Recent sociological research suggests that culturally tight environments enforce strong social penalties for mistakes. I find that such culturally tight environments incentivize managers to suppress negative information, increasing stock price crash risk. Opaque financial disclosure is a channel through which cultural tightness affects managerial bad news hoarding. Labor and capital market pressures strengthen the positive effect of cultural tightness on crash risk. The instrumental regressions using labor-intensive agriculture and ethnic homogeneity as instruments confirm a positive tightness-crash relationship. Finally, changes in environments because of headquarters relocations affect managerial tendencies to withhold bad news, resulting in changes in crash risk levels.

This study investigates how firms respond to restricted access to government information. Specifically, the Stop Trading on Congressional Knowledge (STOCK) Act, which limits the stock trading activities of government officials (hereafter referred to as politicians), reduces the willingness of politicians from federal executive branches to engage with firms. Utilizing this exogenous disruption in private communication, we employ a difference-in-differences approach to demonstrate that firms with significant government customers decrease the frequency of management forecasts more than other firms due to the STOCK Act. This reduction is more pronounced for firms where government sales are crucial to their performance and for those that serve as suppliers and government contractors. Further, the positive impact of the STOCK Act on voluntary disclosures is more significant for firms that ex-ante rely heavily on direct political engagements, as indicated by their discussions of political risk and political contributions, and for those expecting government support, as evidenced by higher competition levels within their industry. Conversely, the STOCK Act does not significantly affect the non-financial disclosures of these firms. Finally, consistent with findings on executive branch officers, our results indicate that congressmen are also involved in corporate communications and are effectively regulated on information exchange by the STOCK Act. Overall, these results justify the powerful supervisory impact of the STOCK Act on the U.S. government and capital market and help to facilitate a new U.S. government information disclosure policy for a fairer investment environment.

Purpose – This study aims to examine whether and how gender diversity on corporate boards is associated with voluntary nonfinancial disclosures, particularly water disclosures. Design/methodology/approach – This study uses corporate water information disclosure data from Chinese listed firms between 2010 and 2018 to conductregression analyses to examine the association between female directors and water information disclosure. Findings – Empirical results show that female directors have a significantly positive association with corporate water information disclosure. Additionally, internal industry water sensitivity of firms moderates this significant relationship. Originality/value – This study determined that female directors can promote not only water disclosure but also positive corporate water performance, reflecting the consistency of words and deeds of female directors in voluntary nonfinancial disclosures.

This study investigates Chinese equity mutual funds’ performances while holding those that are well behaved in financial disclosure (transparent) companies, so-called peace of mind investing. This study uses detailed semi-annual data on mutual funds from 2011 to 2020, and finds that holding these transparent companies’ stocks is profitable for mutual funds and trusted by investors, thereby boosting their inflows. However, there is no significant evidence that mutual funds can beat the market portfolio when fees are considered. The study then provides possible explanations for the above findings from mutual fund managers’ skills and mutual holdings between institutional shareholders of fund management and transparent companies.

Applying the principle of the bonding theory, this study examined the relationship between corporate governance practice and performance of Chinese firms that are listed in the major international stock exchanges, including NASDAQ, New York, Hong Kong, Singapore and London AIM markets, and further investigated whether the Chinese firms that adopted the corporate governance mechanisms of the stock exchanges where they are listed would outperform those of firms listed locally in the Chinese stock exchange that operates in a weak enforcement mechanism environment. Hypotheses are tested using cross sectional data. The empirical tests show a mixed result. The cross-listings in New York and NASDAQ (dual-listing is excluded) exhibit bonding premium, while those noncross- listed Chinese firms demonstrated better firm performance that those listed in London, Singapore, and Hong Kong. Further, the study shed some lights on the relative importance of various corporate governance mechanisms in enhancing the firm performance in the context of the dominance of state-owned-enterprises in the market. The results reveal that different market has different corporate governance mechanisms under its different macro-environments. For the overall Chinese listings, the second largest shareholder of a firm could play a role as an effective corporate governance mechanism in increasing the firm’s performance. A negative relationship between the size of the board and the corporate governance was found. For those cross-listed Chinese firms, by adopting the stringent financial disclosure and the famous auditing firms could increase the firm performance, but not good enough comparing to these non-cross-listed Chinese firms. Meanwhile, controlling shareholder has negative effect on firm performance for the cross-listed Chinese firms. The study suggests that merely borrowing corporate governance mechanism does not guarantee the improvement of corporate governance (further to its firm performance), rather, firm’s own background and country effects also matter.