Pub Date : 2026-01-14DOI: 10.1016/j.pacfin.2026.103063
Yasuhiro Iwanaga , Takehide Hirose
This study proposes a new momentum-related signal called “illusion momentum.” We confirm the effect of illusion momentum in both the Japanese and U.S. stock markets, where stocks with high illusion momentum tend to have higher future returns than those with low illusion momentum. The effectiveness of illusion momentum may be rooted in a cognitive bias where investors mistakenly interpret cumulative sum returns as cumulative returns. Notably, the effect of illusion momentum becomes stronger in bear markets, where traditional momentum strategies tend to struggle, and does not exhibit characteristics similar to selling call options. Considering that illusion momentum is also effective within a universe of large-cap stocks, this study has several practical applications.
{"title":"Illusion momentum and cross-sectional returns","authors":"Yasuhiro Iwanaga , Takehide Hirose","doi":"10.1016/j.pacfin.2026.103063","DOIUrl":"10.1016/j.pacfin.2026.103063","url":null,"abstract":"<div><div>This study proposes a new momentum-related signal called “illusion momentum.” We confirm the effect of illusion momentum in both the Japanese and U.S. stock markets, where stocks with high illusion momentum tend to have higher future returns than those with low illusion momentum. The effectiveness of illusion momentum may be rooted in a cognitive bias where investors mistakenly interpret cumulative sum returns as cumulative returns. Notably, the effect of illusion momentum becomes stronger in bear markets, where traditional momentum strategies tend to struggle, and does not exhibit characteristics similar to selling call options. Considering that illusion momentum is also effective within a universe of large-cap stocks, this study has several practical applications.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103063"},"PeriodicalIF":5.3,"publicationDate":"2026-01-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146037786","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 : 2026-01-13DOI: 10.1016/j.pacfin.2026.103064
Lei Lu , Qingfu Liu , Zilu Wang , Sumei Luo
We analyze the negative impact of credit bond issuance ratings on pricing outcomes. Exploiting the exogenous shock from China’s removal of the mandatory bond rating for credit bond issuance, we employ an event study approach to trace out the consequences of lowering issuance thresholds on bond pricing. We show that firms voluntarily retaining bond ratings experienced credit spreads 10.2 percent higher than firms that abandoned ratings. Firms that dropped issuance ratings experienced significant improvements in bond rating quality, reductions in default risk, and enhanced secondary market liquidity. Our findings highlight the critical role that abandoning issuance ratings plays in improving credit bond pricing efficiency under the issuer-paid rating model.
{"title":"Reassessing bond pricing efficiency: The effects of deregulating mandatory bond ratings","authors":"Lei Lu , Qingfu Liu , Zilu Wang , Sumei Luo","doi":"10.1016/j.pacfin.2026.103064","DOIUrl":"10.1016/j.pacfin.2026.103064","url":null,"abstract":"<div><div>We analyze the negative impact of credit bond issuance ratings on pricing outcomes. Exploiting the exogenous shock from China’s removal of the mandatory bond rating for credit bond issuance, we employ an event study approach to trace out the consequences of lowering issuance thresholds on bond pricing. We show that firms voluntarily retaining bond ratings experienced credit spreads 10.2 percent higher than firms that abandoned ratings. Firms that dropped issuance ratings experienced significant improvements in bond rating quality, reductions in default risk, and enhanced secondary market liquidity. Our findings highlight the critical role that abandoning issuance ratings plays in improving credit bond pricing efficiency under the issuer-paid rating model.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103064"},"PeriodicalIF":5.3,"publicationDate":"2026-01-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145976933","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 : 2026-01-12DOI: 10.1016/j.pacfin.2026.103065
Yuzhi Chen , Deyuan Zhang , Xinyue Li , Hang Su
Given that investors engage in non-synchronous trading activities, the paper integrates prior monthly returns with different lags and employs the Support Vector Regression (SVR) model to develop a Multi-term Momentum indicator (Multi-MOM). By constructing the winner-minus-loser portfolios, the paper reveals the existence of a multi-term momentum effect in the Chinese stock market. Through the spanning regression, the paper finds that the traditional momentum and other machine-learning-based momentum LS returns cannot fully explain the SVR-based momentum LS returns. To further explore the underlying drivers of this anomaly, the paper decomposes the multi-term momentum effect using a range of factors, including firm characteristics, information uncertainty, trend, lottery, and others. The findings reveal that firm characteristics, lottery, and information uncertainty are the key factors driving the multi-term momentum effect, accounting for approximately 16.4%, 11.7%, and 7% of the effect, respectively. Moreover, the paper examines the drivers of multi-term momentum under different market conditions and concludes that firm characteristics, lottery, and information uncertainty remain the primary drivers of multi-term momentum regardless of market conditions. Additionally, considering the varying momentum performance across different levels of Economic Policy Uncertainty (EPU), the paper investigates the drivers of multi-term momentum under different EPU conditions. The results indicate that firm characteristics, lottery, and information uncertainty consistently exhibit significant explanatory power for the multi-term momentum effect at different EPU levels.
