This study investigates how venture capital (VC) reputation affects initial public offering (IPO) exits in the Chinese VC market using a two-sided matching mechanism. Research that distinguishes the sorting and influence effects of VCs in the Chinese market is lacking. To address this gap, Chinese VC transaction data, comprising 3,606 VC firms and 8,173 investment transactions, was used to construct a structural econometric model. The Markov Chain Monte Carlo Bayesian estimation techniques were employed to identify the sorting and influence effects of VC reputation. We demonstrate that the likelihood of IPO exits is considerably increased by VC reputation, whereas historical investment experience has a dampening effect on exit outcomes. The IPO success rates are significantly higher for firms in the biotechnology, electronics, medical, and late-stage industries. The difficulty of IPO exits increases with investment age. Compared to influence effects, sorting effects were the dominant mechanism. VCs with a high reputation systematically selected firms with potential advantages, such as high-quality management teams, to promote IPO success. This study’s novelty lies in its application of an endogenous two-sided matching solution to the Chinese VC market. Using a structural model, we discovered the importance of the reputation sorting effect in the Chinese VC market and refined the VC’s investment preferences in high-tech industries. This study’s practical significance lies in the findings that enterprises must pay attention to the sorting capabilities of VC institutions, the government can guide capital flows to efficient exit industries, and VC institutions should optimize the resource allocation structure.

The frequent occurrence of extreme weather events not only poses serious challenges to global economic growth and financial stability but also affects firms negatively across multiple dimensions. Using a sample of Chinese A-share listed firms from 2006-2016, this study aims to explore the effect of climate risk on firm export sophistication. The findings show that climate risk inhibits firm export sophistication, with the results varying depending on firm and industry types. Specifically, climate risk (i) inhibits export sophistication for firms with low government subsidies more than for firms with high government subsidies; (ii) restraints export sophistication for firms in high-tech industries rather than for low-and medium-tech industries; and (iii) reduces export sophistication for firms in low-marketization regions more than for firms in high-marketization regions. In addition, channel analysis shows that climate risk inhibits firm export sophistication by increasing financial constraints and reducing human capital.

This study explores how foreign competition impacts the capital structure of domestic firms. While import competition is associated with a decrease in domestic firms’ leverage, we propose a novel perspective concerning the positive effect of inward foreign direct investment (FDI) on leverage. FDI competition can boost demand for debt via productivity spillover to domestic firms, and also increase supply of debt by inducing lenders to herd toward foreign investors. Using Chinese firm-level data, we find that the positive effects of industry inward FDI on domestic firms’ leverage are more pronounced in high-tech industries and industries where foreign investors exhibit a high degree of herding behavior. Our instrument variable approach, employing industry exchange rates and import tariffs, supports these findings. Additionally, we reveal that the positive effect of FDI on local firms’ leverage is amplified when the firms have stronger absorptive capacities, receive foreign capital, and experience more human capital transfers from foreign rivals.

Using staggered exogenous shocks to mandatory CSR disclosure, we examine the effect of mandatory CSR disclosure on employment growth. We find that CSR reporting firms have a higher employment growth following the mandate than non-CSR reporting firms. With respect to potential channels, we document that mandatory CSR disclosure promotes employment growth by improving firms’ CSR performance on employee welfare. In cross-sectional tests, we find that the employment effect is more pronounced for state-owned enterprises, firms in hazardous industries and firms in high-tech industries. We also find that cities most impacted by the mandate exhibit higher aggregate employment growth. While mandatory CSR disclosure promotes employment growth of mandated firms, it has a crowding out effect on employment growth of non-mandated local peer firms. Our paper offers novel evidence on the impact of mandatory CSR disclosure on labor resource allocation.