Purpose – This paper takes the Shanghai-Shenzhen-Hong Kong Stock Connect as a quasi-natural experimentand investigates the impact of capital market liberalization on the corporate debt maturity structure. It also aimsto provide some policy implications for corporate debt financing and further liberalization of the capital marketin China. Design/methodology/approach – Employing the exogenous event of Shanghai-Shenzhen-Hong Kong StockConnect and using the data of Chinese A-share firms from 2010 to 2020, this study constructs a difference-in-differences model to examine the relationship between capital market liberalization and corporate debt maturitystructure. To validate the results, this study performed several robustness tests, including the parallel test, theplacebo test, the Heckman two-stage regression and the propensity score matching. Findings – This paper finds that capital market liberalization has significantly increased the proportion of long-term debt of target firms. Further analyses suggest that the impact of capital market liberalization on thedebt maturity structure is more pronounced for firms with lower management ownership and non-Big 4 audit.Channel tests show that capital market liberalization improves firms’ information environment and curbsself-interested management behavior. Originality/value – This research provides empirical evidence for the consequences of capital marketliberalization and enriches the literature on the determinants of corporate debt maturity structure. Further thisstudy makes a reference for regulators and financial institutions to improve corporate financing through thegovernance role of capital market liberalization.

This paper investigates whether Environmental, Social, and Governance (ESG) performance influences the stock idiosyncratic risk and extreme risk. We find that the ESG performance of listed companies significantly reduces the stock idiosyncratic risk and extreme risk. Furthermore, we identify that this mitigating effect is shaped by the nature of enterprise ownership and the firm life cycle. Through additional mechanistic analysis, we confirm that ESG performance affects the stock price volatility risk of listed companies by reducing levels of corporate earnings management and bolstering corporate reputation, thereby alleviating both idiosyncratic risk and extreme risk in stock prices.

Despite nearly twenty years of privatization, mixed-ownership reform has been the mainstay of SOE reform in China in recent years. This raises the question of whether the financial performance of mixed-ownership firms (Mixed firms) is better than private-owned enterprises (POEs). Although Mixed firms suffer more from government intervention, unclear property rights, and interest conflicts between state shareholders and private shareholders, they can also benefit from the external resources controlled by the state. Therefore, the performance of Mixed firms is still unclear. Collecting data from the Chinese A-share listed market, we divide the firms into POEs, Mixed firms controlled by the state (MixedSOEs), and Mixed firms controlled by the private sectors (MixedPOEs). Measuring profitability using ROA and ROE, we find that on average, POEs perform better than Mixed firms, and MixedPOEs have a higher profitability than MixedSOEs. Within Mixed firms, more state shares are related to lower profitability, and more private shares are related to higher profitability. Using the NBS survey data, we further find that on average, SOEs exhibit the lowest profitability, with MixedSOEs and MixedPOEs in the middle, and POEs have the highest profitability. We try to address the endogeneity challenge in several ways and get similar results. Overall, our analysis provides new evidence on the financial performance of mixed-ownership firms.

Why is price momentum absent in China? Since momentum is commonly considered arising from investors’ under-reaction to fundamental news, we decompose monthly stock returns into news- and non-news-driven components and document a news day return continuation along with an offsetting non-news day reversal in China. The non-news day reversal is particularly strong for stocks with high retail ownership, relatively less recent positive news articles, and limits to arbitrage. Evidence on order imbalance suggests that stock returns overshoot on news days due to retail investors' excessive attention-driven buying demands, and mispricing gets corrected by institutional investors on subsequent non-news days. To avoid this tug-of-war in stock price, we use a signal that directly captures the recent news performance and re-document a momentum-like underreaction to fundamental news in China.

Recent studies highlight the resurgence of state capitalism, with the state increasingly acting as equity investors in private firms. Why do state--business equity ties, including partial and indirect state ownership in private firms, proliferate in weakly institutionalized contexts like China? While conventional wisdom emphasizes state-driven explanations based on static evidence, I argue that regulatory risk reshapes business preferences, prompting firms to seek state investors and expanding state--business equity ties. These ties facilitate information exchange and signal political endorsement under regulatory scrutiny. Focusing on China's crackdown on the Internet and IT sectors, difference-in-differences analyses of all investments from 2016 to 2022 reveal a rise in state--business equity ties post-crackdown. In-depth interviews with investors along with quantitative analysis, demonstrate that shifts in business preferences drive this change. This study shows the resurgence of state capitalism is driven not only by the state but also by businesses in response to regulatory risks.

