Portfolio underdiversification is one of the most costly losses accumulated over a household’s life cycle. We provide new evidence on the impact of financial inclusion services on households’ portfolio choice and investment efficiency using 2015, 2017, and 2019 survey data for Chinese households. We hypothesize that higher financial inclusion penetration encourages households to participate in the financial market, leading to better portfolio diversification and investment efficiency. The results of the baseline model are consistent with our proposed hypothesis that higher accessibility to financial inclusion encourages households to invest in risky assets and increases investment efficiency. We further estimate a dynamic double machine learning model to quantitatively investigate the non-linear causal effects and track the dynamic change of those effects over time. We observe that the marginal effect increases over time, and those effects are more pronounced among low-asset, less-educated households and those located in non-rural areas, except for investment efficiency for high-asset households.

This study assesses the impact of China’s Green Credit Guidelines (GCG) 2012 on the quality of firms’ green innovation and their financial asset allocations. While examining patent applications and grants, our findings reveal that, although the GCG 2012 led to a significant increase in green patent applications, its influence on granted patents, especially in the invention category, was minimal. This highlights a discrepancy between innovation intent and quality, suggesting that highpolluting enterprises (HPEs) prioritize rapid policy compliance rather than substantial environmental improvements. However, HPEs seem to prioritize liquidity over long-term financialization, potentially indicating enhanced credit allocation efficiency.

This study investigates how abnormally hot temperatures affect firms’ environmental behavior in China. We find that firms exposed to abnormally hot temperatures participate in more environmental engagement. We also find that this improvement effect is driven mainly by environmental concerns, including public concerns, CEOs, and governments. Our results remain intact after an array of robustness tests. Further analysis shows that the effect of abnormally hot temperatures on corporate environmental engagement is more pronounced in SOEs, heavily polluting firms, and firms located closer to local environmental protection agencies. Moreover, the positive impact of environmental engagement on firm value is stronger when firms are exposed to abnormally hot temperatures. Overall, this study sheds light on the potential stimulation of firms’ environmental actions by global warming, which is yet to be fully understood.

This study examines how classified boards affect workplace safety, an important dimension of employee welfare. Using comprehensive establishment-level injury data from the U.S. Occupational Safety and Health Administration and a novel classified board database, we document that firms with classified boards experience 12-13% lower workplace injury rates. To establish causality, we employ instrumental variable and difference-in-differences approaches exploiting staggered board declassifications. The safety benefits of classified boards operate through increased safety expenditures, reduced employee workloads, and enhanced external monitoring through analyst coverage. These effects are strongest in financially constrained firms and those with weaker monitoring mechanisms. Our findings support the bonding hypothesis that anti-takeover provisions facilitate long-term value creation by protecting stakeholder relationships and provide novel evidence that classified boards benefit rank-and-file employees, not just executives and major customers. The results reveal an important mechanism through which governance structures impact employee welfare and challenge the conventional view that classified boards primarily serve managerial entrenchment.

We investigate the unintended real effects of regulator-led minority shareholder activism on corporate innovation. We use manually collected data from the China Securities Investor Services Center (CSISC), a novel regulatory investor protection institution controlled by the China Securities Regulatory Commission (CSRC) that holds 100 shares of every listed firm. We find that by exercising its shareholder rights, the CSISC substantially curtails the innovation output of targeted firms. This effect is amplified in cases involving a high level of myopic pressure and few innovation incentives. We further observe variation in the real effects of different intervention methods. Textual analysis reveals that CSISC intervention with a myopic topic and negative tone contributes to a decrease in innovation. The results of a mechanism analysis support the hypothesis that regulator-led minority shareholder activism induces managerial myopia and financial constraints, impeding corporate innovation. Furthermore, CSISC intervention not only diminishes innovation output but also undermines innovation efficiency. In summary, our findings suggest that regulator-led minority shareholder activism exacerbates managerial myopia to cater to investors and financial constraints, ultimately stifling corporate innovation.

Individual institutions marginal contributions to the systemic risk contain predictive power for its potential future exposure and provide early warning signals to regulators and the public. We use higher-order co-skewness and co-kurtosis to construct systemic risk contribution measures, which allow us to identify and characterize the co-movement driving the asymmetry and tail behavior of the joint distribution of asset returns. We illustrate the usefulness of higher-order moment augmented approach by using 4868 stocks living in the Chinese market from June 2002 to March 2022. The empirical results show that these higher-order moment measures convey useful information for systemic risk contribution measurement and portfolio selection, complementary to the information extracted from a standard principal components analysis.

Financial technology, also known as Fintech, is transforming our daily life and revolutionizing the financial industry. Yet at present, consensus regarding the effect of Fintech on green bonds market is lacking. With novel data from China, this study documents robust evidence showing that Fintech development can significantly boost green bonds issuance. Further analysis suggests that this promotion effect occurs by empowering intermediary institutions and increasing social environmental awareness. Additionally, we investigate the heterogeneous effect and find that the positive relation is more pronounced for bonds without high ratings and in cities connected with High-Speed Railways network. The results call for the attention from policymakers and security managers to take further notice of Fintech utilization in green finance products.

This article examines the impact of the Green Financial Regulatory Policy on corporate strategic ESG behavior against the backdrop of the 2017 policy integration of “green finance” into the Macro-Prudential Assessment by the central bank. The research identifies that GFRP may shift corporate focus towards the disclosure of ESG performance while neglecting the actual practices of ESG engagement, potentially inducing firms to engage in ESG greenwashing. It is further posited that corporate green perception and executives’ environmental backgrounds serve as primary mechanisms in this dynamic. Additionally, the policy efficacy of GFRP on strategic ESG behavior exhibits heterogeneity

“How does a firm’s bankruptcy affect its regional environment?” is an open empirical question that has received little attention in the literature. We hypothesize that because enterprises provide funds to protect their regional environment, their default risk negatively impacts that environment. We analyze the impact of corporate default risk on environmental deterioration in the international setting to answer this question. Using a firm-level corporate default risk quarterly data from 2013q1 to 2020q4, we find that corporate default risk is positively associated with CO2 emissions and decomposed components. These findings are reliable in low-income and highly uncertain countries but weak in countries having more market competition. We also find that the negative impact of corporate default risk on the environment is more robust in countries with more population density and fewer forest area thresholds. Finally, using the instrumental variable approach, we provide preliminary evidence that firm-level political risk (for US and Canadian firms only) increases corporate default risk, leading to a degrading environment. Our findings are robust to alternative measurements of a firm’s default risk and environmental deterioration. Our research will help environmental authorities to consider corporate default risk as a determinant when formulating environmental-related strategies.

Existing research has found cross-sectional seasonality of stock returns—the periodic out- performance of certain stocks during the same calendar months or weekdays. We hypoth- esize that assets’ different sensitivities to investor mood explain these effects and imply other seasonalities. Consistent with our hypotheses, relative performance across individ- ual stocks or portfolios during past high or low mood months and weekdays tends to recur in periods with congruent mood and reverse in periods with noncongruent mood. Furthermore, assets with higher sensitivities to aggregate mood—higher mood betas— subsequently earn higher returns during ascending mood periods and earn lower returns during descending mood periods.