Corporate misconduct poses significant risks to financial markets, undermining investor confidence and economic stability. This study investigates the influence of World Heritage culture, with its social, historical, and symbolic values, on reducing corporate misconduct. Using firm-level data from China, with its rich cultural heritage and ancient civilization, we find a significant negative association between the number of World Heritage sites near a company and corporate misconduct. This suggests that a richer World Heritage culture fosters an informal institutional environment that mitigates corporate misconduct. This effect is robust across 100 km, 200 km, and 300 km thresholds and remains significant when using a binary misconduct indicator. The results also show that World Heritage culture enhances corporate social responsibility (CSR) and social capital, which in turn reduces corporate misconduct. Additionally, the impact of World Heritage culture is more pronounced in firms located in high social trust areas, those with high institutional investor supervision, and those farther from regulatory authorities. These findings advance academic knowledge and offer practical implications for policymakers and investors.

Taking China Pilot Free Trade Zone (PFTZ) as a new perspective of institutional environment optimization, this paper investigates its impact on corporate ESG performance. We find that the PFTZ positively enhances corporate ESG performance, which remains robust after various checks. The mechanism analysis shows that improving corporate environmental protection capacity and management efficiency are the main channels while strengthening labor protection and easing financial constraints can enhance the positive effect. Moreover, the positive effect of the PFTZ on corporate ESG performance is more pronounced in coastal regions, the service sector, and state-owned enterprises (SOEs).

Taking the Stock Connect scheme as an exogenous shock based on data of China’s Ashare non-financial listed companies from 2009 to 2021, we identify the causal effect of stock market liberalization on green innovation. The baseline result based on a staggered difference-indifferences (DID) model suggests that stock market liberalization promotes corporate green innovation and this effect is similar to the green benefits of China’s mandatory environmental regulations. The results are robust to various checks, including the parallel trend tests, placebo tests, and the heterogenous time-varying treatment test based on Bacon decomposition and the DIDM approach. The enhanced continuity of corporate financing, improved corporate green governance and increased firm external technological collaboration are three plausible channels that allow stock market liberalization to promote corporate green innovation. Moreover, the effect is more significant for clean firms, non-SOEs, and firms in a good institutional environment. Further analysis suggests that the green innovation-enhancing effects of stock market liberalization are more likely to be high-quality innovation. Our paper provides new insights into understanding the green benefits of stock market liberalization and achieving sustainable economic development in developing countries.

This paper selects 346 green bonds issued in China from 2016 to 2021 as the sample, and the Propensity Score Matching (PSM) method is employed to confirm the existence of ‘green premium’ in the Chinese bond market. On this basis, data on internet media sentiment and print media sentiment are collected from ‘Sina Weibo’ and ‘China Important Newspaper Full Text Database’ by both Web Crawler Technology and Textual Analysis Methods to explore the impact and the mechanism of heterogeneous media sentiments on the ‘green premium’. The results show that both the optimism of internet media and print media can significantly promote the ‘green premium’ of green bonds, and the influence of print media sentiment on the ‘green premium’ is greater than that of internet media sentiment. In addition, the Bootstrap method verifies the mediating effect of print media sentiment in the influence of internet media sentiment on ‘green premium’, indicating that print media sentiment is an important transmission path. Moreover, the results of the heterogeneity test show that the more optimistic the media is, the more significant the ‘green premium’ effect is in the regions with higher institutional environments and financial subsidy policies. The ‘green premium’ of green bonds is most pronounced for higher levels of institutional environment and green bond preferential policies.

International debt financing is important for the development of emerging economies, as it allows firms from emerging markets (EMs) to have access to greater liquidity, a wider investor base, and more effective laws and regulations. However, the financial crisis in the late 1990s, coupled with recent rapid growth in corporate leverage in emerging markets, have forced policy makers to re-evaluate the risk of offshore financing and its role in EMs’ development. In this paper, we investigate the bonding/signaling effect of offshore financing to those firms in subsequent domestic market financing through the improvement of information disclosure and creditability. With a comprehensive database covering bond issuances by Chinese firms both in domestic and offshore markets over the period of 2010 to 2015, we find that: 1) The offshore bond issuance has a positive bonding/signaling effect on firm’s subsequent debt-raising in the domestic market in terms of longer maturity of corporate issuance and lower funding cost. 2) If the offshore issuance occurs in a stricter jurisdiction providing more effective investor protection and stringent disclosure, or with an international investment-grade rating, it will have a positive influence on firm’s subsequent debt-raising domestically. 3) Offshore debt financing improves the long-term firm performance, especially for financially-constrained companies. Our study presents new evidence for the role of the offshore market in promoting both the domestic institutional environment as well as firm growth, and provides policy implications for developing a broad offshore corporate bond market in emerging economies.

