Asia-Pacific Journal of Financial Studies最新文献

This paper utilizes the implementation of circuit courts in China to identify a causal relationship between judicial effectiveness and corporate debt financing costs. We provide firm-level evidence demonstrating that enhanced judicial effectiveness leads to lower debt costs, with reduced credit discrimination and improved contract enforcement being key mechanisms. Further analyses reveal that the impact of judicial effectiveness on debt costs is more pronounced for firms that initially experienced higher levels of credit discrimination, and firms with lower credit quality, weaker collateral capacity, and higher reliance on bonds. We also find that improved judicial enforcement increases firms' total loans and credit loans, while reducing collateral loans. Additionally, firms reduce operating expenses to strengthen their financial condition and increase R&D investment after securing more debt at lower costs. This paper offers novel evidence highlighting the critical role of judicial reform in shaping the debt market.

Based on a sample of listed companies in China's A-share market between 2009 and 2019, we analyze the tone of the Management's Discussion and Analysis (MD&A) section of 15 743 annual reports through machine learning. The MD&A tone displays a significantly positive association with the firm's future financial performance, proving that the textual tone of MD&A includes forward-looking aspects regarding management's intentions for the company's prospects, and investors can use it to forecast the firm's future performance. Additionally, higher levels of internal control quality, stronger analyst following, and higher holdings by institutional investors can enhance the correlation between the MD&A tone and the company's future performance.

This paper investigates the effects of a co-CEO structure on earnings smoothing and its implications for the informativeness of earnings. While the consequences of a co-CEO structure have been relatively underexplored in prior research, existing studies suggest potential benefits, such as higher valuations and stronger internal governance. This paper delves into the specific consequences of a co-CEO structure, focusing on earnings smoothing practices. Using data from Korean firms, where co-CEO structures are prevalent, we find that firms with a co-CEO structure exhibit smoother earnings compared to those with a sole-CEO structure. However, the informativeness of these smooth earnings is reduced under a co-CEO structure, suggesting that co-CEOs engage in earnings smoothing primarily for their own benefit, rather than to provide more information to investors. Additional analyses reveal that co-CEOs' earnings smoothing leads to adverse consequences for investors, including lower earnings quality, higher costs of capital, increased financial distress, greater credit risk, and higher stock price crash risk. Our study contributes to the literature by highlighting the potential costs associated with co-CEO structures, particularly in terms of reduced earnings informativeness.

As environmental, social, and governance (ESG) becomes an increasingly popular criterion for investment screening, drivers of ESG performance have attracted attention from a wide range of stakeholders. In this study, we test whether corporate site visits can improve ESG ratings using a unique dataset of site visits from Chinese listed firms. We find that corporate site visits can lead to improved ESG performance for listed firms, which is robust even after adding a series of control variables, alternative model specifications, and accounting for endogeneity issues. This effect is attributed to the mediating effects of ESG information disclosure and corporate internal control quality. We also find that the more ESG-related discussion during site visits the better managers learn to improve ESG performance of their firms. Furthermore, there is evidence that the positive effect of site visits on ESG are more pronounced among firms that are not audited by Big Four accounting firms, not cross-listed, and when Qualified Foreign Institutional Investors are involved. Overall, this paper contributes to the literature by providing complementary evidence that site visits are an important platform for communicating between investors and corporate management, which can have profound implications on incentivizing managers to deliver better ESG performance. Our findings also offer practical and policy implications to regulators on the promotion and implementation of ESG in listed firms.

This study investigates whether firms make efficient labor investment decisions in response to media attention. The results show that media attention lowers labor investment efficiency, not through over-firing but through over-hiring, under-firing, or under-hiring. We interpret these findings as firms' intentional adjustment of their labor resources to recover from or preempt reputational damage. Overall, the media's pressure effects on labor investment efficiency suggest that media coverage can serve as friction in firms' labor investment decisions, highlighting the relatively unexplored role of the media compared with its monitoring function.

This paper investigates how incentives generated by intrafirm tournaments affect the informativeness of bold forecasts issued by sell-side analysts who have recently switched employers. Prior literature suggests that bold forecasts may lose accuracy when they are influenced by tournament-induced incentives. Extending this literature, I find that bold forecasts from transitioning analysts tend to result in decreased forecast accuracy. This negative effect is mitigated when analysts are less concerned about their disadvantages in the new intrafirm tournament—specifically, when they are more experienced, more competent, or have moved to more prosperous brokerage houses. These findings suggest that bold forecasts by transitioning analysts are partly influenced by intrafirm tournament-induced risk-taking, which can deteriorate performance quality.

This study investigates the Korean audit market, revealing that increased audit efforts correlate with reduced stock price crash risk, suggesting audits bridge the information gap between managers and investors, deterring negative news hoarding. The study also finds that this relationship is stronger in firms with more external directors, institutional investor presence, and financial analyst oversight, highlighting the importance of robust corporate governance. The research implies that in emerging markets, comprehensive audits and strong governance are crucial to protect investors from the adverse effects of stock price crashes.

We find a significantly positive relationship between the Tier 1 capital ratio and on-balance-sheet liquidity creation for Canadian Big Six banks, implying that large banks in Canada can take risk due to risk absorption by using capital to fund illiquid assets. Our results are robust to the 2018 initiation of a domestic stability buffer (DSB) of total risk-weighted assets for Pillar 2 risks, core deposits financing, non-deposit funding restrictions, and bank mergers and acquisitions. The positive relation (regulatory capital ratio with liquidity creation) becomes significantly negative during the 2007–9 Global Financial Crisis and COVID-19 pandemic.