China’s energy stocks are confronted with significant climate-related challenges. This paper aims to measure the daily climate transition risk in China by assessing the intensity of climate policies. The daily climate physical risk encountered by China’s renewable energy stocks is also measured based on the perspective of temperature change. Then, the partial linear function coefficient model is adopted to empirically investigate the non-linear impacts of climate transition risk and climate physical risk on the return and volatility of renewable energy stocks. The nonlinear moderating effect of climate transition risk is also involved. It is found that: (1) Between 2017 and 2022, the climate transition risk in China exhibited a persistent upward trend, while the climate policies during this period particularly emphasized energy conservation, atmospheric improvements, and carbon emissions reduction. Additionally, the climate physical risk level demonstrated a pattern consistent with a normal distribution. (2) There is a U-shaped nonlinear impact of climate physical risk on the return and volatility of renewable energy stocks. High climate physical risk could not only increase the return of renewable energy stocks but also lead to stock market volatility. (3) Climate transition risk exhibits a U-shaped effect on the return of renewable energy stocks, alongside an inverted U-shaped effect on their volatility. Notably, a high level of climate transition risk not only increases the return of renewable energy stocks but also serves to stabilize the renewable energy stock market. Moreover, the heightened risk associated with climate transition enhances the negative impact of oil price volatility on the yield of renewable energy stocks and, concurrently, leads to an increase in volatility.The strength of this moderating effect is directly correlated with the level of climate risk.

Purpose – To examine whether and how the different levels of regional economic incentives would have an effect on underwriters’ market share in general. Design/methodology/approach – Drawing on Chinese IPO firms during the period 2006-2016, this study examines the impact of different levels of regional economic incentives on underwriters’ market share. Findings – The authors find thatregional economic incentives have a positive impact on underwriters’ market share and that local economic incentives have a significantly strongerimpact than central economic incentives. Furthermore, the authors find that IPO firms with underwriters driven by regional economic incentives experience worse post-IPO performance than firms with underwriters driven by central economic incentives, which do not experience a significant decline in post-IPO performance. Originality/value – Taken together, the authors’ findings are consistent with the notion that performance assessment motivates officials at various levels of government to bring companies in their jurisdiction to the IPO market prematurely. In addition, the results indicate that central economic incentives play a significantrole in driving China’s macroeconomic development and market-oriented system reforms. As such, they are one of the major driving forces behind China’s market-oriented system reforms.

This study examines the effect of retail investor-firm communications (RIFC) on corporate ESG performance. Exploiting the unique setting of Chinese investor interactive platforms which enable retail investors to pose questions and require firm answers, we show that RIFC significantly improves corporate ESG performance. The consistent evidence is obtained by employing the difference-indifference estimation, Oster’s test and alternative indictors, strengthening our confidence in the causal link between RIFC and corporate ESG performance. Furthermore, we identify two potential economic channels underlying our results: strengthening monitoring pressure and alleviating financial constraints. Our finding further reveals that RIFC drives genuine improvements in ESG performance rather than greenwashing practices. Collectively, this study advances our understanding of the interplay between retail investors and corporate ESG performance, providing a stepping stone toward effective solutions to corporate sustainable development.

Purpose – The aim of this paper is to provide additional insights on the association between real earnings management (REM) and crash risk, particularly from the perspective of an emerging market economy. It also examines the moderation role that internal and external corporate governance may play in this area. Design/methodology/approach – Relying on archival data from the RESSETand CSMAR databases over a timeframe from 2010 to 2018 of China listed company, the authors test the hypotheses by regressing common measures of crash risk on the treatment variable (REM) and crash risk control variables identified in the prior crash risk literature. The authors also introduce monitoring proxies (internal controls as an internal governance and institutional ownership as an external governance) and assess how effective internal and external governance moderate the relation between REM and stock price crash risk. Findings – The results suggest firms with higher REM have a significantly greater stock price crash risk, and that this association is mitigated by external monitoring. That is, greater institutional ownership, particularly pressure insensitive owners, mitigates the impact of REM on stock price crash risk. However, internal control does not mitigate the association between REM and stock price crash risk. Originality/value – Following the passage of the Sarbanes–Oxley (SOX) Act, prior research has documented an increase in the use of REM and a positive association between REM and cash risk. The authors demonstrate that they persist in one of the largest emerging markets where institutional regulations, market conditions and corporate behaviors are different from those in developed markets. Also, the assessment of the moderation effect of internal and external governance mechanisms could have meaningful implications for investors and regulators in Chinese and other emerging markets.

Purpose – For Chinese companies that cross-list in Chinese A share and Hong Kong (H share) markets, the H share price has been consistently lower than the A share price by an average of 85% in recent years. This is puzzling because most institutional differences between the two markets have been eliminated since 2007. The purpose of this study is to explain the puzzle of the price difference of AþH companies. Design/methodology/approach – Using all A and H share Chinese firms in the period 2007–2013 and a simultaneous equations approach, this study identifies three new explanations for the recent price difference. Findings – First, utilizing a unique earning quality measure that is directly related to non-persistent components of fair value accounting under International Financial Reporting Standards (IFRS), this study finds that the lower the earnings quality, the lower the H share price relative to the A share price, and hence the greaterthe price difference. Second, the higherthe myopic investor ownership in A share firms, the largerthe A share price relative to the H share price. Third, the short-selling mechanism introduced to the A share market since 2010 helps reduce the price difference. Originality/value – First, this study identifies three new explanations for the puzzle of the AH price difference which remains substantial even afterthe institutional and accounting standards differences between the two markets were eliminated. Second, we examine the impact of the implementation of fair value accounting under IFRS in an emerging market on the pricing difference of cross-listed shares and reveal that it can induce an unintended negative consequence on the pricing difference of cross-listed shares. Third, this study contributes to the literature on short sales by providing its mitigating role in pricing differences across two different markets. Finally, this study makes improvements in research design, which utilizes a unique measure of earnings quality that is directly related to the implementation of IFRS and a simultaneous equations approach that minimizes endogeneity concern.