{"title":"Multi-term momentum effect and driving mechanisms based on machine learning","authors":"Yuzhi Chen , Deyuan Zhang , Xinyue Li , Hang Su","doi":"10.1016/j.pacfin.2026.103065","DOIUrl":"10.1016/j.pacfin.2026.103065","url":null,"abstract":"<div><div>Given that investors engage in non-synchronous trading activities, the paper integrates prior monthly returns with different lags and employs the Support Vector Regression (SVR) model to develop a Multi-term Momentum indicator (Multi-MOM). By constructing the winner-minus-loser portfolios, the paper reveals the existence of a multi-term momentum effect in the Chinese stock market. Through the spanning regression, the paper finds that the traditional momentum and other machine-learning-based momentum LS returns cannot fully explain the SVR-based momentum LS returns. To further explore the underlying drivers of this anomaly, the paper decomposes the multi-term momentum effect using a range of factors, including firm characteristics, information uncertainty, trend, lottery, and others. The findings reveal that firm characteristics, lottery, and information uncertainty are the key factors driving the multi-term momentum effect, accounting for approximately 16.4%, 11.7%, and 7% of the effect, respectively. Moreover, the paper examines the drivers of multi-term momentum under different market conditions and concludes that firm characteristics, lottery, and information uncertainty remain the primary drivers of multi-term momentum regardless of market conditions. Additionally, considering the varying momentum performance across different levels of Economic Policy Uncertainty (EPU), the paper investigates the drivers of multi-term momentum under different EPU conditions. The results indicate that firm characteristics, lottery, and information uncertainty consistently exhibit significant explanatory power for the multi-term momentum effect at different EPU levels.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103065"},"PeriodicalIF":5.3,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146037780","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 : 2026-01-12DOI: 10.1016/j.pacfin.2026.103062
Qingfu Liu , Yiuman Tse , Chuanjie Wang , Jiaer Yang
Financial turbulence poses substantial challenges to risk management and investment decision-making, particularly in emerging markets. This study constructs a novel Chinese Financial Turbulence Index (FTI) using a dictionary-based method augmented by generative artificial intelligence, drawing from a corpus of over 3.6 million financial news articles spanning 2012 to 2023. The FTI exhibits strong responsiveness to macroeconomic conditions and market uncertainty, and significantly predicts negative market returns. To mitigate risks associated with financial turbulence, we develop a hedging framework that integrates scaled principal component analysis (sPCA) with a portfolio-mimicking strategy. The resulting hedging portfolio, which is based on firm-level financial resilience characteristics and complemented by non-equity assets, effectively offsets turbulence-related risks. The FTI and the proposed hedging approach offer timely and practical tools for monitoring and managing financial turbulence.
