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 study investigates the impact of CIO on the Environment, Social, and Governance (ESG) performance. Our analysis is based on a panel dataset comprising 2395 Chinese listed companies throughout the period from 2007 to 2020. Evidence from empirical results shows that CIO is positively correlated with ESG performance. In other words, CIO enhance the corporate ESG performance. The issue of endogeneity was duly considered, and appropriate measures were made to address it. Furthermore, robustness tests were conducted, and the findings remained consistent and reliable. The examination of the mechanism indicates that CIO enhance internal control quality that facilitates the advancement of ESG activities within firms. This paper contributes to the existing body of knowledge by examining the impact of external governance systems on the promotion of ESG activities in Chinese enterprises. This study adds to the existing body of scholarship on the implications of Common institutional ownership. Findings recommend several possible policy and economic ramifications that might support Chinese enterprises in their endeavors to incorporate ESG initiatives and contribute to the overall sustainability of society.

Green finance has drawn increased worldwide attention from policymakers as a financial mechanism that could potentially encourage corporations to actively engage in sustainable activities. However, despite a growing body of studies investigating the economic outcomes of green financial policies, there is still a lack of research that systematically quantifies the social welfare implications of green finance. Hence, this study aims to fill this research gap by establishing the causal effect of green finance on corporate environmental responsibility. Exploiting the "bottom-up" enforcement of the green finance pilots in 2017 in China as a quasi-natural experiment and the difference-in-difference-in-difference identification strategy, we find that green finance significantly enhances corporate environmental responsibility performance in high-polluting industries relative to their counterparts, and this evidence continues to survive a battery of robustness checks. Moreover, we explore three underlying mechanisms that possibly explain this beneficial effect: risk-taking, external governance and financing channels. Furthermore, we uncover that corporate environmental responsibility serves as a plausible non-economic channel that combines green finance with economic benefits by stimulating green innovation, promoting total factor productivity and expanding market share. Overall, our study offers new insights on both the economic and non-economic consequences of green finance on business performance.

This study empirically investigates the impact of dialect diversity on corporate investment efficiency under different levels of economic policy uncertainty. Our findings reveal that local dialect diversity enhances investment efficiency during stable periods, but this advantage significantly diminishes under high economic policy uncertainty. This reduction primarily arises from underinvestment and overly cautious decision-making by fragmented management during periods of turmoil. Further analysis reveals that this reduction is exacerbated by stronger internal governance, which emphasizes checks and balances, and mitigated by stronger external governance, which focuses on supervisory power. Our results remain robust when using alternative measures of main variables and employing topography as an instrumental variable.

The study finds that analyst skill plays a key factor to explain the complicated and chaotic relation between analyst coverage and external governance. We divide analysts into multiple skill groups by GMM (Gaussian mixture model) method, and explore the effect of the coverage by skilled analysts on earnings management in Chinese listed companies. The results indicate that only the coverage of skilled analysts shows a significant negative correlation with earnings management. Heterogeneity analysis reveals that the negative relationship between the coverage of skilled analysts and earnings management is primarily observed in non-state-owned companies, those with weaker external audits, and smaller-scale firms. The conclusion remains robust after considering endogeneity issues. The findings of this study suggest that incorporating analyst skill contributes to a better understanding of the mechanisms through which analysts influence corporate governance. It also highlights that the role of analysts in corporate governance cannot be generalized.

This study investigates the impact of CIO on the Environment, Social, and Governance (ESG) performance. Our analysis is based on a panel dataset comprising 2395 Chinese listed companies throughout the period from 2007 to 2020. Evidence from empirical results shows that CIO is positively correlated with ESG performance. In other words, CIO enhance the corporate ESG performance. The issue of endogeneity was duly considered, and appropriate measures were made to address it. Furthermore, robustness tests were conducted, and the findings remained consistent and reliable. The examination of the mechanism indicates that CIO enhance internal control quality that facilitates the advancement of ESG activities within firms. This paper contributes to the existing body of knowledge by examining the impact of external governance systems on the promotion of ESG activities in Chinese enterprises. This study adds to the existing body of scholarship on the implications of Common institutional ownership. Findings recommend several possible policy and economic ramifications that might support Chinese enterprises in their endeavors to incorporate ESG initiatives and contribute to the overall sustainability of society.

