This study investigates how the interaction of political accountability and local officials’ career incentives shapes the market for Municipal Corporate Bonds (MCBs) in China, taking the 2017 local government debt personal responsibility rule as a quasinatural experiment. We develop a stylized incomplete-information bargaining model to analyze how the rule reshapes the bargaining equilibrium by rendering officials’ observable characteristics credible signals of bailout incentives. Using a dataset of prefecture-level MCBs from 2008 to 2020, we empirically test the model’s predictions and focus on separating officials’ incentive effects from their inherent ability. Our core findings show that post-announcement of the rule, each additional year of a local party secretary’s remaining time to retirement, a proxy for bailout incentives, reduces MCB spreads by approximately 2.5 basis points and increases issuance volume by about 2.0%. These effects are significantly amplified in fiscally stressed cities. Notably, under the 2017 rule, cities led by party secretaries with stronger bailout incentives can expand MCB issuance, which is contrary to the rule’s original intent to rein in local borrowing.

We examine the unintended consequences of bankruptcy court establishment on corporate behavior. Using data on Chinese listed firms from 2009 to 2019 and a staggered difference-in-differences model, we find that the establishment of bankruptcy courts increases accrual earnings management by about 17% among high bankruptcy risk firms relative to low-risk firms. While bankruptcy courts improve bankruptcy efficiency and justice, reduce local government intervention, and accelerate the exit of zombie firms, they also induce greater earnings management. This effect is driven mainly by survival pressure and managerial reputation concerns, rather than by efforts to correct external evaluations. Consistent with this interpretation, we do not observe improvements in long-term operations, governance, performance, or real earnings management. Overall, this paper enriches the literature on earnings management from the perspective of judicial governance and on the economic consequences of creditor-friendly bankruptcy institutions.

This paper examines the use of finance leases in China’s local government debt. Using a unique dataset of government finance lease transactions, we document that local government financing vehicles (LGFVs) rapidly adopted finance leases, with the outstanding amount growing from virtually nothing in 2013 to a cumulative total of 1.02 trillion RMB by 2018. Our difference-in-differences (DID) analysis reveals that the central government’s restrictive financial policies account for a substantial portion of this surge. Because these restrictive policies confined LGFVs’access to conventional borrowing channels, finance leases emerged as a key alternative, particularly through bank-affiliated leasing firms. While LGFVs' use of finance leases offers low-cost financing for local governments, the low quality of the underlying assets poses significant risks to the leasing firms.

The Full Guaranteed Purchase System began to replace the subsidy system as the core policy for promoting renewable energy integration, designating grid companies as the sole entity responsible for the physical integration of renewable energy. Meanwhile, the Tradable Green Certificates system provides environmental benefits for renewable power generators through market mechanisms. Therefore, exploring the strategic choices of various entities under the dual policy interventions, and uncovering the mechanisms for realizing electricity energy value and green value under different integration models, is of great significance for advancing China’s renewable energy integration. Based on China’s actual conditions, this study integrates the features of both policies and constructs a three-party evolutionary game model involving government, power generators, and grid enterprises to simulate their interactions and identify key factors influencing strategic choices. The results show that active government regulation effectively encourages positive strategies from both generators and grid companies, and that active power integration by grid companies further promotes green power generation. A “stepwise complementary” relationship exists among reputation gains, reputation losses, and regulatory costs: higher reputation gains can offset decision-making resistance arising from increased regulatory costs. Green power generation costs and innovation costs have significant negative effects on strategic choices, while the guaranteed purchase price has a significant positive effect on generators’ active strategies. The penalty parameter plays a key positive role in grid companies’ active strategies, and the guaranteed purchase price significantly influences their active integration behavior. This paper provides recommendations for motivating all entities actively participate in the consumption process.

Examining a cross section of seven regional Emission Trading System (ETS) and thenational ETS in China, we explore the interplay between firms and governments. We find heterogeneous adaptation among firms. Firms in regions anticipating stringentpolicies reduce emissions and invest in decarbonization technology, whereas expecta-tions of lenient policies lead to increased emissions. Meanwhile, governments set upmore stringent carbon policies when firms decarbonize more proactively. The resultsare robust to allowance allocation policies, such as cap-and-trade or tradable perfor-mance standards. Our findings underscore the importance of strategic interactionsbetween firms and governments in decarbonization.

