This study highlights asymmetries in liquidity risk pricing from the perspective of heterogeneously informed traders facing changing levels of preference uncertainty. We hypothesize that higher illiquidity premium and liquidity risk betas may arise simultaneously in circumstances where investors are asymmetrically informed about their trading counterparts’ preferences and their financial firms’ timely valuations of assets . We first test the time-varying state transition patterns of IML, a traded liquidity factor of the return premium on illiquid-minus-liquid stocks, using a Markov regime-switching framework. We then investigate how the conditional price of the systematic risk of the IML fluctuate over time subject to changing levels of preference uncertainty. Empirical results from the Chinese stock market support our hypotheses that investors’ sensitivity to the IML systematic risk conditionally increase in times of higher preference uncertainty as proxied by the stock turnover and order imbalance. Further policy impact analyses suggest that China’s market liberalization efforts, contingent upon its recent stock connect and margin trading programs, reduce the conditional price of liquidity risk for affected stocks by helping the incorporation of information into stock prices more efficiently. Tighter macroeconomic funding conditions, on the contrary, conditionally increase the price of liquidity that investors require.

Under the guidance of the dual-carbon target, the development of the carbon financial system is of great significance to compensate for the gap between green and low-carbon investment. Considering the current state of the development of carbon financial system, China has initially formed a carbon financial system, including participants, carbon financial products and macro and micro operation structures, but the system is still in the initial development stage. Given the current restrictions on the development of carbon finance, it can be seen that there are still problems such as unreasonable economic structure, insufficient market construction, single product category, low utilization rate and urgent construction of relevant judicial guarantee system. Therefore, the system should be improved at the economic level and the legal level. The economic level includes adjusting the layout of economic development structure, strengthening the construction of market infrastructure, encouraging the diversification of carbon financial products and strengthening publicity and education promotion strategies. The legal level includes improving the top-level design, formulating judicial interpretation to promote carbon financial trading, promoting commercial law amendment, and promoting the linkage mechanism between specialized environmental justice and carbon finance and other safeguard measures. Finally, improving the carbon finance system is required to promote and protect the orderly development of carbon finance. To promote the reform of the pattern of economic development, the concept of ecological and environmental protection in the financial sector needs to be implemented to form an overall pattern of pollution reduction, carbon reduction and synergistic efficiency improvement.

Despite nearly twenty years of privatization, mixed-ownership reform has been the mainstay of SOE reform in China in recent years. This raises the question of whether the financial performance of mixed-ownership firms (Mixed firms) is better than private-owned enterprises (POEs). Although Mixed firms suffer more from government intervention, unclear property rights, and interest conflicts between state shareholders and private shareholders, they can also benefit from the external resources controlled by the state. Therefore, the performance of Mixed firms is still unclear. Collecting data from the Chinese A-share listed market, we divide the firms into POEs, Mixed firms controlled by the state (MixedSOEs), and Mixed firms controlled by the private sectors (MixedPOEs). Measuring profitability using ROA and ROE, we find that on average, POEs perform better than Mixed firms, and MixedPOEs have a higher profitability than MixedSOEs. Within Mixed firms, more state shares are related to lower profitability, and more private shares are related to higher profitability. Using the NBS survey data, we further find that on average, SOEs exhibit the lowest profitability, with MixedSOEs and MixedPOEs in the middle, and POEs have the highest profitability. We try to address the endogeneity challenge in several ways and get similar results. Overall, our analysis provides new evidence on the financial performance of mixed-ownership firms.

Does large-scale privatization increase income inequality? To answer this question, we analyze the impact of China’s reform of state-owned enterprises on labor market outcomes in urban areas from 1992 to 2004, exploiting cross-prefecture variation in reform exposure stemming from initial differences in the employment shares of urban collective enterprises and state-owned enterprises. Our analysis reveals that workers in prefectures with higher exposure to the reform experienced a more rapid decline in employment and a slower increase in income, compared to those in less exposed areas. Further analysis shows that individuals with lower income and those with lower educational attainment experienced greater losses. A back-of-the-envelope analysis indicates that the reform contributed to more than 40% of the study period’s increase in income inequality.

