This paper uses the China Household Income Project 2018 dataset to estimate returns to education for various Hukou-migration subgroups. We overcome the endogeneity problem of years of schooling using an instrument based on the Great Expansion of Higher Education policy. Our results indicate that the highest returns are for urban native workers (27.4%), followed by urban Hukou-converted (25.0%) and rural native workers (14.7%). In contrast, the returns to education for rural-urban migrant workers are insignificant. Further analyses suggest that Hukou conversion significantly increased the returns to education for rural-origin people by enabling them access to better job opportunities.

The study explores the impacts and processes of traditional Confucianism on the green technology innovation behavior of organizations from the perspective of the informal system, using samples of Chinese A-share listed companies from 2003 to 2022. The findings indicate that Confucianism has a significant promotional effect on green technological innovation, which remains robust after using the cross-multiplier term between the number of regional Confucius temples and the mean ESG of firms as an instrumental variable to mitigate the endogeneity problem and a series of tests. According to mechanistic research, Confucianism works largely through two channels: reducing agency conflicts and raising environmental consciousness. Further investigation reveals that there is a substitution impact between Confucianism in the informal institution and environmental legislation in supporting green technology innovation in firms. To encourage green technological innovation in enterprises, it is critical to emphasize the integration of informal and formal systems, as well as to fully use traditional culture’s governance efficacy in supporting the enterprise green transformation.

This paper comprehensively examines how subjective well-being (SWB) is influenced by various aspects of housing — tenure, living conditions, and housing values — based on an individual panel from the China Household Finance Survey. We employ a two-way fixed effects model to reduce the endogeneity problems of housing choices. Our findings suggest that housing plays a comparable role to income and wealth in SWB and that housing inequality and living experience both matter a great deal. Moreover, the positive impacts of home ownership on SWB reported by prior research are likely quality of life effects masked in home ownership. Results are robust to ordered logistic estimation with individual fixed effects. What we document carries important implications for housing policies, and these are generalizable to other countries.

This study examines the impact of Shenzhen Stock Exchange’s (SZSE) information disclosure ratings on investment efficiency in China. Based on a sample of Chinese A-share listed companies on the SZSE from 2001 to 2018, we discover that superior information disclosure ratings improve investment efficiency after controlling for various firm- and industry-level variables. Our findings remain valid after various robustness tests and using instrumental variables to address the endogeneity problem. Specifically, we find that improving information disclosure ratings help firms attract more investor attention, which leads to higher investment efficiency. In addition, this information disclosure effect is more pronounced for underinvestment firms and firms on the main board than for smaller firms on SEM (small- and medium-sized enterprise) and GEM (growth enterprise market) boards. Our evidence supports the idea that regulatory activities for information disclosure ratings of companies listed on China’s stock exchanges improve investment efficiency.

This paper explores the relationship between corporate social responsibility (CSR) and timeliness of goodwill impairment. Goodwill is the premium that is paid when a business is acquired. If the value of the business declines, goodwill impairment occurs. Deliberately delaying goodwill impairment (timeliness) is a widespread ethical issue. Based on all the mergers of Chinese listed companies during 2010–2019, we study the motivation of corporate charitable donations when facing the risk of goodwill impairment. Our results suggest that long-term (consistent) charitable donations reflect more altruist social responsibility than short-term (suddenly increased) donations. In particular, firms that make more long-term donations tend to report goodwill impairment timely, while firms making excessive short-term donations are more likely to delay goodwill impairment. Furthermore, we find that short-term donation is motivated not only to cover up the goodwill impairment delay, but also to provide insurance-like protection when delayed impairment is announced. Our results also suggest that moral licensing plays a role in inducing such opportunistic behaviors. To address the endogeneity problem, we use the number of provincial charitable funds and the number of provincial deaths due to natural disasters as instrumental variables for short-term excessive donations.

