China faces significant environmental challenges, including reducing pollutants, improving environmental quality, and peaking carbon emissions. Industrial restructuring is key to achieving both emission reductions and economic transformation. This study uses the Environmentally Extended Multi-Regional Input-Output model and multi-objective optimization to analyze pathways for China’s industrial transformation to synergistically reduce emissions. Our findings indicate that under a compromise scenario, China’s carbon emissions could stabilize at around 10.9 billion tonnes by 2030, with energy consumption controlled at approximately 5 billion tonnes. The Papermaking sector in Guangdong and the Chemicals sector in Shandong are expected to flourish, while the Coal Mining sector in Shanxi and the Communication Equipment sector in Jiangsu will see reductions. The synergy strength between carbon emission reduction and energy conservation is highest at 11%, followed by a 7% synergy between carbon emission and nitrogen oxide reduction. However, significant trade-offs are observed between carbon emission reduction and chemical oxygen demand, and ammonia nitrogen reduction targets at -9%. This comprehensive analysis at regional and sectoral levels provides valuable insights for advancing China’s carbon reduction and pollution control goals.

This study explores the anchoring effect of previous bid premiums on acquirers’ bidding behavior in serial acquisitions. We demonstrate that, after controlling for deal characteristics, learning, and unobserved factors, the current bid premium is positively correlated with the acquirer’s previous bid premium. The strength of this anchoring effect diminishes with longer time intervals between acquisitions and increases with the industry similarity of targets. Notably, it remains unaffected by the acquirer’s state ownership or acquisition frequency. Additionally, the anchoring effect is less pronounced during periods of high economic uncertainty and can reverse following a change in the acquirer’s CEO. Our findings suggest that serial acquisitions are interrelated events, challenging the notion that each bid is an isolated occurrence. This research provides insights into the underperformance of serial acquirers compared to single acquirers and the declining trend in announcement returns across successive deals.

We study how politicians' activities affect the stock market and firm performance. Using hand-collected data on China's national leaders' corporate visits, we investigate the industry-wide implications of these visits. We find that over the six days surrounding a visit, an average industry peer's value increases by 2\% of its total assets. This result reflects investors' favourable interpretation of leaders' visits as a signal of more government support for the entire industry. However, the industry peer's profitability plummets by more than 15\% in the next three years. Further analysis reveals that after the visits, industry peers increase their investments, presumably in anticipation of additional government subsidies and credits. However, these resources are insufficient, and the profitability of these firms suffers. Our findings suggest that national leaders' visits do not help boost the targeted industries, and firms should carefully interpret the politicians' activities.

Facing external shocks, maintaining and stabilizing imports is a major practical issue for many developing countries. We first document that sourcing market switching (SMS) is widespread for Chinese firms (For 2000-2016, SMS firms account for 76.29% of all import firms and 96.30% of total import value). Then we use Chinese firm-level data to show that SMS can significantly mitigate the negative impacts of international uncertainty on imports, which further stabilizes firm employment and innovation, leading to increases in national and even world welfare. Possible motivations for SMS include stabilizing import supply, lowering import tariffs, raising the real exchange rate, and increasing product switching. We also find that the effects of SMS vary by the type of uncertainty, firm ownership, productivity, credit constraints, trade mode, and product features.

This paper explores the impact of government intervention on local analysts’ earnings forecasts, based on a scenario of financial misconduct in Chinese state-owned enterprises (SOEs). The results show that, under the influence of the government, local analysts’ earnings forecasts for SOEs with financial misconduct are less accurate and more optimistically biased. Further heterogeneity analysis reveals that forecast bias by local analysts is greater when officials have stronger promotion incentives, when regions are less market-oriented and have a larger share of the state-owned economy, and when SOEs contribute more to taxation and employment. In further analysis, we find that local analysts have a more optimistic tone in reports targeting non-compliant SOEs. Local analysts who depend heavily on political information will also issue more biased and optimistic forecasts on SOEs with violations. Finally, as a reward for achieving government goals, the local brokerages affiliated with these analysts and providing these optimistic forecasts are more likely to become underwriters in seasoned equity offerings of SOEs. This paper reveals that government intervention significantly influences analyst forecasts, providing implications for understanding the sources of analyst forecast bias.

