338","DOIUrl":"10.1016/j.ememar.2025.101338","url":null,"abstract":"<div><div>This paper assesses the state and resilience of corporate and banking sectors in the Middle East and North Africa (MENA) in a “higher-for-longer” interest rate environment using granular micro data to conduct the first cross-country corporate and banking sector stress tests for the MENA region. The results suggest that corporate sector debt at risk may increase sizably from 13.5 in 2023 to nearly 33 % of total corporate debt by the end of 2025. Banking systems would be broadly resilient in an adverse scenario featuring higher interest rates, corporate sector stress, and rising liquidity pressures with Tier-1 capital ratios declining by 3.4 percentage points in the Gulf Cooperation Council (GCC) countries and 4.5 % age points in non-GCC MENA countries. In the cross-section of banks, there are pockets of vulnerabilities as banks with higher ex-ante vulnerabilities and state-owned banks suffer greater losses. While manageable, the capital losses in the adverse scenario could limit lending and adversely impact growth.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"69 ","pages":"Article 101338"},"PeriodicalIF":4.6,"publicationDate":"2025-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144781879","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-12DOI: 10.1016/j.ememar.2025.101336
Yaozhi Chen , Honghong Wei
We examine the impact of overseas experiences on second-generation successors in family enterprises from a cultural learning perspective. By manually curating data, we find that these successors significantly enhance both the quantity and quality of corporate innovation. Mechanism tests indicate that overseas experiences, through cultural learning, enhance risk-taking, confidence, and reduce seniority culture, fostering innovation. Furthermore, heterogeneity tests show that while these experiences hinder innovation in company locations with strong Confucian culture, they enhance it with high social openness. The results remain robust under a series of robustness and endogeneity tests.
{"title":"Overseas experience and corporate innovation: Second-generation successors in family enterprises","authors":"Yaozhi Chen , Honghong Wei","doi":"10.1016/j.ememar.2025.101336","DOIUrl":"10.1016/j.ememar.2025.101336","url":null,"abstract":"<div><div>We examine the impact of overseas experiences on second-generation successors in family enterprises from a cultural learning perspective. By manually curating data, we find that these successors significantly enhance both the quantity and quality of corporate innovation. Mechanism tests indicate that overseas experiences, through cultural learning, enhance risk-taking, confidence, and reduce seniority culture, fostering innovation. Furthermore, heterogeneity tests show that while these experiences hinder innovation in company locations with strong Confucian culture, they enhance it with high social openness. The results remain robust under a series of robustness and endogeneity tests.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101336"},"PeriodicalIF":5.6,"publicationDate":"2025-07-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144634113","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-12DOI: 10.1016/j.ememar.2025.101339
Sun-ae Cho , Sangil Kim , Won-Wook Choi
This study examines the heterogeneity among controlling shareholders on corporate tax avoidance. Findings reveal that controlling shareholders are divided on tax avoidance behavior, which leads to less tax avoidance; however, they are unified in earnings management and R&D expenditure. Additional analysis shows that their divided interests are influenced by several factors, such as shareholder type, related-party transactions, family business status, Chaebol affiliation, and firm maturity. This study underscores that controlling shareholders, once considered a single entity, encompass individuals who counterbalance each other's interests; thus, reassessing their corporate governance role is necessary.
