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.

Using a unique dataset from China spanning 2005 to 2023, we investigate how superstitious beliefs influence mutual fund managers’ risk-taking behavior and how this influence evolves over their careers. We find a significant 6.82% reduction in risk-taking during managers’ zodiac years, traditionally considered unlucky in Chinese culture. This effect is particularly pronounced among less experienced managers, those without financial education backgrounds, and those with lower management skills. The impact also intensifies during periods of high market volatility. Our findings challenge the traditional dichotomy between retail and professional investors, showing that even professional fund managers can be influenced by irrational beliefs early in their careers. However, the diminishing effect of superstition with experience and expertise suggests a gradual transition towards more rational decision-making. Our results provide insights into the process by which financial professionals evolve from exhibiting behavior akin to retail investors to becoming the rational actors often assumed in financial theory.

In the pursuit of knowledge, research philosophy serves as the uncharted compass guiding scholars through intellectual terrain. This meticulously crafted review paper embarks on an enthralling odyssey through the annals of history and the corridors of thought. We trace the origins of research philosophy in ancient civilizations, witness the dynamic interplay of faith and reason during the medieval and Renaissance periods, and explore the Enlightenment era's embrace of reason and empiricism. The ascent of positivism in the 19th and 20th centuries reshapes the landscape, followed by the seismic shifts of postmodern critiques and paradigm shifts. As we journey through time, we also embrace the contemporary and cross-disciplinary influences that enrich the philosophical fabric of modern research. This narrative underscores the profound impact of philosophy on research practices, offering readers a captivating tapestry interwoven with intellectual discoveries. Join us on this voyage through the epochs and ideologies that have shaped the pursuit of knowledge.

We investigate the effect of the Consumer Financial Protection Bureau’s 2015 disclosure of complaint narratives on reducing racial disparities in financial services. Employing a triple-differences approach that compares the performance of affected and unaffected financial institutions across communities with varying racial compositions, we find that post-disclosure, minority communities experience welfare enhancements. These include higher savings interest rates (amounting to over $50 million annually), reduced maintenance fees, and lower interest rates on auto loans and credit cards. The research emphasizes the broad impact of service quality disclosure in mitigating racial disparities in savings and lending markets.

We present a novel methodology for constructing portfolios to hedge economic and financial risks arising from climate change. We utilize ChatGPT-4 to identify climate-related conversations during earnings conference calls and connect these time-stamped transcripts with high-frequency stock price data pinpointed to the conversation level. This approach allows us to assess a company’s dynamic exposure to climate change risks by analyzing real-time stock price responses to discussions about climate issues between managers and analysts. Our proposed portfolio, constructed by taking long (short) positions in stocks with positive (negative) market responses to climate conversations, appreciates in value during future periods with negative aggregate climate news shocks. Compared to portfolios constructed using alternative methods, our real-time market response-based portfolios demonstrate superior out-of-sample hedge performance. A key advantage of our approach is its ability to capture time-series and cross-sectional variations in stocks’ rapidly-evolving exposures to climate risk, relying on the timing of when climate-related issues become salient topics that warrant conference call discussions and real-time market responses to such conversations. Additionally, we showcase the versatility of our approach in hedging other types of dynamic risks: namely political risk and pandemic risk.

Chinese enterprises are currently facing unprecedented economic transformations accompanied by a diverse array of challenges. This article delves into these challenges and provides management recommendations to assist companies in addressing these pressing issues. First, China's economic growth is gradually slowing, prompting companies to explore new avenues for growth, such as diversifying their products and markets, enhancing research and development, and expanding into emerging markets. Second, the uncertain global trade landscape has impacted exports and supply chains, necessitating diversified supply chains, new trade partnerships, and proactive strategies to navigate potential trade policy changes. Additionally, the pressure of technological innovation cannot be underestimated, urging companies to increase R&D investment, collaborate with other enterprises on research, and recruit and nurture high-quality tech talent. Furthermore, with the Chinese government's growing focus on environmental concerns, companies need to invest in clean production technologies, build sustainable supply chains, and actively fulfill their social responsibilities. Other challenges including rising labor costs, intellectual property protection, financial risks, regulatory compliance, talent recruitment and retention, and digital transformation all require proactive responses. By adopting proactive management strategies, Chinese enterprises can thrive in this era filled with both opportunities and risks, achieving sustainable growth and enhanced competitiveness.

There are large regional disparities in relation to the development of digital finance in China. This study expands on the human–land relationship to analyze the impact of terrain relief on digital finance adoption using China Household Finance Survey data. The results show an inverted U-shaped relationship. Further, mechanism analysis indicates that terrain relief influences the wealth creation environment and stimulates the likelihood of entrepreneurship, especially through small and medium-sized enterprises. In addition, the impact is more pronounced in rural and western areas. These findings provide insights enabling the development of a more inclusive financial system.

Amongst major economies, China has been taking a lead in the development of central bank digital currency (CBDC), which has generated widespread interest and impact around the globe. China’s CBDC, commonly known as e-CNY, is designed with several distinctive features, enabling it to compare favorably to other payment methods such as credit cards, mobile payment, unbacked cryptocurrency, and stablecoins. A variety of social, economic, political, and regulatory reasons can be identified to help explain China’s active pursuit of CBDC. However, the prospect of success will be affected by many factors and may vary between the domestic and international markets. This paper argues that the adoption of eCNY will likely succeed domestically, but may face more challenges in the international markets. The development of e-CNY seems to have created a catfish effect on other major economies in the race for CBDC. It is not fully clear, however, that the CBDC race will be better explained by the first-mover or the late-mover advantage theory. The CBDC project will have both public and private law implications, and several legal issues warrant particular attention in relation to the legal status of CBCD, the role and responsibility of the central bank, legal remedies for losses suffered by CBDC users from cybersecurity issues and operational problems, and the issue of data privacy and protection.

Based on a unique arrangement of trading and disclosure times around earnings announcements in the Chinese stock market, we provide evidence of a striking overnight-intraday disparity in terms of the reaction to earnings news. Specifically, we find that the overnight period exhibits a strong and consistent reaction to earnings announcements, whereas the intraday period trades against both the earnings news and the prior market reaction during the overnight period. In addition, we show that abnormal overnight returns on earnings announcement days exhibit strong predictability for future stock returns, consistent with the overnight returns containing valuerelevant signals. In contrast, we observe no return predictability for abnormal intraday returns on earnings announcement days, which as a result, also undermines the return predictability of abnormal daily returns. We propose possible explanations for the overnight-intraday disparity. We conclude that the differences in trading mechanisms between the two periods as well as in investor composition likely drive the phenomenon.

We investigate the cross-sectional factors of Chinese corporate bond returns via the reducedrank regression analysis (RRA) proposed by He et al. (2022). We collect 37 individual bond characteristics in the extant literature using a new dataset and construct 40 factor portfolios. Empirically, we find that the four-factor models created by RRA outperform the traditional factor models, PCA, and PLS factor models, both in-sample and out-of-sample. Among the 40 factors, the bond market factor is the most substantial predictor of future bond returns. In contrast, other factors provide limited incremental information for the cross-sectional pricing. Therefore, it is necessary to find more new bond factors. We further find that stock market anomalies do not improve the explanatory power of the RRA factor models. In particular, stock market anomalies can only partially explain the systematic part of bond returns in the RRA framework and have almost no explanatory power for the idiosyncratic component.