The low-altitude economy (LAE) refers to economic activities conducted within airspace below 1,000 meters. Drawing on related theories on socio-technical transitions, LAE can be understood as a future regime challenging the dominant urban mobility paradigm. As an emerging field, it has yet to be systematically examined through an empirical study, especially about local response. In this paper, we construct an Integrated Local Support Index (ILSI) based on the number of relevant local policies and the level of public interest measured by the Baidu search index. Private sector readiness is measured by the LAE Development Scale (DS) based on the registered capital of relevant enterprises locally. Focusing on the top 50 cities in China’s LAE sector, we conduct a comprehensive empirical study to explore the relationships between DS, ILSI, and other natural and socio-economic factors between 2012 and 2023. The dynamic interactions of key stakeholders (local government, foreign capital, and talents) are analysed by game theory. The findings suggest that the ILSI, education level, and foreign investment have significant positive impacts. Wind speed is identified as a negative factor for LAE development. The game theory analysis further reveals that the three positive factors tend to foster efficient and stable growth when working synergistically. This implies that enhancing local government support could trigger chain reactions that attract more investment and talents, thereby accelerating LAE development. Projecting to the future, local LAE DS in 2026 is predicted via a panel time-series model with random effects. This study provides both empirical evidence and governance strategies for decision-makers navigating the socio-technical transition of the LAE.

High-quality development of water conservancy (HDWC) is of critical value for safeguarding the stability of production systems, livelihoods, and ecosystems. As the digital revolution intersects with China’s “dual carbon” targets, development of water conservancy must transition from traditional engineering approaches to data-driven ecological models. Drawing on institutional logic theory and employing dynamic qualitative comparative analysis across 30 Chinese provinces, this study examines how digital ecology facilitates the HDWC. The findings reveal that none of digital government, digital infrastructure, digital economy, digital capability, or digital society constitutes a necessary condition for the HDWC. Instead, it is the result of the combined effects of multiple institutional logics. Five configurations leading to HDWC are identified and categorized into four types: government-market-driven model, government-market-society-driven model, market-society-driven model, and government-society-driven model. The consistency of the configurations significantly increased during the study period. Furthermore, their distribution showed substantial regional differences. There are two configurations that inhibit the HDWC, namely the government-market-absence type and the market-society-absence type. Digital society emerges as a critical factor. This research uncovers multiple pathways through which digital ecology can empower HDWC, providing valuable insights for optimizing regional digital environments.

Understanding the impact of local government debt on economic development has emerged as a focal issue for both academic research and policymakers. This study adopts a financing structure perspective and utilizes panel data from 214 cities and 3,228 A-share listed companies in China (2017–2023) to empirically investigate the impact of local government debt on corporate “shift from virtual to real economy” and its underlying mechanisms. The expansion of local government debt significantly promotes enterprises “shift from virtual to real economy”. The positive impact of local government debt on enterprises” transition from financialization to the real economy is more pronounced among firms in first tier and new first-tier cities, non-state-owned enterprises, and labor-intensive industries. Further analysis indicates that local government debt drives capital reallocation from financial investments to real investments by alleviating corporate financing constraints. This study proposes policy recommendations including optimizing debt fund allocation, further optimizing the financing environment, implementing differentiated regulatory measures. These suggestions provide both a theoretical foundation and practical references for synergistically advancing debt governance and real economy revitalization.

The relationship between economic decentralization and regional economic growth has attracted wide academic attention. However, existing literature rarely explores the validity and applicability of decentralization theory from the perspective of location endowments. This study takes China’s county-to-city reform - a decentralization policy - as a point of entry to construct a decentralization model incorporating location endowments. Using county-level panel data from 1992 to 2009 and employing a difference-in-differences (DID) approach, the study evaluates the impact of county-to-city reform under the constraint of location endowments on county-level economic development. The findings reveal that the policy effects of local decentralization are constrained by location endowments. Specifically, in regions with poorer location endowments, county-to-city reform significantly inhibits local economic development. Indeed, mechanism analysis further indicates that in such disadvantaged regions, local decentralization under the county-to-city reform generates a “political resource curse” effect, which hinders economic growth through three channels such as distorted fiscal expenditure structures, corruption, and misallocation of land resources. The conclusions of this study provide a valuable perspective for understanding the conditions under which decentralization theory holds, while also offering rigorous empirical evidence for government agencies to design more targeted decentralization policies.

Cultural tightness measures the extent to which individuals behave according to the broader values shared by other members in society. While cultural tightness has been studied extensively in the context of individuals’ behavior and (cross) country-level outcomes, much less is known about the explanatory power it holds in the setting of organizational structures. Motivated by the ambiguous relationship between cultural tightness and population-level gender equality documented by prior literature, we investigate whether cultural tightness helps explain board gender diversity levels in China. Rooting our hypotheses in institutional theory and the contextual governmental reforms of China, we leverage a large sample of Chinese A-share listed firms and document that firms located in culturally tight provinces have higher levels of board gender diversity. Further analyses reveal that cultural tightness in China partially offsets the impact of more traditional Confucian values, and the relationship becomes more pronounced in settings where firms can realize higher legitimacy gains from adopting women on their boards. Finally, we counter potential critiques of window dressing, by demonstrating that in culturally tighter areas women are more likely to be higher educated, have more experience abroad, hold more board positions, and are less likely to be independent directors.