This study shows how price limit rules, intended to stabilize markets, inadvertently distort price dynamics by fostering strategic speculation. Through a dynamic rational expectations model, we demonstrate that price limits induce post limit-up price jumps by impeding full information incorporation, enabling speculators to artificially push prices to upper bounds and exploit uninformed traders. The model predicts two distinct patterns: (1) stocks closing at price limits exhibit positive overnight returns followed by long-term reversals, and (2) stocks retreating from upper bounds suffer sharp reversals with partial recovery. Empirical analysis confirms these predictions. A natural experiment from China’s 2020 GEM reform —- which widened the price limit -— further provides causal evidence that relaxed limits mitigate speculative distortions.

We (re)evaluate the general-equilibrium effects of (environmental) policies from the perspectives of input-output networks and firm dynamics and heterogeneity. Using China’s carbon emission trading system (ETS) as an example, we find that ETS leads to more patent applications, especially the ones associated with low-carbon technologies in the targeted sectors. The effects are muted at the firm level due to selection effects, whereby only larger firms are significantly and positively affected. Meanwhile, larger firms occupy a small share in number but a large share of aggregate outcomes, contributing to the discrepancy between the effects of ETS at the individual firm and aggregate sector levels. The effects also diffuse in input-output networks, leading to more patents in upstream/downstream sectors. We build and estimate the first firm dynamics model with input-output linkages and regulatory policies in the literature and conduct policy experiments. ETS’s effects are amplified given input-output networks.

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.

Under the guidance of the dual-carbon target, the development of the carbon financial system is of great significance to compensate for the gap between green and low-carbon investment. Considering the current state of the development of carbon financial system, China has initially formed a carbon financial system, including participants, carbon financial products and macro and micro operation structures, but the system is still in the initial development stage. Given the current restrictions on the development of carbon finance, it can be seen that there are still problems such as unreasonable economic structure, insufficient market construction, single product category, low utilization rate and urgent construction of relevant judicial guarantee system. Therefore, the system should be improved at the economic level and the legal level. The economic level includes adjusting the layout of economic development structure, strengthening the construction of market infrastructure, encouraging the diversification of carbon financial products and strengthening publicity and education promotion strategies. The legal level includes improving the top-level design, formulating judicial interpretation to promote carbon financial trading, promoting commercial law amendment, and promoting the linkage mechanism between specialized environmental justice and carbon finance and other safeguard measures. Finally, improving the carbon finance system is required to promote and protect the orderly development of carbon finance. To promote the reform of the pattern of economic development, the concept of ecological and environmental protection in the financial sector needs to be implemented to form an overall pattern of pollution reduction, carbon reduction and synergistic efficiency improvement.

How much value has been lost in the Chinese bankruptcy system due to excessive liquidation of companies whose going concern value is greater than the liquidation value? I compile new judiciary bankruptcy auction data covering all bankruptcy asset sales from 2017 to 2022 in China. I estimate the valuation of the asset for both the final buyer and creditor through the revealed preference method using an auction model. On average, excessive liquidation results in a 13.5% welfare loss. However, solely considering the liquidation process, an 8% welfare gain is derived from selling the asset without transferring it to the creditors. Firms that are (1) larger in total asset size, (2) have less information disclosure, (3) have less access to the financial market, and (4) possess a higher fraction of intangible assets are more vulnerable to such welfare loss. Overall, this paper suggests that policies promoting bankruptcy reorganization by introducing distressed investors who target larger bankruptcy firms suffering more from information asymmetry will significantly enhance welfare in the Chinese bankruptcy market.