{"title":"Unified or divided? Conflicting interests of controlling shareholders in corporate tax avoidance","authors":"Sun-ae Cho , Sangil Kim , Won-Wook Choi","doi":"10.1016/j.ememar.2025.101339","DOIUrl":"10.1016/j.ememar.2025.101339","url":null,"abstract":"<div><div>This study examines the heterogeneity among controlling shareholders on corporate tax avoidance. Findings reveal that controlling shareholders are divided on tax avoidance behavior, which leads to less tax avoidance; however, they are unified in earnings management and R&D expenditure. Additional analysis shows that their divided interests are influenced by several factors, such as shareholder type, related-party transactions, family business status, Chaebol affiliation, and firm maturity. This study underscores that controlling shareholders, once considered a single entity, encompass individuals who counterbalance each other's interests; thus, reassessing their corporate governance role is necessary.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101339"},"PeriodicalIF":5.6,"publicationDate":"2025-07-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144679629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-07DOI: 10.1016/j.ememar.2025.101332
Mohammadreza Hassanpour, Amineh Mahmoudzadeh, Seyed Ali Madanizadeh
This study examines how exchange rate (FX) fluctuations affect bank lending, focusing on the moderating role of liquidity. Using monthly data from Iranian banks (2007–2018), we exploit a fixed official FX rate regime to isolate extensive-margin adjustments. A 10% depreciation reduces real loan growth by 0.4 percentage points—about 30% of average monthly growth. The effect is stronger for banks with low liquidity and high non-performing loans. Local-currency and private-sector loans are most affected. The findings, which are robust to IV and GMM methods, underscore the importance of liquidity buffers in mitigating lending contractions during FX shocks and can inform macroprudential policy in emerging markets.
{"title":"Unraveling exchange rate shocks: Disentangling extensive and intensive effects on the lending channel","authors":"Mohammadreza Hassanpour, Amineh Mahmoudzadeh, Seyed Ali Madanizadeh","doi":"10.1016/j.ememar.2025.101332","DOIUrl":"10.1016/j.ememar.2025.101332","url":null,"abstract":"<div><div>This study examines how exchange rate (FX) fluctuations affect bank lending, focusing on the moderating role of liquidity. Using monthly data from Iranian banks (2007–2018), we exploit a fixed official FX rate regime to isolate extensive-margin adjustments. A 10% depreciation reduces real loan growth by 0.4 percentage points—about 30% of average monthly growth. The effect is stronger for banks with low liquidity and high non-performing loans. Local-currency and private-sector loans are most affected. The findings, which are robust to IV and GMM methods, underscore the importance of liquidity buffers in mitigating lending contractions during FX shocks and can inform macroprudential policy in emerging markets.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101332"},"PeriodicalIF":5.6,"publicationDate":"2025-07-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144653031","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-04DOI: 10.1016/j.ememar.2025.101325
Liangliang Zhang , Li Guo , Weiping Zhang , Tingting Ye , Qing Yang , Ruyan Tian
Stock market index enhancement remains a widely adopted strategy among hedge funds within China’s financial market. The underlying algorithm aims to fine-tune the weightings of individual stocks within a benchmark index, thereby enhancing the performance of the target portfolio relative to its original benchmark.
Our innovative numerical framework stands out for its generality, rapidity, and theoretical convergence to the global optimum under reasonable assumptions. It also shines in tackling high-dimensional portfolio optimization problems. Empirical results demonstrate that the stock market index enhancement strategy, as computed by our algorithm, consistently delivers stable and significant excess returns, outperforming existing benchmarks.