This paper investigates how transparency in lawsuit information affects capital allocation and aggregate industrial production. Greater transparency enhances the availability of information about firms' fundamentals, which can influence resource distribution. We exploit regional variations in courts' compliance with mandated judicial document disclosures in China, implemented since 2014, as a natural experiment. For firms with initially high marginal revenue products of capital (MRPK), a 10-percentage-point increase in legal transparency results in a 4.4% increase in physical capital and a 7.9% reduction in MRPK, relative to firms with lower MRPK. Additionally, regions with higher transparency experience a rise in aggregate output. Further analysis differentiating firms by ownership type, public listing status, and industry-level contract intensity enhances the robustness of our findings.

Based on institutions' general role and the specialty of motivated investors' relatively larger stake, we examine whether ownership by motivated investors is associated with the focal firm's ESG rating disagreement in China. Our results suggest that ownership by motivated investors can decrease the focal firm's ESG rating disagreement. That relationship is strengthened by a better internal or external information environment. What's more, ownership by motivated investors can increase the quality of ESG disclosure and the level of consensus ESG rating. ESG rating disagreement increases stock return volatility and price synchronicity, while motivated investors can mitigate those negative effects. Our results confirm that motivated investors have greater incentive and capability to discipline managers and influence corporate policies and actions even in an emerging market with weak investor protection and the popularity of exploration by ultimate controllers. That would shed valuable insights into the high-quality development of other emerging markets, especially those in south-east Asian.

The relationship between corporate Environmental, Social, and Governance (ESG) performance and its value has garnered increasing attention in recent times. However, the utilization of ESG scores by rating agencies, a critical intermediary in the linkage between ESG performance and value, presents challenges to ESG research and investment as a result of inherent subjectivity, hysteresis, and discrepant coverage. Fortunately, news can provide an objective, timely, and socially relevant perspective to augment prevailing rating frameworks and alleviate their shortcomings. This study endeavors to scrutinize the influence of ESG-related news on the Chinese stock market, to showcase its efficacy in supplementing the appraisal of ESG performance. The study's findings demonstrate that (1) the stock market is significantly impacted by ESGrelated news; (2) ESG-related news with different attributes (sentiments and sources) have notably diverse effects on the stock market; and (3) the heterogeneity among enterprises (industries and ownership structures) affects their ability to withstand ESGrelated news shocks. This study contributes novel insights to the comprehensive and objective assessment of corporate ESG performance and the management of its media image by providing a vantage point on ESG-related news.

This study attempts to shed new light on how the state as a minority shareholder can affect the tax planning of non-state-owned enterprises(non-SOEs). We examine publicly traded non-SOEs in China and find that non-SOEs are more tax avoidance when the government is a minority shareholder, indicating that minority state ownership has played a "shelter effect" on tax avoidance of non-SOEs. Further analysis shows that the sheltering effect of minority state ownership is more prominent for firms located in areas with more social burden, worse tax enforcement and firms with stronger incentive to avoid taxes. Furthermore, non-SOEs with minority state ownership increase excessive capital expenditure and employ redundant employees, but still have higher firm value. Overall, our findings suggest the state as a minority shareholder shapes the tax-planning activities of non-SOEs in a “two-way favor exchange” manner and it is beneficial for non-SOEs to maintain a close relationship with the government in China where the government controls key resources.

This study investigates the impact of CIO on the Environment, Social, and Governance (ESG) performance. Our analysis is based on a panel dataset comprising 2395 Chinese listed companies throughout the period from 2007 to 2020. Evidence from empirical results shows that CIO is positively correlated with ESG performance. In other words, CIO enhance the corporate ESG performance. The issue of endogeneity was duly considered, and appropriate measures were made to address it. Furthermore, robustness tests were conducted, and the findings remained consistent and reliable. The examination of the mechanism indicates that CIO enhance internal control quality that facilitates the advancement of ESG activities within firms. This paper contributes to the existing body of knowledge by examining the impact of external governance systems on the promotion of ESG activities in Chinese enterprises. This study adds to the existing body of scholarship on the implications of Common institutional ownership. Findings recommend several possible policy and economic ramifications that might support Chinese enterprises in their endeavors to incorporate ESG initiatives and contribute to the overall sustainability of society.