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.

This paper examines the relationship between population aging and corporate digital transformation from the perspective of demographic changes. Generally, the findings indicate that population aging notably contributes to corporate digital transformation, mainly through increasing labor costs, including expected and actual labor costs. Further analysis suggests that the above effects are significantly weakened in samples of firms with lower levels of regional intellectual property protection, higher corporate financial constraints, and shorter-sighted managerial decision-making. Moreover, the economic consequences test implies aforementioned favorable effects can enhance corporate total factor productivity.

Green finance has drawn increased worldwide attention from policymakers as a financial mechanism that could potentially encourage corporations to actively engage in sustainable activities. However, despite a growing body of studies investigating the economic outcomes of green financial policies, there is still a lack of research that systematically quantifies the social welfare implications of green finance. Hence, this study aims to fill this research gap by establishing the causal effect of green finance on corporate environmental responsibility. Exploiting the "bottom-up" enforcement of the green finance pilots in 2017 in China as a quasi-natural experiment and the difference-in-difference-in-difference identification strategy, we find that green finance significantly enhances corporate environmental responsibility performance in high-polluting industries relative to their counterparts, and this evidence continues to survive a battery of robustness checks. Moreover, we explore three underlying mechanisms that possibly explain this beneficial effect: risk-taking, external governance and financing channels. Furthermore, we uncover that corporate environmental responsibility serves as a plausible non-economic channel that combines green finance with economic benefits by stimulating green innovation, promoting total factor productivity and expanding market share. Overall, our study offers new insights on both the economic and non-economic consequences of green finance on business performance.

This study examines how localized carbon reduction policies affect corporate green productivity. Leveraging a quasi-experiment from China’s low-carbon pilot rollout across cities, we find that these interventions significantly increased polluting firms’ green productivity. The gains persisted over time and were greater for firms with higher financial constraints, lower market competition, and lower capital intensity. Textual analysis reveals enhanced executive environmental cognition as a plausible channel. Overall, the results provide robust evidence that well-designed local regulations can achieve a win-win outcome of lower emissions and higher efficiency.

Taking China Pilot Free Trade Zone (PFTZ) as a new perspective of institutional environment optimization, this paper investigates its impact on corporate ESG performance. We find that the PFTZ positively enhances corporate ESG performance, which remains robust after various checks. The mechanism analysis shows that improving corporate environmental protection capacity and management efficiency are the main channels while strengthening labor protection and easing financial constraints can enhance the positive effect. Moreover, the positive effect of the PFTZ on corporate ESG performance is more pronounced in coastal regions, the service sector, and state-owned enterprises (SOEs).

This paper investigates the varying impact of government subsidies on corporate investment efficiency using micro-level data from Chinese listed firms. Through meticulous compilation of information on government subsidies revealed in financial statements, and the implementation of an innovative categorization methodology based on the nature and timing of funds (ex-ante versus ex-post), we shed light on the divergent effects of these subsidies. Our findings are as follows: (1) Government subsidies enhance corporate investment efficiency, yet their effects exhibit asymmetry by alleviating underinvestment while exacerbating overinvestment. (2) Functional subsidies exert a stronger influence on investment efficiency compared to selective subsidies. Specifically, functional subsidies prove more effective in addressing underinvestment, but also possess a higher likelihood of exacerbating overinvestment. (3) State ownership, firm size and dividend payments lead to heterogeneity in the effects of subsidies. (4) Corporate financial constraints serve as one of the mechanisms through which subsidies affect investment efficiency. This suggests that firms with easier access to financing may not effectively utilize subsidies, while those facing severe financial constraints are less prone to misusing them.

This study investigates the relationship between ESG (environmental, social, and governance) ratings and labor share at the firm level. Using data from Chinese A-share listed firms from 2011 to 2021, we find a significantly positive relationship between the two. Furthermore, we document that state-owned enterprises do not demonstrate a strong sense of political and social responsibility in their employee recruitment projects, while companies with high ESG ratings in East China could increase their labor share due to less stringent financial constraints. Finally, the employment-creation effect of ESG ratings is one of the important channels for improving labor share. Considering the increasing awareness of ESG concepts and the boom in ESG investing, our findings hold significant relevance for employees, directors, investors, and public policymakers.

We estimate the financial and real effects of a subsidy program on imported capital goods recently implemented in China. We identify ffrms that have access to the subsidy program by combining data on catalogues of eligible products periodically released by the government and product-level import data. Our findings demonstrate that following the implementation of the program, eligible firms experience an increase in borrowing and gain access to loans at lower interest rates compared to non-eligible firms. This improved financial situation enables them to expand their fixed-asset investments, increase total output, and enhance their export performance. The expansion of production capacity also leads to improved investment efffciency and greater profitability. Further analysis reveals that the effects of the policy are particularly pronounced for non-state-owned enterprises and small firms in relatively competitive industries. This finding suggests that these firms face ex-ante financial constraints, and their marginal rate of return to capital is large.

We provide firm-level evidence on the real effects of shadow banking in terms of technological innovation. Firm-to-firm entrusted loans, the largest part of the shadow banking sector in China, enhance the borrowers’ innovation output. The effects are more prominent when the borrowers are subject to severer financial constraints, information asymmetry, and takeover exposures. A plausible underlying channel is capital reallocations from less productive but easy-financed lender firms to more innovative but financially less-privileged borrower firms. Our paper suggests that shadow banking helps correct bank credit misallocations and thus serves as a second-best market design in financing the real economy.

This study examines the effect of retail investor-firm communications (RIFC) on corporate ESG performance. Exploiting the unique setting of Chinese investor interactive platforms which enable retail investors to pose questions and require firm answers, we show that RIFC significantly improves corporate ESG performance. The consistent evidence is obtained by employing the difference-indifference estimation, Oster’s test and alternative indictors, strengthening our confidence in the causal link between RIFC and corporate ESG performance. Furthermore, we identify two potential economic channels underlying our results: strengthening monitoring pressure and alleviating financial constraints. Our finding further reveals that RIFC drives genuine improvements in ESG performance rather than greenwashing practices. Collectively, this study advances our understanding of the interplay between retail investors and corporate ESG performance, providing a stepping stone toward effective solutions to corporate sustainable development.