We examine the relationship between customer concentration and capital structure adjustment speed using a sample of US listed firms from 1977 to 2020. We found that the customer-concentrated firms have a lower speed of leverage adjustment. Customer concentration affects leverage adjustment speed mainly through increased cash flow volatility and asset specificity. The negative association is more pronounced in firms with high relationship-specific investments and low switching costs for their customers. Stock market reacts to leverage deviation strongly for firms with concentrated customers. Our findings highlight the vital role of customers as key stakeholders in capital structure decisions.

This study examines how firm-level exposure to the COVID-19 pandemic affects the speed of leverage adjustment among 3260 US-listed firms from 2019q1 to 2022q1. Using a novel measure of COVID-19 exposure, we find that higher exposure significantly reduces the speed at which firms adjust their leverage towards target levels. This effect is more pronounced for financially constrained firms and those operating in competitive markets. We further show that COVID-19 exposure adversely impacts corporate liquidity, default risk, and financial flexibility. Our findings highlight the role of exogenous shocks in shaping corporate financing decisions.

Analyzing data from 3,616 Chinese listed firms, we find a strong positive relationship between policy uncertainty and firms’ exchange rate exposure. This result remains robust after controlling for macroeconomic conditions and addressing endogeneity issues. Notably, policy uncertainty’s impact is significantly stronger for firms with a higher degree of international involvement and for poorly-governed firms. Interestingly, firms use financial hedging more intensively and reduce their operational hedging in high-uncertainty periods. Our results suggest that policy uncertainty exacerbates the impact of currency movements on firms’ financial performance, as firms become increasingly involved in international operations. Consequently, firms should strengthen their corporate governance and make effective use of hedging tools.

Testing the household Euler equation with consumption data faces econometric challenges caused by large measurement errors in the data and a short time span. We adopt a framework to test the Euler equation with stock market data to alleviate the measurement error and short time span issues. Utilizing a data-driven group panel data method, we identify a heterogeneous pattern of Euler equation failure among different groups of listed firms. The identified degree of Euler equation failure is significantly related to firm characteristics that are associated with famous stock anomalies. We show that the correlations between the degree of Euler equation failure and firm characteristics provide a new set of stylized facts that can help us distinguish between different economic theories on Euler equation failures and asset pricing anomalies, and identify challenges facing current theories.

Purpose – This study aims to investigate whether firms purchase directors’ and officers’ liability (D&O) insurance when the country-level economic policy uncertainty (EPU) is high. Design/methodology/approach – This study uses D&O insurance data from Chinese listed firms between 2003 and 2019 to conduct regression analyses to examine the association between D&O insurance and EPU. Findings – The results show that government EPU, despite being an exogenous factor, increases the likelihood of firms’ purchasing D&O insurance, and this effect is more pronounced when firms are exposed to great share price crash risk and high litigation risk, suggesting that firms intend to purchase D&O insurance possibly due to the accentuated stock price crash risk and litigation risk associated with EPU. In addition, the results indicate that the effect of EPU on the D&O insurance purchase decision is moderated by the provincial capital market development and internal control quality. Practical implications – The study highlights the role of uncertain economic policies in shareholder approval of D&O insurance purchases. Originality/value – The study enriches the literature on the determinants of D&O insurance purchases by documenting novel evidence that country-level EPU is a key institutional factor shaping firms’ decisions to purchase D&O insurance.

This paper utilizes the COVID-19 pandemic as an exogenous shock to investor uncertainty and examines the effect of uncertainty on stock liquidity. Analyzing data from Chinese listed firms, we find that stock liquidity dries up significantly in response to an increase in uncertainty resulting from regional pandemic exposure. The underlying reason for the decline in stock liquidity during the pandemic is a combination of earnings and information uncertainty. Funding constraints, market panic, risk aversion, inattention rationales, and macroeconomics factors are considered in our study. Our findings corroborate the substantial impact of uncertainty on market efficiency, and also add to the discussions on the pandemic effect on financial markets.

The 2020 Holding Foreign Companies Accountable (HFCA) Act will force China-based firms to delist from U.S. exchanges if China fails to permit audit inspections during a two-year period. The Act also requires such firms, as soon as China blocks such inspections, to disclose ties to the Chinese party-state. We first explain why the delisting provisions, while well-intentioned, may well harm U.S. investors. We then turn to the disclosure provisions, explaining that they appear to be motivated by a desire to name-shame Chinese firms rather than to protect investors. While China-based firms do pose unique risks to U.S. investors, the Act fails to mitigate—and may well exacerbate—these risks.

This paper examines the effectiveness of preemptive rights in protecting minority shareholders, drawing on new issuances by Chinese listed firms spanning from 2006 to 2022. The evidence reveals that, on average, only 62% of shareholders exercise their preemptive rights despite an 18% issuance discount, resulting in wealth losses of 6% of issuance amount for non-participating shareholders. More importantly, minority shareholders suffer greater wealth losses because they lack sophistication and face extra constraints in exercising their rights compared to controlling shareholders. These findings call for additional policy safeguards, such as rights transferability and controlling shareholders’ pre-commitment, to enhance minority shareholder protection.

This study investigates how digital transformation can affect ESG performance within China’s unique environment. Using data from Chinese A-share listed firms from 2009 to 2022, this paper reveals digital transformation can positively affect ESG performance. Within the mechanism, customer concentration plays a medicating effect and organizational structure stability plays a positive moderating effect. Besides, the effect of digital transformation on ESG performance is more pronounced in Chinese western enterprises, non-heavy polluting industries and large-size enterprises. To our knowledge, this paper is one of the pioneering studies that examines the relationship between digital transformation and ESG performance from the perspective of supply chain management.

As China’s shadow banking sector expands, the impact of listed companies’ involvement in financial stability and the real economy accumulates increasing attention. Despite being a crucial channel for non-financial firms to participate in shadow banking, the literature has given limited consideration to the acquisition of wealth management products (WMPs). Using data from Chinese listed firms between 2007 and 2020, we analyze how excessive equity financing affects companies’ WMP acquisitions. Our findings indicate that over-financing significantly boosts WMP purchases among these firms, particularly in cases of private ownership, raised environmental uncertainty, and strict financing constraints.