Using the sample of Chinese A-share listed firms from 2020 to 2021, this study investigates the impact of EPU on corporate ESG performance. We find that EPU improves corporate ESG performance, and the results largely hold after a series of robustness tests. Furthermore, EPU has a significantly positive effect on each dimension of corporate ESG performance (environment, society and governance). In addition, we document that the positive effect of EPU on corporate ESG performance is more pronounced for state-owned firms, and firms with better internal governance, better external governance, and firms that are more financially-constrained. This study provides large-sample empirical evidence for the effect of EPU on corporate ESG performance, which provides implications for management to make use of corporate ESG performance in the face with uncertain economic policy environment.

Using a comprehensive dataset for Chinese listed companies from 2009 to 2021, we find that online media is negatively associated with cash dividend level, and the proportion of positive news has a negative moderating effect on this relationship. Our results support the "information intermediary" effect and exclude the "external governance" and "market pressure" effects. We further propose that online media weakens the positive relationship between cash dividends and past earnings (rather than the future), indicating that cash dividends contain signals of improvement in past earnings and are replaced by online news. We also find that only firms with more positive news pay dividends that have signaling effects, and there is a synergistic effect between positive news and dividend signal. Additional results show that the effect of online media on dividend policy is more pronounced than traditional media, which has almost no influence. Our main conclusions remain valid after addressing potential endogeneity issues and conducting various robustness tests.

Purpose – The aim of this paper is to provide additional insights on the association between real earnings management (REM) and crash risk, particularly from the perspective of an emerging market economy. It also examines the moderation role that internal and external corporate governance may play in this area. Design/methodology/approach – Relying on archival data from the RESSETand CSMAR databases over a timeframe from 2010 to 2018 of China listed company, the authors test the hypotheses by regressing common measures of crash risk on the treatment variable (REM) and crash risk control variables identified in the prior crash risk literature. The authors also introduce monitoring proxies (internal controls as an internal governance and institutional ownership as an external governance) and assess how effective internal and external governance moderate the relation between REM and stock price crash risk. Findings – The results suggest firms with higher REM have a significantly greater stock price crash risk, and that this association is mitigated by external monitoring. That is, greater institutional ownership, particularly pressure insensitive owners, mitigates the impact of REM on stock price crash risk. However, internal control does not mitigate the association between REM and stock price crash risk. Originality/value – Following the passage of the Sarbanes–Oxley (SOX) Act, prior research has documented an increase in the use of REM and a positive association between REM and cash risk. The authors demonstrate that they persist in one of the largest emerging markets where institutional regulations, market conditions and corporate behaviors are different from those in developed markets. Also, the assessment of the moderation effect of internal and external governance mechanisms could have meaningful implications for investors and regulators in Chinese and other emerging markets.

Distinct from existing studies on general institutional investors and institutional investor cliques, this study examines how common institutional owners, who simultaneously hold more than 5% equity blocks in at least two publicly traded firms within the same industry, influence firms’ bad mergers and acquisitions (M&As) in China. Contrary to the “conspiracy tort” view, according to which common institutional owners are more likely to vote for bad M&A deals to pursue internalized gains from industry portfolios (Antón et al., 2022b), our results strongly support the “synergy governance” view, according to which common institutional owners perform more actively and effectively in monitoring against bad M&As and improving M&A quality. There is further evidence that common institutional owners with greater peer linkages and industry power and longer-term holdings are more likely to oppose deals with negative acquirer returns. Finally, we find that the effect of common institutional ownership on M&As is more pronounced among firms with stronger earnings management, moderate stock return synchronicity, less management shareholding and higher management expenses. The results are consistent with the “synergy governance” hypothesis whereby common institutional owners are able to leverage their advantages of industry information and supervisory experience to improve the information environment and corporate governance of the firms they hold. Overall, in China’s market, common institutional owners play an active external governance role and effectively improve M&A quality.