{"title":"Hedging financial turbulence risk with textual analysis","authors":"Qingfu Liu , Yiuman Tse , Chuanjie Wang , Jiaer Yang","doi":"10.1016/j.pacfin.2026.103062","DOIUrl":"10.1016/j.pacfin.2026.103062","url":null,"abstract":"<div><div>Financial turbulence poses substantial challenges to risk management and investment decision-making, particularly in emerging markets. This study constructs a novel Chinese Financial Turbulence Index (FTI) using a dictionary-based method augmented by generative artificial intelligence, drawing from a corpus of over 3.6 million financial news articles spanning 2012 to 2023. The FTI exhibits strong responsiveness to macroeconomic conditions and market uncertainty, and significantly predicts negative market returns. To mitigate risks associated with financial turbulence, we develop a hedging framework that integrates scaled principal component analysis (sPCA) with a portfolio-mimicking strategy. The resulting hedging portfolio, which is based on firm-level financial resilience characteristics and complemented by non-equity assets, effectively offsets turbulence-related risks. The FTI and the proposed hedging approach offer timely and practical tools for monitoring and managing financial turbulence.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103062"},"PeriodicalIF":5.3,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146037781","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 : 2026-01-12DOI: 10.1016/j.pacfin.2026.103066
Jing Chen, Haoran Fu, Yushan Xue, Yifeng Zhu
This paper analyzes the impact of monthly stock recommendations by securities companies on investor sentiment; it then creates a quantitative stock selection investment strategy based on the developed sentiment indicators and Rainbow algorithm, named the Rainbow Algorithm Strategy with Integrated Technical and Sentiment Indicators (TS-RA Strategy). Results show that the stock recommendation factor exhibits good and stable stock selection ability, and the TS-RA Strategy constructed on this basis demonstrates high profitability. During the testing period, the annualized return reached 25.58%, with a maximum drawdown of 7.41%, indicating high returns and manageable risks. Furthermore, the TS-RA Strategy is superior to the investment strategy constructed using deep Q-learning methods and has performed well in different market environments.
{"title":"Rainbow deep reinforcement learning in the Chinese stock market","authors":"Jing Chen, Haoran Fu, Yushan Xue, Yifeng Zhu","doi":"10.1016/j.pacfin.2026.103066","DOIUrl":"10.1016/j.pacfin.2026.103066","url":null,"abstract":"<div><div>This paper analyzes the impact of monthly stock recommendations by securities companies on investor sentiment; it then creates a quantitative stock selection investment strategy based on the developed sentiment indicators and Rainbow algorithm, named the Rainbow Algorithm Strategy with Integrated Technical and Sentiment Indicators (TS-RA Strategy). Results show that the stock recommendation factor exhibits good and stable stock selection ability, and the TS-RA Strategy constructed on this basis demonstrates high profitability. During the testing period, the annualized return reached 25.58%, with a maximum drawdown of 7.41%, indicating high returns and manageable risks. Furthermore, the TS-RA Strategy is superior to the investment strategy constructed using deep Q-learning methods and has performed well in different market environments.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103066"},"PeriodicalIF":5.3,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145976869","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 : 2026-01-09DOI: 10.1016/j.pacfin.2026.103059
Praveena Musunuru, Mohammad Shameem Jawed, Kaveri Krishnan
This study examines the relationship between board independence and share-pledging behavior by controlling shareholders (promoters) in Indian listed firms from 2010 to 2020 using a balanced panel. Further, we examine the interplay between the independence of the board and the presence of the promoter as an executive director on the board and its impact on the share pledging by promoters. Our findings reveal that independent boards serve as a deterrent to share pledging by promoters, especially when independent directors actively participate. However, this deterrent effect diminishes when promoters hold executive positions on the board. Moreover, unlike business group firms, board independence fails to deter share pledging in concentrated standalone firms. Furthermore, we examine whether independent boards encourage promoters to provide fair reasons for share pledging following a regulation in 2019. Our analysis confirms that independent boards incentivize promoters to provide transparent and justifiable reasons for engaging in share pledging. However, promoters on board reduce this effect.
