Exploiting ffnancial news stories data, we construct news-implied linkages and document a strong lead-lag effect of ffrms with shared news coverage in China’s stockmarket. The news-link momentum strategy generates a monthly return of 1.33% and a four-factor alpha (Liu et al., 2019) of 1.43%. While prior evidence on the attention dynamics among ffrms with joint news coverage is limited, we show that the momentum spillover of news-linked ffrms is largely driven by investor underreaction. The return predictability from news links is also robust to controlling for alternative economic linkages. The ffndings suggest that information diffuses sluggishly among news-connected ffrms, thereby providing new evidence on the implication of media coverage for pricing efffciency.

Minority shareholder activism (MSA) on online interactive platforms is a new form of corporate governance in China. This paper investigates whether and how dividend-related MSA affects corporate dividend policies. We find listed firms are more likely to pay dividends and raise payout ratios with MSA. Our baseline findings are robust to a variety of robustness checks. We establish a causal relationship between MSA and future dividend payouts, with both instrumental variable approach and PSM-DID approach, and we provide evidence to show the increasing effect of MSA can be explained by exit threat and voting attendance. Our focused MSA complements the formal voting rights of minority shareholders and overcomes the absence of institutional investor monitoring. Overall, our findings suggest that minority shareholders can effectively monitor management when they are empowered with voice in the age of information.

This paper identiffes culture as an important factor affecting corporate cash holdings by using China and its national culture, Confucianism, as the setting. We find that firms located in regions with stronger Confucian culture hold persistently higher levels of cash. We employ an instrumental variable to draw causal inference. The culture effect is stronger for more ffnancially-constrained and riskier ffrms, suggesting precautionary motives as the underlying mechanism. We ffnd that the culture effect remains intact after controlling for corporate governance heterogeneity, which rules out the agency motives. Lastly, ffrms’ operating performance indicates that high cash holdings is an efffcient outcome.

This paper develops a growth model for understanding the mechanisms behind industrial upgrading in a catching-up economy. In the model, when the market of new consumption varieties emerges, the rising demand drives the incentives of domestic innovation, resulting in technology progress and cost reduction. The cost reduction of existing varieties in turn leads to ìsurplusî of aggregate capital, which seeks opportunities in next new industries that produce new varieties. The dynamic feedback of ìcapital-push new marketîand ìdemand-pull innovationî moves forward the domestic technology frontier and the consumption frontier in an upward spiral, and in this process the dual-sector economic structure ó the co-existence of domestic technology-mature industries and domestic technology-immature industries ó evolves endogenously. Because of the presence of dynamic externality, the laissez-faire equilibrium is inefficient and the optimal development policy involves two-side interventions: suppressing consumption and enhancing capital accumulation in the early stage of the development while reversing the sign to stimulate consumption in a later stage.

We develop a banking model to explain the remarkable growth of China’s shadow banking since the global financial crisis. In the presence of local government interventions for low-quality projects due to short-termism, a policy combination of tightening formal banking and loosening shadow banking can reduce inefficiency given the information asymmetry between banks and regulators. This is because the higher funding liquidity risk of shadow banking incentivizes banks to be more disciplined about the quality of projects. We find consistent empirical evidence that when on-balance-sheet financing was constrained by regulators, banks shifted high-quality projects into shadow banking and rejected low-quality ones.

We study the effect of managerial career concerns on informational feedback from stockmarkets. We set up a model in which managers with career concerns can learn information from their own information production or from stock price feedback. A key insight from the model is that if managerial career concerns are high, a less frictional market induces more information production by both managers and speculators. As a result, although price informativeness improves, managers learn less from the stock market, contrasting with the classical view in the literature on stock price feedback. Exploiting a quasi-natural experiment, we document evidence consistent with model predictions.

We examine how improving the efficiency of a country’s tax system via the implementation of the information system affects firms’ behavior, utilizing the implementation of the Golden Tax Project III in China as a natural experiment. The Golden Tax Project III strengthens tax enforcement, while standardizes the application procedures for tax incentives. Based on a large-scale corporate tax survey data, we show that large firms enjoy better access to debt finance and increase take-up of tax benefits since the reform, while keeping their tax burden unchanged. The reform leads large firms to increase investment. On the contrary, the reform increases tax burden for small firms, which offsets the positive effect due to better access to debt finance. The reform has limited impact on small firms’ investment or take-up rate of tax incentives. Our study contributes to the debate on how adopting more efficient information system affects tax administration and firms’ real performances.

We survey a large representative sample of retail investors to elicit their memories of stock market investment and return expectations. We then merge the survey data with administrative data of transactions to test a model in which investors form expectations by selectively recalling past experiences similar to the present cue. Our analysis not only uncovers newstylized facts about investor memory, but also provides support for similarity-based recall as a key mechanism of belief formation in ffnancial markets. Market ffuctuations affect investors’ recall: positive market returns cue investors to retrieve episodes of rising markets and recall own performances more positively. Recalled experiences explain a sizable fraction of cross-investor variation in beliefs and dominate actual experiences in explanatory power. We also show that recalled experiences can drive out the explanatory power of recent returns for expected future returns, ruling in a memory-based foundation for return extrapolation.

Using plant-level pollution data from Environmental Survey and Reporting Database in China, we analyze how the government's 2007 environmental policy aiming to curb pollution from two-high industries (i.e., high-polluting and high energy-consuming) affect real firm pollution activities across the supply chain. We employ the Differences-in-Differences approach and find that following the 2007 environmental policy, firms in two-high industries that are mostly in the upstream of the supply chain indeed reduce emissions of air and water pollutions significantly (e.g., sulfur dioxide (SO2), chemical oxygen demand (COD), and wastewater). Such reductions are mainly due to higher pollution removal and the increased investments in treatment facilities that are funded by subsidized bank loans such as the China Development Bank (CDB). By contrast, following the 2007 policy, firms in the downstream of two-high industries increase their production levels without any increases in their pollution treatment facilities and capabilities, which leads to increased pollution levels such as SO2 emissions and coal consumption. Furthermore, such adverse spillover effects in downstream industries can be alleviated by CDB loans, which help finance the investments in pollution treatments for these downstream firms. Our findings about direct and unintended spillover effects of the environmental policy suggest that policymakers should carefully consider all potential impacts across the supply chain when designing the package of environmental policies to mitigate unintended adverse consequences.

In the era of digital economy, the development and application of digital intelligence technology are changing rapidly, and human society has entered a new era where digital intelligence technology is rapidly advancing and playing an important role. Workers who master digital intelligence technology play a decisive role in the sustained and healthy development of enterprises, and the human capital possessed by workers has become the driving force for high-quality development of enterprises. The recognition and measurement of the value of human capital possessed by workers is the foundation and prerequisite for motivating workers, and the recognition and measurement of human capital value has become a core issue that urgently needs to be studied in human resource equity accounting. The article briefly introduces the development of human resource accounting theory, expounds that establishing human capital property rights is an important condition for the sustainable development of enterprises in the digital economy era, stimulates the potential of human capital, and is conducive to accelerating economic transformation and upgrading. The dynamic equity distribution mechanism is an important way to stimulate the vitality of human capital.