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.

This paper investigates the effects of serial acquisitions on labor cost stickiness. We show that serial acquisitions can significantly increase the labor cost stickiness through increasing managerial optimism, agency costs and labor adjustment difficulty, and the labor cost stickiness further damages corporate value. The baseline findings are weaker in firms with better internal control and higher institutional ownership. Overall, this study contributes to the literature on serial acquisitions and cost stickiness, provides a new perspective for the value-destroying effect of serial acquisitions in a typical emerging market.

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.

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.

Common institutional ownership can enhance knowledge spillovers by increasing portfolio firms’ awareness about each other’s innovation. By investigating listed electronic hardware firms in China for 2000-2016, we find that when common ownership by mutual funds is higher between a firm pair, it is more likely that these two firms cite each other’s patents. To confirm causality, we show that even the exogenous increase in firms’ common ownership following their inclusion into the stock index still positively influences the citing likelihood. We also find that such citations are taken place in a timely manner. Additionally, this positive effect is robust when the effects of overlapping board members and common ownership by other types of institutional investors are controlled for. This effect is more pronounced among nonneighboring firms, when non-neighboring firms are close to their common owners, when common owners hold shares longer, and when firms’ executives have lower incentive to communicate (i.e., SOEs). Last, we find that common ownership by mutual funds also enhances knowledge spillovers through third-party patents. This paper deepens the understanding of knowledge spillovers among firms in developing countries.

Using data on Chinese firms with the unique state ownership structure of stateowned enterprises (SOEs), we examine whether institutional investors can help reduce the required returns on equity for SOEs or non-SOEs, and if so, the underlying channels. We find that an increase in the shareholdings of institutions, especially independent institutions, can reduce the required returns. This effect is more prominent in non-SOEs than in SOEs, indicating that state ownership may limit the effect by which institutional investors reduce the required returns. In addition, institutional investors promote corporate social responsibility in invested firms and may thereby reduce the required returns on equity.

This study examines the relationship between analyst forecast dispersion or accuracy and supplier concentration of listed firms in China from 2008 to 2019. Our findings suggest that higher supplier concentration is associated with lower analyst forecast dispersion, which can be attributed to the increased attention it receives from analysts. Moreover, this effect is more pronounced when firms have less bargaining power and higher institutional ownership, indicating a greater reliance on the supply chain. Our study highlights the importance of disclosing supply chain information, which provides insight beyond traditional financial information.

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.

In this article, we analyse investment preferences of domestic and foreign institutional investors to the management quality of Chinese listed firms. We find that foreign institutional investors hold higher shareholding in firms with greater numbers of executive officers with MBA degrees, having served as vice president or higher prior to joining the firm and sitting on multiple boards. Foreign institutional investors in China also show preference over investee firms with larger board size. However, they pay no attention to whether directors are independent from the firm management and meet often. Domestic institutional investors show preference to all management quality indicators that are associated with foreign institutional ownership. In addition, domestic institutional investors invest more in firms where the executive officers are certified public accountants (CPA) and are longer tenured in their current position. Furthermore, domestic institutional investors pay more attention to corporate governance of investee firms than foreign institutional investors. Finally, we find that domestic institutional investors show a strong preference to firms that have been invested by at least one Qualified Foreign Institutional Investor (QFII), even after controlling for QFII’s preference for management quality. This indicates that the QFIIs’ international reputation has been used by domestic institutional investors as a positive signal for investment opportunities.

Existing literatures indicate that, in Nontradable Shares Reform, institutional investors collude with nontradable shareholders (controlling shareholders) to help them settle a lower compensation ratio. Classifying institutional investors into mutual funds and non-mutual funds, this paper presents a further research upon whether fund governance helps mitigate collusion. Due to the rigorous entry qualifications, and the worldwide reputation as hostage, a foreign background fund is expected to have better governance quality than a domestic fund. Our empirical evidence shows that, relative to those dominated by domestic funds, mutual funds dominated by foreign background funds are less inclined to collude with nontradable shareholders. Introducing foreign institutional investors into domestic markets is Chinese government’s consistent policy. Our evidence indicates that this policy may be beneficial to the sound development of Chinese stock markets. Meanwhile, we find no sufficient evidence that mutual funds dominated by open-end funds are less inclined to collude with nontradable shareholders, although an open-end fund is expected to have better governance quality than a closed-end fund due to the redemption mechanism. As for the effect of ownership structure, it is found that mutual funds with a lower institutional ownership are less inclined to collude with nontradable shareholders. Fund governance seems to deteriorate as institutional ownership increases. Providing an implication for policy making, our evidence suggests that restricting the proportion of fund shares held by institutions may help improve fund governance in China.