{"title":"Board independence, promoter influence, and share pledging behavior","authors":"Praveena Musunuru, Mohammad Shameem Jawed, Kaveri Krishnan","doi":"10.1016/j.pacfin.2026.103059","DOIUrl":"10.1016/j.pacfin.2026.103059","url":null,"abstract":"<div><div>This study examines the relationship between board independence and share-pledging behavior by controlling shareholders (promoters) in Indian listed firms from 2010 to 2020 using a balanced panel. Further, we examine the interplay between the independence of the board and the presence of the promoter as an executive director on the board and its impact on the share pledging by promoters. Our findings reveal that independent boards serve as a deterrent to share pledging by promoters, especially when independent directors actively participate. However, this deterrent effect diminishes when promoters hold executive positions on the board. Moreover, unlike business group firms, board independence fails to deter share pledging in concentrated standalone firms. Furthermore, we examine whether independent boards encourage promoters to provide fair reasons for share pledging following a regulation in 2019. Our analysis confirms that independent boards incentivize promoters to provide transparent and justifiable reasons for engaging in share pledging. However, promoters on board reduce this effect.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103059"},"PeriodicalIF":5.3,"publicationDate":"2026-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145976927","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 : 2026-01-05DOI: 10.1016/j.pacfin.2026.103055
Feng Hu , Huijie Yang , Shaobin Wei , Haiyan Zhou , Yufeng Chen , Hao Hu
On the basis of green patent transfer data from 41 cities in the Yangtze River Delta (YRD) region and green credit data from five major state-owned banks from 2015 to 2023, this study employs social network analysis and a geographical detector model to examine the spatiotemporal dynamics and systemic coupling between green technology diffusion and green finance development. We document the following key findings: (1) the green technology transfer network has expanded, with Hefei surpassing Shanghai as the core hub, and intensive green technology flows being concentrated in Shanghai, Hangzhou, Suzhou, Nanjing, and Hefei; (2) while green finance has grown substantially, it remains spatially concentrated around Shanghai, leading to a persistent core–periphery divide; (3) the coordination between cities' positions in the technology network and their green finance levels has declined, except in Shanghai, indicating a growing structural mismatch; and (4) factor detection results from the geographical detector indicate that green finance policies act as an independent driving force for the green technology transfer network. Furthermore, interaction detection demonstrates that green finance exerts a stronger influence when it is jointly driven by the urban financial scale and market vitality.
{"title":"Urban green technology transfer networks and green finance development: Evidence from the Yangtze River Delta, China","authors":"Feng Hu , Huijie Yang , Shaobin Wei , Haiyan Zhou , Yufeng Chen , Hao Hu","doi":"10.1016/j.pacfin.2026.103055","DOIUrl":"10.1016/j.pacfin.2026.103055","url":null,"abstract":"<div><div>On the basis of green patent transfer data from 41 cities in the Yangtze River Delta (YRD) region and green credit data from five major state-owned banks from 2015 to 2023, this study employs social network analysis and a geographical detector model to examine the spatiotemporal dynamics and systemic coupling between green technology diffusion and green finance development. We document the following key findings: (1) the green technology transfer network has expanded, with Hefei surpassing Shanghai as the core hub, and intensive green technology flows being concentrated in Shanghai, Hangzhou, Suzhou, Nanjing, and Hefei; (2) while green finance has grown substantially, it remains spatially concentrated around Shanghai, leading to a persistent core–periphery divide; (3) the coordination between cities' positions in the technology network and their green finance levels has declined, except in Shanghai, indicating a growing structural mismatch; and (4) factor detection results from the geographical detector indicate that green finance policies act as an independent driving force for the green technology transfer network. Furthermore, interaction detection demonstrates that green finance exerts a stronger influence when it is jointly driven by the urban financial scale and market vitality.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103055"},"PeriodicalIF":5.3,"publicationDate":"2026-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145925439","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 : 2026-01-03DOI: 10.1016/j.pacfin.2026.103057
Jia Guo , Kemin Wang , Guanglong Zhang
We leverage the 2015 managerial pay reform in Chinese state-owned enterprises (SOEs) as a quasi-natural experiment to examine whether managerial pay caps intensify corporate agency conflicts. Our results show that affected SOEs opportunistically increase cash holdings, as managers seek to self-compensate for the pay reduction. This cash-hoarding effect is stronger for firms facing more severe agency problems and weaker external oversight. Consequently, firms that hoard more cash due to the pay cap suffer a lower marginal value of cash, decreased operational efficiency, and reduced profitability. Our findings suggest that a “one-size-fits-all” mandatory pay cap may unintentionally exacerbate agency conflicts and hinder economic efficiency.
