Using Chinese publicly listed firms from 2007 to 2020, this study empirically explores the impact of non-controlling shareholders’ network on the corporate excess goodwill. We find that the centrality of non-controlling shareholders’ network significantly decreases the excess goodwill from mergers and acquisitions, indicating that non-controlling shareholders’ network can restrain the goodwill bubbles. Moreover, the inhibitory effect of non-controlling shareholders’ network on excess goodwill stems from pressure-resistant institutional investors and individual investors. This effect is achieved through the information effect, resource effect, and governance effect. Furthermore, this inhibitory effect is more pronounced in firms located in less developed regions and legal environments, and firms with lower audit quality. In conclusion, non-controlling shareholders’ network plays a positive role in the restriction of excess goodwill in listed companies.

The study introduces 'earnings purity,' a concept based on the 'gold content' of target earnings, to evaluate its impact on merger and acquisition (M&A) premiums. Our findings reveal that targets with higher earnings purity command increased valuations and premiums. Further analysis of the information effects uncovers a U-shaped relationship between earnings purity and negotiation duration, suggesting that elevated premiums might not always be justified. The heterogeneity test indicates that the effect of a target firm's earnings purity on M&A premiums is more pronounced in cross-border and inter-industry M&As. However, it is less influential in cases with larger target firms and better external conditions. These results highlight the dual aspects of M&As, presenting them as both advantageous and potentially hazardous.

This study investigates the impact of non-controlling shareholders' network on corporate excess goodwill using Chinese publicly listed companies from 2007 to 2020. We find that a stronger centrality of non-controlling shareholders' network leads to a significant decrease in excess goodwill resulting from mergers and acquisitions. This implies that the non-controlling shareholders’ network has a significant inhibitory effect on the occurrence of goodwill bubbles. Mechanism analysis finds that non-controlling shareholders' network can inhibit excess goodwill thorough information effect, resource effect, and governance effect. Furthermore, this inhibitory effect is attributed to pressure-resistant institutional investors and individual investors, and is more pronounced in firms located in less developed intermediary market and legal system environment, as well as firms with lower audit quality. In summary, the non-controlling shareholders' network plays a positive role in curbing excess goodwill in listed companies.

This paper examines the impact of a policy targeting firms with implicit government guarantees (IGGs). We focus on the debt management policy (DMP) proposed for state-owned enterprises in China. Our analysis shows that the DMP lowered the average yield of SOE bonds by 6.6 basis points. However, when accounting for the information effect of the policy announcement, the DMP’s impact ranged from 6.6 to 32.1 basis points. Our findings reveal that the information effect weakened the intended effect of the DMP and increased the average bond yields of both private-owned enterprises. We emphasize the need for policymakers to carefully design their policy communication to mitigate the information effect and consider the response of the financial market.

In this paper, we examine investors’ valuations of corporate cash hoardings and dividend payout to explicitly isolate the monitoring effect from the information effect of corporate disclosure activity. In a sample of 951 firms from 38 countries, we find that cash resources are rewarded with higher market valuation when greater disclosure improves a firm’s transparency. These results suggest that extensive disclosure enhances external monitoring and thus limits insiders’ ability to accumulate cash to expropriate minority shareholders. In further support of the monitoring effect of strong disclosure, we find that dividend payout is valued at a premium in opaque firms where cash is more vulnerable to consumption of private control benefits. Overall, our findings support the disciplinary role of firm-level disclosure policy in corporate governance mechanisms.

In 2005 and 2006, the split-share structure reform converted the nontradable shares of most domestic public firms in China to tradable shares. This conversion imparted a drastic supply shock to the public market. Studying this unique event, we provide direct evidence to support an inelastic demand curve for stocks. Abnormal returns of the sample firms resulting from the reform are found to be negatively associated with the size of the supply shock. This finding is free from the confounding information effects present in many prior studies of stock price elasticity. It is also robust after controlling for opposite price impacts of ROA, firm size, and ownership concentration.