{"title":"Stock market index enhancement via machine learning","authors":"Liangliang Zhang , Li Guo , Weiping Zhang , Tingting Ye , Qing Yang , Ruyan Tian","doi":"10.1016/j.ememar.2025.101325","DOIUrl":"10.1016/j.ememar.2025.101325","url":null,"abstract":"<div><div>Stock market index enhancement remains a widely adopted strategy among hedge funds within China’s financial market. The underlying algorithm aims to fine-tune the weightings of individual stocks within a benchmark index, thereby enhancing the performance of the target portfolio relative to its original benchmark.</div><div>Our innovative numerical framework stands out for its generality, rapidity, and theoretical convergence to the global optimum under reasonable assumptions. It also shines in tackling high-dimensional portfolio optimization problems. Empirical results demonstrate that the stock market index enhancement strategy, as computed by our algorithm, consistently delivers stable and significant excess returns, outperforming existing benchmarks.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101325"},"PeriodicalIF":5.6,"publicationDate":"2025-07-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144570251","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-03DOI: 10.1016/j.ememar.2025.101337
Boakye Dankwah , Emmanuel Joel Aikins Abakah , Elikplimi Komla Agbloyor , Chi-Chuan Lee
Using the novel quantile vector autoregression (QVAR) approach, the present study investigates the dynamics of the spillovers and connectedness among Africa's emerging equity markets and the international equity and alternative markets under different market conditions from 2012 to 2022. More specifically, the study analyzes the shock transmission between 12 of Africa's emerging and frontier markets, 4 international equity markets, and 5 alternative emerging assets under both normal and extreme market conditions. The study finds asymmetric spillovers and connectedness among Africa's equity markets and the international markets across the different market conditions. Moreover, it identifies close symmetry in the return and volatility spillovers and connectedness under bullish and bearish market conditions. The findings also reveal that Africa's markets are more connected with conventional assets than with emerging alternative assets. Furthermore, the study observes a low degree of connectedness among Africa's equity markets across the analyzed market conditions, signifying the low level of integration of the markets. These results suggest the potential diversification benefits of the assessed markets for portfolio investors under normal market conditions but fail to evidence a hedge or safe haven for investors during bad times because the volume of the spillovers and connectedness with other assets increases as conditions become fiercer.
{"title":"Dynamic connections between Africa's emerging equity markets and global financial assets","authors":"Boakye Dankwah , Emmanuel Joel Aikins Abakah , Elikplimi Komla Agbloyor , Chi-Chuan Lee","doi":"10.1016/j.ememar.2025.101337","DOIUrl":"10.1016/j.ememar.2025.101337","url":null,"abstract":"<div><div>Using the novel quantile vector autoregression (QVAR) approach, the present study investigates the dynamics of the spillovers and connectedness among Africa's emerging equity markets and the international equity and alternative markets under different market conditions from 2012 to 2022. More specifically, the study analyzes the shock transmission between 12 of Africa's emerging and frontier markets, 4 international equity markets, and 5 alternative emerging assets under both normal and extreme market conditions. The study finds asymmetric spillovers and connectedness among Africa's equity markets and the international markets across the different market conditions. Moreover, it identifies close symmetry in the return and volatility spillovers and connectedness under bullish and bearish market conditions. The findings also reveal that Africa's markets are more connected with conventional assets than with emerging alternative assets. Furthermore, the study observes a low degree of connectedness among Africa's equity markets across the analyzed market conditions, signifying the low level of integration of the markets. These results suggest the potential diversification benefits of the assessed markets for portfolio investors under normal market conditions but fail to evidence a hedge or safe haven for investors during bad times because the volume of the spillovers and connectedness with other assets increases as conditions become fiercer.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101337"},"PeriodicalIF":5.6,"publicationDate":"2025-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144596372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-30DOI: 10.1016/j.ememar.2025.101334
Jose E. Gomez-Gonzalez , Jorge M. Uribe , Oscar M. Valencia , Bum Kim
The post-COVID surge in public debt has intensified the financial interdependence between sovereigns and banks in emerging market economies, where domestic financial institutions have increasingly financed government borrowing. This paper examines the interaction between sovereign and banking sector risk through two complementary empirical strategies. First, using daily data from 2005 to 2023 for Brazil, Chile, Colombia, Mexico, and Peru, we estimate risk spillovers between sovereign CDS spreads and bank stock returns at different points of the distribution. We find that spillovers are economically significant—particularly in the tails—and that two-way risk transmission persists regardless of banks' exposure to sovereign debt. Second, drawing on panel data for 111 banks across 30 countries, we study how changes in sovereign risk affect the downside market risk of banks, measured as the 5th percentile of their daily stock return distribution. Results from dynamic panel regressions reveal a strong and robust link between sovereign and bank downside risk, driven primarily by common macroeconomic shocks rather than by endogenous fragility loops. Notably, at low levels of market stress, moderate exposure to sovereign debt appears to reduce downside risk for banks. These findings underscore the importance of sound regulatory frameworks for sovereign exposure and credible fiscal policies in maintaining financial stability, particularly in emerging market contexts.