{"title":"Do managerial pay caps intensify agency conflicts? Evidence from corporate cash holdings","authors":"Jia Guo , Kemin Wang , Guanglong Zhang","doi":"10.1016/j.pacfin.2026.103057","DOIUrl":"10.1016/j.pacfin.2026.103057","url":null,"abstract":"<div><div>We leverage the 2015 managerial pay reform in Chinese state-owned enterprises (SOEs) as a quasi-natural experiment to examine whether managerial pay caps intensify corporate agency conflicts. Our results show that affected SOEs opportunistically increase cash holdings, as managers seek to self-compensate for the pay reduction. This cash-hoarding effect is stronger for firms facing more severe agency problems and weaker external oversight. Consequently, firms that hoard more cash due to the pay cap suffer a lower marginal value of cash, decreased operational efficiency, and reduced profitability. Our findings suggest that a “one-size-fits-all” mandatory pay cap may unintentionally exacerbate agency conflicts and hinder economic efficiency.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103057"},"PeriodicalIF":5.3,"publicationDate":"2026-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145925441","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 : 2026-01-03DOI: 10.1016/j.pacfin.2026.103056
Shiqi Yao , Limin Song , Junkang Zhang
This study examines whether strengthened financial regulation can improve resource allocation efficiency and mitigate the labor market monopsony power of superstar firms. Utilizing China's New Asset Management Regulation (NAMR) as a quasi-natural experiment and panel data from Chinese listed firms (2007–2022), we employ a triple difference model to assess the impact of this heightened financial oversight. The results indicate that the regulation significantly curtails the monopsony power of superstar firms, an effect particularly pronounced for those characterized by high labor intensity, substantial R&D investment, and intense market competition. Mechanism analysis reveals that the policy operates by increasing labor input, boosting R&D spending, and improving the human capital structure, which collectively diminish firms' dominance in the labor market. These findings highlight the potential of financial regulation to enhance equity in income distribution.
{"title":"Can strengthened financial regulation reduce monopsony power in superstar firms? Evidence from China's asset management reform","authors":"Shiqi Yao , Limin Song , Junkang Zhang","doi":"10.1016/j.pacfin.2026.103056","DOIUrl":"10.1016/j.pacfin.2026.103056","url":null,"abstract":"<div><div>This study examines whether strengthened financial regulation can improve resource allocation efficiency and mitigate the labor market monopsony power of superstar firms. Utilizing China's New Asset Management Regulation (NAMR) as a quasi-natural experiment and panel data from Chinese listed firms (2007–2022), we employ a triple difference model to assess the impact of this heightened financial oversight. The results indicate that the regulation significantly curtails the monopsony power of superstar firms, an effect particularly pronounced for those characterized by high labor intensity, substantial R&D investment, and intense market competition. Mechanism analysis reveals that the policy operates by increasing labor input, boosting R&D spending, and improving the human capital structure, which collectively diminish firms' dominance in the labor market. These findings highlight the potential of financial regulation to enhance equity in income distribution.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103056"},"PeriodicalIF":5.3,"publicationDate":"2026-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145925442","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 : 2026-01-02DOI: 10.1016/j.pacfin.2025.103054
Junbiao Yu
This study examines the impact of corporate headquarters location on firm innovation from the perspective of inventors. Utilizing a sample of Chinese publicly listed firms—a setting characterized by highly concentrated corporate R&D activities and the hukou-related labor frictions—we find that firms located near a higher density of local inventors achieve superior innovation output, as measured by patent counts and forward citations. The positive effect is more pronounced for younger, high-tech firms and those in less developed regions, supporting the local skilled labor supply mechanism. This talent supply also incentivizes firms to reallocate innovation efforts toward exploitative activities and accelerate human capital accumulation. Instrumental variable analysis using the Ming-Qing jinshi density supports a causal interpretation. Our findings provide novel evidence on the value of proximity to specialized human capital and inform policy discussions on mobility constraints.
{"title":"Inventors and firm innovation: Does location matter?","authors":"Junbiao Yu","doi":"10.1016/j.pacfin.2025.103054","DOIUrl":"10.1016/j.pacfin.2025.103054","url":null,"abstract":"<div><div>This study examines the impact of corporate headquarters location on firm innovation from the perspective of inventors. Utilizing a sample of Chinese publicly listed firms—a setting characterized by highly concentrated corporate R&D activities and the <em>hukou</em>-related labor frictions—we find that firms located near a higher density of local inventors achieve superior innovation output, as measured by patent counts and forward citations. The positive effect is more pronounced for younger, high-tech firms and those in less developed regions, supporting the local skilled labor supply mechanism. This talent supply also incentivizes firms to reallocate innovation efforts toward exploitative activities and accelerate human capital accumulation. Instrumental variable analysis using the Ming-Qing <em>jinshi</em> density supports a causal interpretation. Our findings provide novel evidence on the value of proximity to specialized human capital and inform policy discussions on mobility constraints.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"96 ","pages":"Article 103054"},"PeriodicalIF":5.3,"publicationDate":"2026-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145976836","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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