Purpose – The aim of this paper is to examine the effect of information disclosure by unlisted bond issuers on the stock price informativeness of listed firms in the same industry. Design/methodology/approach – This paper takes advantage of information disclosure during the bond issuance and examines the spillover effect of unlisted bond issuers’ information disclosure on listed firms in the stock market. The sample is composed of A-share firms listed on the Shanghai and Shenzhen stock exchanges from 2007 to 2018. All the data are obtained from the China Stock Market and Accounting Research and WIND databases. The impact of bond market information disclosure on price informativeness of listed firms in the same industry is identified through multivariate regression analyses. Findings – Empirical results show that price informativeness of listed firms has a significantly positive association with the information disclosure of same-industry unlisted bond issuers. Further analyses show that the above finding is more significant when information disclosure of bond issuers is a more important channel for acquiring industry information (i.e. when industry is more concentrated, when economic uncertainty is high, and when industry information is less transparent) and understanding the industry competitive landscape (i.e. when bond issuers are relatively large, when bond issuers and listed firms have more direct product competition, when bond issuance firms are large-scale state-owned business groups), and when there are more cross-market information intermediaries (i.e. more cross-market institutional investors and more sellside analysts).This paperindicates that information disclosure of bond issuers has a positive spillover effect on the stock market. Originality/value – The novelty of the research is that the authors examine industry information spillover from unlisted firms to listed firms leveraging on unlisted firms’ information disclosure in bond markets.

Based on a unique arrangement of trading and disclosure times around earnings announcements in the Chinese stock market, we provide evidence of a striking overnight-intraday disparity in terms of the reaction to earnings news. Specifically, we find that the overnight period exhibits a strong and consistent reaction to earnings announcements, whereas the intraday period trades against both the earnings news and the prior market reaction during the overnight period. In addition, we show that abnormal overnight returns on earnings announcement days exhibit strong predictability for future stock returns, consistent with the overnight returns containing valuerelevant signals. In contrast, we observe no return predictability for abnormal intraday returns on earnings announcement days, which as a result, also undermines the return predictability of abnormal daily returns. We propose possible explanations for the overnight-intraday disparity. We conclude that the differences in trading mechanisms between the two periods as well as in investor composition likely drive the phenomenon.

We conduct a comprehensive study on momentum spillovers in the Chinese stock market using varioustypes of economic linkages. We find that the news co-mention momentum spillover is signiffcantly strongercompared to other forms of momentum spillovers. Using spanning tests and Fama-MacBeth regressions,we further show that the news co-mention momentum spillover uniffes all different forms of momentum spillover effects in the Chinese stock market. Notably, the analyst co-coverage momentum spillover effect, which is the dominant species in the US stock market, is subsumed by the news co-mention momentum spillover effect in the Chinese stock market. We further explore the differences in the information content of links implied by news co-mentioning and other proxies. We suggest that the dominance of news co-mention momentum spillover over others can be attributed to two primary factors: comprehensive information and prompt updates.

Under contemporary market conditions in China, the stock index has been volatile and highly reflect trends in the coronavirus pandemic, but rare scientific research has been conducted to model the nonlinear relations between the two variables. Added, on the advent that covid-related news in one time period impacts the stock market in another period, time delay can be an equally good predictor of the stock index but rarely investigated. This study utilizes high-frequency data from January 2020 to the first week of July 2022 to model the nonlinear relationship between the stock index, new covid cases and time delay under polynomial regression environment. The empirical results show that time delay and new covid cases, when modelled in a polynomial environment with optimal degree and delay, do present better representation (up to 16-fold) of the nonlinear relationship such predictors have with stock index for China. The representative delay model is used to project for up to 17 weeks for future trends in the stock index. From the findings, the prowess of the time delay polynomial regression is heavily dependent on instability in covid-related time trends and that researchers and decision-makers should consider modeling to cover for the unsteadiness in coronavirus cases.

The study reveals that the COVID-19 crisis has had a strong but one-off negative impact on the hedge fund industry. It also shows that during the new coronavirus pandemic, the main components of the hedge fund industry achieved only partially their main investment goal, i.e. they as a whole provided a hedge of the investment risk but did not produce higher than the market return in the conditions of a growing capital market. In this situation, due to the relatively stable М&A market, the Event-Driven Risk Arbitrage strategy was undoubtedly most successful, followed by the Emerging Markets, the Global Macro and the Long/Short Equity strategies. The worst performance was reported for the Fixed Income Arbitrage strategy due to the currently overvalued bond markets and to the expectations for higher inflation rates in the countries with developed capital markets.