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 paper investigates the effect of exchange-traded funds (ETFs) on the ESG performance of their underlying firms. Using data from China, we find that ETFs enhance the ESG performance of their underlying firms. This finding remains consistent after several robustness and endogeneity tests. Further, we show that the effect is more pronounced for non-SOEs, firms in low-polluting industries, and firms at growth and maturity stages. Studying the mechanisms behind these results, we find that ETFs mitigate the corporate agency problems, enhance the willingness of managers to invest in ESG, and improve the ESG performance.

This study attempts to shed new light on how the state as a minority shareholder can affect the tax planning of non-state-owned enterprises(non-SOEs). We examine publicly traded non-SOEs in China and find that non-SOEs are more tax avoidance when the government is a minority shareholder, indicating that minority state ownership has played a "shelter effect" on tax avoidance of non-SOEs. Further analysis shows that the sheltering effect of minority state ownership is more prominent for firms located in areas with more social burden, worse tax enforcement and firms with stronger incentive to avoid taxes. Furthermore, non-SOEs with minority state ownership increase excessive capital expenditure and employ redundant employees, but still have higher firm value. Overall, our findings suggest the state as a minority shareholder shapes the tax-planning activities of non-SOEs in a “two-way favor exchange” manner and it is beneficial for non-SOEs to maintain a close relationship with the government in China where the government controls key resources.

This study investigates whether common auditors have an impact on firms’ green innovation. Using a sample of Chinese listed firms, we find the common auditor ties to firms with green patents are positively related to focal firms’ green innovation. When examining underlying mechanisms behind such effects, we observe that our main findings are more profound for focal firms with more opaque information, communicating with auditors intensively and audited by senior auditors, which indicates information sharing serves as the plausible mechanism. Cross-sectionally, our findings are more remarkable for non-SOEs, firms with lower financial constraints, firms located in regions with environmental courts, local auditors, auditors with green auditing abilities and firms in the same industry. Further analysis suggests that the common auditor ties to firms with green patents can further improve focal firms’ environmental performance and green patent citations, which in turn boosts market share of involved audit firms. Overall, we document that common auditors have a positive spillover regarding green innovation to connected clients through transferring valuable green expertise in a legitimate way.

Using China's Strategic Emerging Industries Classification (CSEIC), which is enacted in 2018, as a quasi-natural experiment, this study investigates its impact on corporate innovation behaviors. In basic research, we find that: (1) The CSEIC significantly enhances both substantive and strategic innovation; (2) The effect of CSEIC is influenced by the characteristics of the enterprise. Specifically, in state-owned enterprises (SOEs), the CSEIC significantly enhances substantive innovation and strategic innovation, while in non-SOEs, the CSEIC only significantly enhances substantive innovation. In further research based on entrepreneurial spirit, we find that: (1) The effect of CSEIC on strategic innovation is suppressed if entrepreneurial patriotism is higher, no matter whether the enterprise is SOEs or non-SOEs; (2) The effect of CSEIC on substantive innovation is enhanced, if and only if entrepreneurial integrity is higher in SOEs or International Vision is higher in non-SOEs. These findings offer valuable insights for policymakers aiming to foster innovation through targeted support for enterprise leaders, highlighting the need for tailored approaches considering the distinct characteristics of SOEs and non-SOEs.

This paper explores the ethical dimensions of firm-level digitalisation and its impact on ESG metrics during a decade (2010-2020) of rapid technological progress, focusing on Chinese-listed companies. Utilising a text-based index to measure digitalisation, we find that while digitalisation positively influences ESG ratings, supporting resource-based and dynamic capability theories, its relationship with corruption reveals complex dynamics. Surprisingly, corruption strengthens digitalisation’s positive impact on ESG, raising concerns about technology being used to enhance ESG appearances artificially. A distinct difference emerges between state-owned enterprises (SOEs) and non-SOEs; SOEs use digitalisation more ethically and are less influenced by corruption, indicating a more responsible approach to technology adoption. Through examining cash holdings, internal controls, and audit fees, we unpack how corruption influences the digitalisation-ESG nexus. These insights underscore the need for policy that encourages ethical digitalisation and highlight the potential role of SOEs in leading the charge towards sustainable and ethical digitalisation.

This study examines the enduring effects of China’s planned economy on contemporary social attitudes. By leveraging spatial disparities in the historical distribution of state-owned enterprises and external shocks such as the First Five-Year Plan and the Third Front Construction movement, we find that a one percentage point increase in the historical SOE proportion of industrial output corresponds with a 0.57% to 0.89% increase in the contemporary preference for state-owned sectors. The results are robust after controlling the contemporary SOE employment share, and this effect does not apply to the younger generation born after the marketization reform. Furthermore, we provide evidence that city-level state ownership preferences significantly impact the likelihood of SOEs receiving subsidies, with this effect notably amplified in cities governed by locally-born leaders, but the share of locally-born leaders has been trending down.

Digital transformation empowers enterprises with new kinetic energy for high-quality development, can digital transformation enhance the transparency of capital market? This study constructs a corporate digital transformation index, and examines its impact on Chinese capital market transparency from the perspective of information senders. We find that corporate digital transformation significantly improves transparency, and this finding is more pronounced in non-SOEs, firms with low political connection, high industry environment uncertainty, and low regional marketization level. Channel tests show that lowering management myopia and increasing analyst attention are possible mechanisms. Furthermore, digital transformation improves stock liquidity by enhancing enterprises’ information transparency. Overall, our findings provide critical insights for improving transparency in China’s capital market.

Using the data of Chinese listed firms from 2003-2020, this study applies a System GMM estimation approach to document that high local government ecological concerns increase a firm’s stock price crash risk. This finding remains consistent after addressing endogeneity issues and undergoing robustness checks. This study also reveals that the implementation of the new environmental protection law in 2015 mitigates the relationship between local government ecological concerns and stock price crash risk. Further analyses indicate that stricter environmental regulation and high subsidies, as well as enhanced corporate social responsibility and governance, can effectively alleviate the adverse effect of local government ecological concerns on stock price crash risk. In addition, we note that the influence of local government ecological concerns on stock price crash risk is more significant in the eastern region, heavily polluting industries, and non-SOEs. Lastly, the research identifies two potential channels through which local government ecological concerns can impact stock price crash risk by reducing the quality of information disclosure and intensifying investor disagreement.

This paper explores the impact of political network on insider trading activities in China. We find that stronger political network discourages insider trading. Such effect is more pronounced among long-standing and high-level connections, and persists in the events of M&A and public policy announcement when insiders may make profitable informed trading. This finding points to new cost of being politically connected. In exploring the underlying mechanisms, we confirm that the muted insider trading is related to preferable financial and policy support, and are more pronounced for SOEs in provinces with stronger market force and legal enforcement.