Using “the Measures for the Administration of Bank Wealth Management (henceforth BWM) Funds Sales” as an exogenous shock in fund distribution channels in Chinese BWM industry, we investigate the impact of non-affiliated distribution on fund performance. We find that the adoption of non-affiliated distribution brokers has a positive effect on BWM fund performance. We further find that the effect is more pronounced when the non-affiliated distribution broker has more market power and when the fund issuer has better governance. We interpret our findings to indicate that non-affiliated distribution brokers alleviate the agency problems of fund managers by introducing both ex-ante and ex-post monitoring, highlighting the role of non-affiliated distribution brokers as an external governance mechanism in wealth management industry.

This paper investigates the effect of exchange-traded funds (ETFs) on the ESG performance of their underlying firms. Using data from China, we find that ETFs enhance the ESG performance of their underlying firms. This finding remains consistent after several robustness and endogeneity tests. Further, we show that the effect is more pronounced for non-SOEs, firms in low-polluting industries, and firms at growth and maturity stages. Studying the mechanisms behind these results, we find that ETFs mitigate the corporate agency problems, enhance the willingness of managers to invest in ESG, and improve the ESG performance.

Site visits allow visitors to physically inspect productive resources and interact with onsite employees and executives face-to-face. We posit that, by allowing visitors to acquire investmentrelated information and monitor the management team, site visits offer disciplinary benefits for corporate investments. Using mandatory disclosures of site visits in China, we find that corporate investments become more responsive to growth opportunities as the intensity of site visits increases, consistent with the notion that site visits yield disciplinary benefits. We also find that the positive association between site visits and investment efficiency is more pronounced when visitors can glean more investment-related information and when they have stronger incentives and greater power to monitor managers. This positive association is also stronger among firms with more severe agency problems and higher asset tangibility. The overall evidence supports the notion that site visits serve as a unique venue for institutional investors and financial analysts to acquire valuable information and serve a monitoring function, which generates disciplinary benefits for corporate investments.

This study examines the impact of strategic alliances on corporate green innovation. We find that strategic alliances significantly promote corporate green innovation. Mechanism tests indicate that strategic alliances promote green innovation through channels of attracting market attention, alleviating agency problems, and stimulating collaborative innovation. Heterogeneity analysis demonstrates that the effects of strategic alliances are more pronounced for firms in areas with stringent environmental regulations and a favorable business environment, and firms facing intense product market competition. The findings provide new insights into the green transformation and upgrading of enterprises.

Utilizing the removal of the bank lending interest rate floor (IRFD) in China as an exogenous shock of banking liberalization, we find that IRFD leads to a significant rise in firms’ cost of equity capital, which is consistent with the prediction from the MM theory. The identified effects are more pronounced among firms with weaker ex-ante corporate governance and more severe ex-ante agency problems. We also find that IRFD witnesses an increase in the amount of acquired bank loans, a decrease in the average interest rate, and an increase in free cash flow. Further evidence also suggests IRFD provokes a drop in firms’ investment quality. Overall, our findings highlight an unexplored role of banking sector deregulation on firms’ cost of equity capital.

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.

In this paper, we construct a content analysis structure to explore whether corporate governance information in voluntary disclosures can predict management expenses in the next term. Employing the site visit information disclosure of firms listed on the Chinese A-share market from 2012 to 2021, we find that corporate governance information disclosure is motivated by ownership concentration,and that corporate governance information can predict management expenses and comprises incremental information, indicating that the content analysis we construct is valuable and the disclosure of corporate governance information can mitigate the agency problems.There is a difference between state-owned listed firms and nonstate-owned listed firms.

We investigate whether suppliers value their clients’ ESG profiles in China, the largest emerging market featured with low ESG awareness and severe agency problems. We find a robust and negative impact of Chinese firms’ ESG scores on their access to trade credit. The 2SLS regression results based on the instrumental variable indicate that the impact is casual. Additionally, the impact is more pronounced for firms with higher agency costs, greater information asymmetry, and worse financial performance. These results suggest that suppliers in China view clients’ ESG engagement as costly investments caused by agency problems. Finally, we highlight the economic importance of the impact by showing that trade credit access helps Chinese firms decrease debt costs, increase trade credit supply to downstream firms, and promote R&D inputs.

corporate governance. We hypothesize that (a) Firms in more individualistic cultures should suffer more from agency problems and should use more corporate governance practices; (b) Firms in more individualistic cultures should use more debt since financing policy can also be used to control managerial opportunism, but the cultural effect should be smaller in firms with already higher corporate governance standards. Using the corporate governance scores from ASSET4, we find that individualism can explain a large variation in firm-level corporate governance and the empirical results are consistent with the our hypotheses.

Financing of and investing in R&D are prone to risks of appropriation by competitors, information asymmetry, and agency problems. Although legal protection of intellectual property (IP) rights at the national level is necessary to encourage investing in R&D, we show that the effective enforcement at the local level is critical. We focus on the impact of provincial level IP rights enforcement on the financing of and investing in R&D, using a unique and rich database of high technology firms. These firms are located in twenty-eight provinces/districts throughout China. The enforcement of IP rights differs at the provincial level, although the firms are under the same set of national and international laws. To identify the causal effect of provincial level IP rights enforcement on firm behavior, we use several approaches to deal with the issues of endogeneity, reverse causality, and simultaneity. Controlling for provincial institutional factors such as economic development, banking system development, legal system performance, and local government corruption, we find that the enforcement of IP rights positively affects firms’ ability to acquire new external debt (including formal and informal financing) and external equity. Firms in provinces with better enforcement of IP rights invest more funding in R&D, generate more innovation patents, and produce more sales from new products. We also find better enforcement of IP rights encourages financing of and investment in R&D in foreign and ethnic joint ventures. The results confirm that enforcement of IP rights matters even in China. Our paper provides firm level evidence that financing of and investing in R&D are the channels that link enforcement of IP rights and economic growth.