Many prior studies conclude that Chinese independent directors engage in window dressing. The results of research into the relationship between the proportion of independent directors on the board and firm performance are mixed. We use the number of negative opinions issued by a firm’s independent directors as a proxy for their effectiveness in the monitoring role they play. We hypothesize that both board structure and the personal characteristics of independent directors influence the effectiveness of monitoring. Using a matched control sample of firms in which there were no disputes in the board room over the sample period, we find that independent directors who have more political capital, such as former government officials, Communist Party members, and those who also have a senior management position in another firm are more likely to issue negative opinions. We also find that the independent directors of firms with more balanced power structure in board and those that operate in a better institutional environment have a greater tendency to issue negative opinions.

This paper investigates pay dispersion and its effects on firm performance in China’s listed firms. Due to weak investor protection and an inefficient legal system, China is expected to have a lower level of corporate governance. In this weak institutional environment, we argue that awarding sufficient power and high pay to CEOs is helpful to increase firm performance. Using data from 2002 to 2007, we find that pay dispersion is related to tournament incentives and agency factors. Importantly, we find evidence that pay dispersion is positively related to firm performance which is consistent with our primary hypothesis. In addition, the relation is more positive when the firm is controlled by the state. Our results are robust to corrections for endogeneity between pay dispersion and firm performance and to several alternative measures of pay dispersion and firm performance.

This study conducts a firm-level analysis of the impact that the gender diversity of boards of directors has on corporate philanthropic responses to disasters. We predict a negative relationship between diversity and philanthropic contribution; as the relationship is stronger in listed firms with a better-developed institutional environment. Data were collected on the philanthropic responses of listed Chinese firms to the 5.12 Wenchuan earthquake in 2008. These data support the hypothesized negative relationship and show that it is stronger in higher level vs. lower level marketization environments; the relationship is weaker in listed firms with average gender diversity that have political connections. We also find evidence that agency cost theory explains corporate philanthropic disaster response much better than strategic philanthropic theory since women on boards of directors do not facilitate corporate donation process but rather evaluate the benefits of corporate responses to disasters. These benefits depend on the level of marketization and separation from the government, especially for listed firms with average gender diversity in China. These constructive results provide the first examination of the moderating role of institutional environment on the relationship between gender diversity and corporate philanthropic behaviors. We discuss the implications of this work for further research on diversity considering the interaction with the corporate context.

With the expansion of multinational corporations (MNCs), the alarming upsurge in widely publicized and notable corporate scandals involvingMNCs in emerging markets has begun to draw both academic and managerial attention to look beyond home market practices to the pressing concern of CSR in emerging markets. Previous studies on CSR have focused primarily on Western markets, reserving limited discussions in addressing the issue of MNC attitudes and CSR practices in their emerging host markets abroad. Despite this incongruity in academic response to CSR in emerging markets, managers of multinational companies continue to face mounting and most often conflicting pressures to weigh among multiple strategic CSR responses in emerging markets. Such a task is often further complicated by the complexity of varying business norms and standards, regulatory environments, and stakeholder demands for CSR across national boundaries. With such a challenge in mind, I attempt to examine the explanatory factors in leading MNCs, otherwise recognized for accountability and integrity in their home markets, to employ inconsistent or negligent practices under CSR pressure in Chinese emerging economy. Preliminary findings reveal that discrepancies exist in how MNCs perform in CSR in home countries versus in host countries. While MNCs do have much to improve, the institutional environment in the emerging market, including the legal framework and the ethical culture, also needs to be improved by the host country governments, the industry associations, and local firms. Meanwhile, media interest and journalists, NGOs, third party monitors, industry stakeholders as well as consumer advocacy groups can raise the visibility of MNC’s contradictory practices between their origin nations and countries with emerging economies and offer the pressures and incentives for MNCs to amend their ethical shortcomings. This article also suggests implications for both theory and practice.

We study corporate philanthropy using an original database that includes firm-level data on cash giving, political connection, and institutional environment in corporate contribution after Sichuan Earthquake at 12, May, 2008. Results provide support for the theory that political connection enhances corporate philanthropy, as firms with political connection tend to adopt giving practices to generate insurance-like protection of relational wealth; meanwhile firms that condition high levels of law enforcement environment and low risks of loss political connection give less to charity. However, much of our evidence indicates that mangers adopt corporate philanthropy to maintain personal political connection with governments which mask their personal benefits from philanthropic contribution and philanthropy insurance-like protection theory combined with agency costs play a prominent role in explaining corporate giving. Firms with political connection, larger boards of directors and higher interest conflicts among controlling shareholders and other investors are associated with significantly more cash giving. The empirical work considers the impact of institutional environment as well as risks of loss political connection on corporate giving and the relationship between political connection and corporate social responsibility.