{"title":"Doom loops in Latin America","authors":"Jose E. Gomez-Gonzalez , Jorge M. Uribe , Oscar M. Valencia , Bum Kim","doi":"10.1016/j.ememar.2025.101334","DOIUrl":"10.1016/j.ememar.2025.101334","url":null,"abstract":"<div><div>The post-COVID surge in public debt has intensified the financial interdependence between sovereigns and banks in emerging market economies, where domestic financial institutions have increasingly financed government borrowing. This paper examines the interaction between sovereign and banking sector risk through two complementary empirical strategies. First, using daily data from 2005 to 2023 for Brazil, Chile, Colombia, Mexico, and Peru, we estimate risk spillovers between sovereign CDS spreads and bank stock returns at different points of the distribution. We find that spillovers are economically significant—particularly in the tails—and that two-way risk transmission persists regardless of banks' exposure to sovereign debt. Second, drawing on panel data for 111 banks across 30 countries, we study how changes in sovereign risk affect the downside market risk of banks, measured as the 5th percentile of their daily stock return distribution. Results from dynamic panel regressions reveal a strong and robust link between sovereign and bank downside risk, driven primarily by common macroeconomic shocks rather than by endogenous fragility loops. Notably, at low levels of market stress, moderate exposure to sovereign debt appears to reduce downside risk for banks. These findings underscore the importance of sound regulatory frameworks for sovereign exposure and credible fiscal policies in maintaining financial stability, particularly in emerging market contexts.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101334"},"PeriodicalIF":5.6,"publicationDate":"2025-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144535746","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-30DOI: 10.1016/j.ememar.2025.101335
Weiping Li , Hanfang Zhang , Jingjing Xia
Although the impact of retail investor attention on stock market dynamics has been widely studied, its influence on firm-level strategic decisions, such as mergers and acquisitions (M&As), remains largely unexplored. This study investigates the relationship between retail attention and M&A activity using a sample of Chinese A-share listed firms from 2011 to 2022. We find that heightened retail attention can lead to CEO overconfidence due to the self-attribution bias, which in turn results in increased M&A activity. However, these attention-driven acquisitions often prove to be value-destroying, consistent with evidence in prior research that overconfident CEOs tend to make imprudent investment decisions. Furthermore, the positive association between retail attention and M&A is more pronounced in firms facing higher uncertainty but is attenuated in firms subject to stronger external monitoring. These findings underscore the substantial, yet often overlooked, impact of retail investors on corporate strategic decision-making.
{"title":"The perils of popularity: Retail investor attention and misguided M&As","authors":"Weiping Li , Hanfang Zhang , Jingjing Xia","doi":"10.1016/j.ememar.2025.101335","DOIUrl":"10.1016/j.ememar.2025.101335","url":null,"abstract":"<div><div>Although the impact of retail investor attention on stock market dynamics has been widely studied, its influence on firm-level strategic decisions, such as mergers and acquisitions (M&As), remains largely unexplored. This study investigates the relationship between retail attention and M&A activity using a sample of Chinese A-share listed firms from 2011 to 2022. We find that heightened retail attention can lead to CEO overconfidence due to the self-attribution bias, which in turn results in increased M&A activity. However, these attention-driven acquisitions often prove to be value-destroying, consistent with evidence in prior research that overconfident CEOs tend to make imprudent investment decisions. Furthermore, the positive association between retail attention and M&A is more pronounced in firms facing higher uncertainty but is attenuated in firms subject to stronger external monitoring. These findings underscore the substantial, yet often overlooked, impact of retail investors on corporate strategic decision-making.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"68 ","pages":"Article 101335"},"PeriodicalIF":5.6,"publicationDate":"2025-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144549476","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"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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