The scale expansion of low-carbon industries and the green transformation of carbon-intensive industries are two sides of the same coin in achieving the “dual carbon” goals. However, research on transition finance supporting the upgrading of traditional existing carbon-intensive industries remains insufficient. The key to examining the effectiveness of transition finance lies in distinguishing whether the supported enterprises are engaging in greenwashing or green evolution. Based on data of Chinese A-share listed companies in the carbon-intensive industries, an empirical study is conducted and offers the following findings: (1) Transition finance not only does not increase greenwashing but also promotes comprehensive green innovation in carbon-intensive enterprises. (2) In terms of the influencing mechanism, transition finance exerts “resource effects” and “signaling effects,” promoting green innovation by improving debt maturity mismatch and attracting green institutional investors. (3) Heterogeneity analysis shows that the positive impact of transition finance on green innovation is particularly pronounced among enterprises in the eastern region, state-owned enterprises, and those with lower levels of managerial myopia. (4) Further industry spillover effects analysis reveals that transition finance empowers green innovation within industries though peer effects and competitive effects. The findings are essential for understanding the effectiveness of transition finance and offer valuable insights for policymakers.

This study investigates the impact of analysts' information source diversity on forecast bias and investment returns. We combine the GPT-4o model and text similarity, to extract the names of information sources from the text of analyst in-depth reports. Using 349,200 sources, we calculate information diversity scores based on the variety of data sources to measure analysts’ ability of selecting relevant information. The findings reveal that higher information diversity significantly reduces forecast bias and enhances portfolio returns. The effect is particularly pronounced for large companies, state-owned enterprises, those with low analyst coverage, low firm-specific experience, and reports with positive forecast revisions. Institutional investors recognize the value of this skill, while retail investors remain largely unaware, which contributes to financial inequality. This study highlights the critical role of information diversity in analyst performance.

Recent studies highlight the resurgence of state capitalism, with the state increasingly acting as equity investors in private firms. Why do state--business equity ties, including partial and indirect state ownership in private firms, proliferate in weakly institutionalized contexts like China? While conventional wisdom emphasizes state-driven explanations based on static evidence, I argue that regulatory risk reshapes business preferences, prompting firms to seek state investors and expanding state--business equity ties. These ties facilitate information exchange and signal political endorsement under regulatory scrutiny. Focusing on China's crackdown on the Internet and IT sectors, difference-in-differences analyses of all investments from 2016 to 2022 reveal a rise in state--business equity ties post-crackdown. In-depth interviews with investors along with quantitative analysis, demonstrate that shifts in business preferences drive this change. This study shows the resurgence of state capitalism is driven not only by the state but also by businesses in response to regulatory risks.

We examine the effect of minority shareholder voting rights on labor investment efficiency using a sample of Chinese firms. Taking advantage of the difference-in-difference setting, our study reveals that the expansion of minority shareholder voting rights has a detrimental effect on labor investment efficiency. Through analysis of holding period and a managerial shortsightedness index based on textual analysis, we find that this outcome can be attributed to the fact that minority shareholders typically prioritize short-term gains over long-term corporate growth. Moreover, the impact of voting power is more pronounced in determining the investment efficiency of rank-andfileemployees. Our results are more significant for firms that face severe financial constraints, are non-state-owned enterprises, exhibit lower levels of internal control, possess fewer female managers, demonstrate lower human capital quality and higher labor intensity. Taken together, our paper suggests that minority shareholders could be myopia in making labor decisions.

This paper develops a network to analyze inter-industry risk spillovers during high and low volatility periods. Our findings indicate that China's Industrials and Consumer Discretionary exhibit the greatest levels of spillovers in both high and low volatility states. Notably, our results demonstrate the "event-driven" character of structural changes to the network during periods of pronounced risk events. At the same time, the economic and financial network exhibits clear "small world" characteristics. Additionally, in the high volatility stage, the inter-industry risk contagion network becomes more complex, featuring greater connectivity and direct contagion paths. Furthermore, concerning the spillover connection between finance and the real sector, the real economy serves as a net exporter of risk. The study's findings can assist government agencies in preventing risk contagion between the financial market and the real economy. The empirical evidence and policy lessons provide valuable insights for effective risk management.

We construct firm-level indicators to capture the engagement in the Belt and Road Initiative (BRI, henceforth) via textual analysis. We find that higher firm engagement in BRI predicts higher stock returns in the subsequent 12 months. The top 10% high-BRI firms have 12.42% higher annual returns than bottom 10% low-BRI firms in China A-Share market. Additionally, two fundamental channels of increased earnings and reduced liabilities explain the higher expected returns of high-BRI firms. Furthermore, we reveal that the phenomenon is more pronounced among non-state-owned enterprises. For large-cap firms, BR Report is a more effective indicator for predicting future stock returns, while BR Beta performs better for small-cap firms. These findings contribute to the measurement of firm engagement in BRI and its impact on the stock market.