In an increasingly open and transparent information environment, negative media coverage of Environmental, Social, and Governance (ESG) issues would detriment focal firms’ legitimacy and performance. However, we have a limited understanding of whether negative media coverage of supply chain partners would spill over to focal firms. Using a panel dataset from Chinese listed firms, we examine the research question at a dyadic (i.e., focal firm and supplier or customer) level. This study reveals that negative media coverage about supply chain partners’ ESG issues can cause a spillover effect, negatively impacting the focal firms’ financial performance. Notably, the extent of this impact is contingent on the reach of the media sources and the severity of the coverage. We also show that focal firms are more impacted by supply chain partners with stronger relationships and greater market power. Our findings underscore the importance of actively managing partners’ ESG issues to avoid potential financial losses within a multi-tier supply chain. This study has fruitful contributions to the literature on supply chain sustainability and the spillover effect in dyadic relationships.

We study how politicians' activities affect the stock market and firm performance. Using hand-collected data on China's national leaders' corporate visits, we investigate the industry-wide implications of these visits. We find that over the six days surrounding a visit, an average industry peer's value increases by 2\% of its total assets. This result reflects investors' favourable interpretation of leaders' visits as a signal of more government support for the entire industry. However, the industry peer's profitability plummets by more than 15\% in the next three years. Further analysis reveals that after the visits, industry peers increase their investments, presumably in anticipation of additional government subsidies and credits. However, these resources are insufficient, and the profitability of these firms suffers. Our findings suggest that national leaders' visits do not help boost the targeted industries, and firms should carefully interpret the politicians' activities.

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.

With the increasing executive-employee pay disparity in recent years, research on executive compensation has grown exponentially. This paper reviews all articles on executive compensation published between 2000 and 2022 in the six accounting journals with the highest impact index in South Korea and China (five journals in China), and evaluates and analyzes the research in both countries. The analysis results are organized as follows: First, the research on executive compensation started earlier in South Korea than in China; second, the focus of the research on executive compensation differs between the two countries; then, the study on the determinants of executive compensation varies between the two countries; forth, the proxies for firm performance are mostly the same in the two countries; and finally, most of the studies in the two countries assert that executive compensation has a positive impact on firm performance. Based on the above research, this paper confirms that the agency theory, which has been widely validated in Western countries, is also valid in Asian countries. In addition, it provides an essential reference for future research on executive compensation in Asian countries.

Exploiting the unexpected Central Environmental Inspections (CEI) in China as a quasinaturalexperiment, we find that public firms in polluting industries experience significant gains in both profitability and market valuation after the regulatory shock, relative to firms in nonpolluting industries. The outperformance of public firms can be explained by the retreat of their private competitors, many shut down due to poor environmental performance. Because firms seeking public listing are required to meet high environmental standards, CEI significantly strengthen public firms’ competitive position, leading to increased sales growth and market share. Moreover, the outperformance is more pronounced for firms with more eco-friendly technologies, consistent with strict environmental regulations increasing the marginal benefit of these technologies. We provide novel evidence of the bright side of environmental regulation by highlighting the importance of industry dynamics.

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.

This study provides the first empirical evidence on the relationship between the chairman of the board of directors (COB) and corporate financial performance. Using a sample of Chinese A listed firms between 2008-2017, we find reliable evidence that the COB turnover improves corporate financial performance. Moreover, the existence of a majority shareholder (Majority) positively influences corporate financial performance, while firm nature (private majority shareholder or public majority shareholder)(Private) may not.

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.

Using an extensive panel of Chinese firms from the Annual Tax Survey and relying on labor unrest as shock to local social stability, we show that state-owned enterprises (SOEs) react to nearby labor unrest by creating additional employment at the expense of firm performance. Each SOE exposed to unrest hires 3% more employees, which is a sizeable aggregated effect. This effect is larger when labor unrest occurs in the same industry as the exposed SOEs, when local governments have sound fiscal budgets, and when governing mayors have stronger promotion incentives. SOEs obtain more fiscal benefits when they absorb additional labor. In contrast, non-SOEs do not react to labor unrest, and their performance is unaffected. Similar effects are detected when we use the population of Chinese listed firms. This paper provides evidence that SOEs internalize the goal of maintaining social stability and contribute to the growth of the non-state sector.

What determines the prevalence of family firms? In this project, we investigate the role of historical family culture in the spatial distribution of family firms. Using detailed firm-level data from China, we ffnd that there is a larger share of family firms in regions with a stronger historical family culture, as measured by genealogy density. The results are further conffrmed by an instrumental variable approach and the nearest neighbor matching method. Examining the mechanisms, we find that entrepreneurs in regions with a stronger historical family culture: i) tend to have family members engage more in firms; ii) are more likely to raise initial capital from family members; iii) are more willing to pass on the firms to their children. Historical family culture predicts better firm performance partly due to a lower leverage ratio.