This study investigates the relationship between gender diversity on the board and dividend payouts in China using a large sample over the period 2003–2017. Our results provide robust and strong evidence showing that gender diversity on the board is positively associated with cash payments of dividends. The empirical outcomes confirm that gender diversity on the board facilitates corporate governance and subsequently promotes dividend payouts. We demonstrate that gender diversity on the board has the greatest effect when the board has critical mass participation (three or more female directors) compared with only their token participation. However, independent female directors increase dividend payouts, while female executive directors do not have a significant impact. Furthermore, we extend the literature on the relationship between dividend payments and government ownership by providing evidence that gender diversity has a higher impact on dividend payouts for state-owned enterprises than non-state-owned enterprises. After controlling the endogeneity problems, our findings are reliable and robust.

We empirically evaluate 20 prominent contributions to a broad range of areas in the empirical corporate finance literature. We assemble the necessary data and then apply a single, simple econometric method, the connected-groups approach of Abowd, Karmarz, and Margolis (1999), to appraise the extent to which prevailing empirical specifications explain variation of the dependent variable, differ in composition of fit arising from various classes of independent variables, and exhibit resistance to omitted variable bias and other endogeneity problems. In particular, we identify and estimate the role of observed and unobserved firm- and manager-specific characteristics in determining primary features of corporate governance, financial policy, payout policy, investment policy, and performance. Observed firm characteristics do best in explaining market leverage and CEO pay level and worst for takeover defenses and outcomes. Observed manager characteristics have relatively high power to explain CEO contract design and low power for firm focus and investment policy. Estimated specifications without firm and manager fixed effects do poorly in explaining variation in CEO duality, corporate control variables, and capital expenditures, and best in explaining executive pay level, board size, market leverage, corporate cash holdings, and firm risk. Including manager and firm fixed effects, along with firm and manager observables, delivers the best fit for dividend payout, the propensity to adopt antitakeover defenses, firm risk, board size, and firm focus. In terms of source, unobserved manager attributes deliver a high proportion of explained variation in the dependent variable for executive wealth-performance sensitivity, board independence, board size, and sensitivity of expected executive compensation to firm risk. In contrast, unobserved firm attributes provide a high proportion of variation explained for dividend payout, antitakeover defenses, book and market leverage, and corporate cash holdings. In part, these results suggest where empiricists could look for better proxies for what current theory identifies as important and where theorists could focus in building new models that encompass economic forces not contained in existing models. Finally, we assess the relevance of omitted variables and endogeneity for conventional empirical designs in the various subfields. Including manager and firm fixed effects significantly alters inference on primary explanatory variables in 17 of the 20 representative subfield specifications.

Previous studies have typically found a negative relation between pyramidal ownership and firm value, and have interpreted it as supporting evidence of the incentive problems created by pyramiding. Those studies, however, do not adequately control for the endogeneity of ownership to factors that also affect firm performance, leaving the agency problem indistinguishable from the unfavorable fundamental shock. Using a unique sample of privately owned listed enterprises in China, this paper examines the effect of pyramidal ownership on returns in response to the announcement of the Share Split Reform in China. This reform triggered zero fundamental shocks but resurrected entrepreneurial incentives in proportion to the separation of ownership and control. Estimates of agency cost of pyramidal ownership are significant and material, and are robust against a range of alternative hypotheses. Moreover, institutional investors appear to appreciate the reform more when a firm’s pyramidal ownership is less separated. The findings suggest that, despite the endogenous determinant of ownership choice, agency theory alone successfully explains the pyramidal discount.

Numerous studies have focused on the theoretical and empirical aspects of corporate capital structure since the 1960s. As a new branch of capital structure, however, debt maturity structure has not yet received as much attention as the debt-equity choice. We use the existing theories of corporate debt maturity to investigate the potential determinants of debt maturity of the Chinese listed firms. In addition to the traditional estimation methods, the system-GMM technique is used to explicitly control for the endogeneity problem. We find that the size of the firm, asset maturity and liquidity have significant effects in extending the maturity of debt employed by Chinese companies. The amount of collateralized assets and growth opportunities also tend to be important. However, proxies for a firm’s quality and effective tax rate apparently report mixed or unexpected results. Debt market and equity market conditions are also examined in relation to corporate loan maturity. The system-GMM results show that market factors seem to influence debt maturity decisions. Finally, corporate equity ownership structure has also been found to have some impact on debt maturity mix.