Asia-Pacific Journal of Financial Studies最新文献

This paper investigates the relationship between guanxi-based (relation-based) proximity to political power (GUPPP), government subsidies, and investment efficiency within the context of China. Employing a sample of Chinese listed firms from 2007 to 2019, we find that firms in provinces with high GUPPP receive more government subsidies, particularly non-tax subsidies, compared to those in provinces with low GUPPP. Moreover, we find that the association between GUPPP and government subsidies is more pronounced for firms that have local political connections. We further find that subsidies improve the investment efficiency of under-invested firms but exacerbate the investment inefficiency of over-invested firms. Our results suggest that effective political connections encompass both central–province and province–firm relationships, at least within the context of our study on subsidies.

This paper investigates how collaboration depth influences forecast performance in analyst teams. Based on Chinese A-share market data from 2007 to 2022, we find that teams with deeper collaboration experience produce more accurate and timely forecasts. Cross-sectional analyses indicate that the effect on forecast accuracy becomes more significant when the lead analyst has more firm-specific experience, there is greater gender diversity in the analyst teams, and when the firm has high information opacity. For timeliness, the effect is stronger in teams with high education diversity and in firms with highly volatile revenues, but weaker in teams with more star analysts. Furthermore, the positive effect of collaboration depth on forecast accuracy is more significant in brokerage firms with stronger collaboration cultures. However, deeper collaboration among analyst teams is also associated with increased herding behavior. These findings have practical implications for brokers and analysts.

This study investigates how the availability of proprietary cost information influences corporate investment. By leveraging the regulatory cessation of disaggregated cost reporting in Korea, we document a decline in investment-q sensitivity after peers stop disclosing the detailed cost information, suggesting significant externalities arising from peers' proprietary information contained in cost reports. This finding is robust to alternative measures and estimation methods. We echo the importance of disaggregated cost information in product market competition and managerial learning from peer disclosure.

This research examines the relationships among window dressing, fund performance, and fund flows in Taiwan's equity fund industry. The empirical findings reveal several important insights. Equity fund managers are actively involved in window dressing, with underperforming managers being more prone to such practices. These managers demonstrate a stronger preference for increasing their holdings of winner stocks more than avoiding loser stocks. Additionally, funds with a higher portfolio concentration and turnover rates are more likely to engage in window dressing activities compared to other funds. The study also highlights the adverse effects of window dressing on performance and fund flows. Window dressing negatively impacts both short- and long-term fund performances. Furthermore, window dressing fails to attract short-term fund inflows and instead exacerbates the decline in long-term outflows. This comprehensive analysis highlights the implications of window dressing on fund performance and investor behavior, shedding light on its prevalence and consequences within Taiwan's equity fund industry.

This study reveals a notable anomaly in Taiwan's stock market, where stocks with substantial directors' and officers' (D&O) insurance coverage tend to yield higher expected returns, partly due to their exposure to liquidity risk. First, firms purchasing extensive D&O insurance coverage experience increased stock illiquidity, which is influenced by the inadequate quality of information disclosure. This observation supports the moral hazard-based information opacity hypothesis. Second, we introduce an illiquidity-based mimicking factor and show that portfolios with higher (lower) D&O insurance coverage display positive (negative) loadings on this factor, underscoring the importance of liquidity risk in asset pricing. Third, this market-wide illiquidity mimicking factor explains approximately one-third of the observed premium associated with variations in D&O insurance coverage across certain model specifications. This research challenges the behavioral mispricing hypothesis by highlighting the liquidity-driven covariance risk linked to the D&O insurance anomaly, thereby providing fresh insights into asset pricing dynamics in emerging markets.

We examine whether board directors with previous experience as military officers improve corporate ethics. Using information about Korean board directors, we show that firms with ex-military-officer (EMO) CEOs and inside directors are substantially less likely to commit fraud, highlighting the importance of exposure to military values as former officers while serving as corporate executives. The positive impact of EMO directors' presence on corporate ethics is particularly prominent among Korean business group (chaebol) firms that are otherwise prone to fraudulent behaviors without their presence. Our results suggest that firms with board members of heightened personal integrity from their military officer experience have a higher standard in corporate ethics.

This study examines the effects of the 2007 antitrust regulations on the value of acquiring firms engaged in mergers and acquisitions (M&A) in Korea. By employing a difference-in-differences model and analyzing 5-day cumulative average abnormal returns (CAR), the study reveals that horizontal acquisitions lead to increased shareholder returns. However, there is no indication that market power or cost efficiency are contributing factors. For chaebol firms, M&A significantly decreases firm value, likely due to tunneling. Subsample analyses suggest that managerial entrenchment causes this decline, while non-chaebol firms show no empirical support for the market power or cost efficiency hypotheses.

This study uses China's stock exchange disclosure guidelines in a quasi-natural experiment to build a difference-in-differences model, examining how industry-specific disclosure regulation affect accounting estimation intensity. The results show these regulations reduce intensity due to better information comparability and stricter auditor oversight. The effect is stronger for firms with weak governance, in less competitive industries, or far from regulators. Tests also find such regulation lowers capital costs. The findings have implications for refining regulatory frameworks and capital market reforms in developing economies.

This study investigates the influence of cornerstone investors on the initial public offerings (IPOs) of firms listed on the Hong Kong Stock Exchange (HKEX), drawing on signaling theory and the certification hypothesis. It examines their impact on IPOs' pricing range, subscription multiples, post-IPO trading, and underpricing. Findings reveal that cornerstone investors reduce information asymmetry, narrowing IPO pricing ranges and enhancing investor confidence. Independent venture capital backed cornerstone investors significantly increase subscription multiples and turnover while narrowing price ranges. In contrast, corporate venture capital backed cornerstone investors help reduce underpricing, promoting market stability. The results offer practical insights for issuers, investors, and policymakers seeking to enhance IPO efficiency and outcomes.

Under Article 27 of Taiwan's Company Act, juridical entities can designate representatives to act as directors of firms in which they invest. This institutional feature has raised concerns regarding the effectiveness with which such representative directors (particularly the friendly representative directors, FDIRs) can monitor and/or advise on firm operations. This study first examines whether FDIRs are associated with investee overinvestment. Prior studies have found that financial derivatives are important tools for risk management, reducing cost of capital and preventing underinvestment. This study extends these works and further examines whether the relationship between FDIRs and overinvestment is moderated by the use of hedging derivatives. Empirical results show that the proportion of FDIRs is negatively associated to firm overinvestment, suggesting that FDIRs improve the monitoring and/or advising functions of firm investment activities. A further test reveals that this negative relationship is pronounced for firms that are not engaged in derivative hedging activities. This implies that FDIRs are likely to incorporate managerial hedging programs into their monitoring and/or advising functions when examining firm investment decisions, thereby restraining overinvestment in firms that are not engaged in derivative hedging. Collectively, this study provides evidence that, in emerging markets like Taiwan, FDIRs tend to inhibit overinvestment, and this behavior is actually moderated by firm hedging derivatives activity.