The relationship between economic decentralization and regional economic growth has attracted wide academic attention. However, existing literature rarely explores the validity and applicability of decentralization theory from the perspective of location endowments. This study takes China’s county-to-city reform - a decentralization policy - as a point of entry to construct a decentralization model incorporating location endowments. Using county-level panel data from 1992 to 2009 and employing a difference-in-differences (DID) approach, the study evaluates the impact of county-to-city reform under the constraint of location endowments on county-level economic development. The findings reveal that the policy effects of local decentralization are constrained by location endowments. Specifically, in regions with poorer location endowments, county-to-city reform significantly inhibits local economic development. Indeed, mechanism analysis further indicates that in such disadvantaged regions, local decentralization under the county-to-city reform generates a “political resource curse” effect, which hinders economic growth through three channels such as distorted fiscal expenditure structures, corruption, and misallocation of land resources. The conclusions of this study provide a valuable perspective for understanding the conditions under which decentralization theory holds, while also offering rigorous empirical evidence for government agencies to design more targeted decentralization policies.

The Excellence Initiatives represent a significant investment in higher education, yet little is known about the causal impact of these programs on doctoral students and future researchers. Using a comprehensive student-level dataset, we apply a difference-in-differences approach to identify how China’s Double World-Class (DWC) Project affects PhD students’ research productivity. Our results indicate that the DWC Project significantly increases both the quantity and the quality of research output among PhD students in supported disciplines, even after controlling for supervisor-related effects. In addition, these impacts vary significantly across institutional tiers and academic fields. Lower-tier universities experience considerable increases in publication volume with slight enhancements in quality, while top-tier institutions show no notable variation in either aspect. Disciplinary patterns also vary: Science and medicine show improvement in both measures, while engineering displays little change overall. These findings demonstrate how excellence initiatives influence human capital development via doctoral training and provide evidence-based recommendations for education policymakers aiming to maximize returns on strategic higher education investments worldwide.

This paper investigates whether and how independent director-affiliated corporate donations affect stock price crash risk in China. We find a significant positive relationship between affiliated donations and future crash risk. The relationship is more significant for firms with weak internal governance and limited external monitoring, when affiliated directors serve on the audit committee, and in non-state-owned enterprises. Overall, our findings suggest that the social ties built through affiliated donations undermine rather than enhance director monitoring, and that agency theory has more explanatory power than resource dependence theory for understanding the impact of affiliated donations on stock price crash risk.

Capital market internationalization is widely regarded as an important pathway to improving resource allocation efficiency and enhancing governance quality, while simultaneously imposing higher requirements on corporate sustainability and social responsibility. However, its impact on firms’ internal income distribution remains subject to academic debate. This study treats the inclusion of China’s A-shares in the MSCI Emerging Markets Index as a landmark exogenous shock of capital market internationalization. Based on a sample of Chinese A-share listed firms from 2014 to 2022, we manually compile firm-level MSCI inclusion data and construct a multi-period difference-in-differences model for empirical testing. The results indicate that firms’ inclusion in the MSCI Index significantly increases their labor income share. The mechanism analysis reveals that this promoting effect operates mainly through three channels: alleviating financing constraints, fostering innovative development, and strengthening investor governance. Further heterogeneity analysis shows that the effect is more pronounced among technology-intensive firms, firms under greater competitive pressure, and firms with higher degrees of internationalization. By incorporating income distribution outcomes into the framework of capital market internationalization, this paper enriches the evidence on the economic and social effects of internationalization and provides policy implications for emerging economies to advance high-level capital market opening and optimize income distribution.

Traditional production function theory treats executive characteristics as exogenous fac-tors, failing to capture how managerial heterogeneity dynamically influences productiv-ity. This study integrates Upper Echelon Theory and Dynamic Capabilities Theory to develop an endogenous production function framework where executive attributes serve as dynamic parameters reshaping capital and labor elasticities. Using fixed effect-s panel-data models, we analyze Chinese listed companies, examining how executives’ education, experience, and compensation interact with production parameters. Re-sults show executive characteristics significantly moderate factor productivity: higher education and board independence enhance capital productivity, while compensation intensity transforms labor elasticity from negative to strongly positive values. Hetero-geneity analysis reveals effects vary across ownership types and technology intensity, with technology-intensive firms showing strongest responsiveness. This research recon-ceptualizes executives as active architects of production processes, provides a rigorous framework for endogenizing management factors, and offers evidence-based guidance for corporate governance and talent strategy optimization.

This article examines the link between foreign institutional holdings and firms’ efficiency in labor investment in the setting of Chinese markets. We find that foreign institutional investors enhance firms’ labor investment outcomes primarily through mitigating asymmetric information and by strengthening internal governance. Specifically, the influence of foreign institutional investors on a firm’s labor investment efficiency is stronger when the firm faces greater labor adjustment frictions. This effect is more evident when foreign institutional investors are originated from countries or areas with stronger cultural connections to China, stronger governance quality, common law traditions, or stronger bargaining power in the firms’ governance. Our paper contributes to the literature in that it documents the monitoring role of foreign institutional investors from the perspective of firms’ labor investment decisions, and adds to the literature on the drivers of firms’ labor investment choices.

Cultural tightness measures the extent to which individuals behave according to the broader values shared by other members in society. While cultural tightness has been studied extensively in the context of individuals’ behavior and (cross) country-level outcomes, much less is known about the explanatory power it holds in the setting of organizational structures. Motivated by the ambiguous relationship between cultural tightness and population-level gender equality documented by prior literature, we investigate whether cultural tightness helps explain board gender diversity levels in China. Rooting our hypotheses in institutional theory and the contextual governmental reforms of China, we leverage a large sample of Chinese A-share listed firms and document that firms located in culturally tight provinces have higher levels of board gender diversity. Further analyses reveal that cultural tightness in China partially offsets the impact of more traditional Confucian values, and the relationship becomes more pronounced in settings where firms can realize higher legitimacy gains from adopting women on their boards. Finally, we counter potential critiques of window dressing, by demonstrating that in culturally tighter areas women are more likely to be higher educated, have more experience abroad, hold more board positions, and are less likely to be independent directors.

This study investigates the impact of employee ownership on firms’ investment responsiveness to stock market feedback. Using data from Chinese listed firms, we find that employee ownership significantly enhances the sensitivity of corporate investment to Tobin’s q. This effect is more pronounced in firms with higher information asymmetry, greater labor intensity, weaker corporate governance, and higher financial distress risk. While employee ownership is linked to increased subsequent profitability volatility, it also mitigates financial mismatch and downside operating risk. Our findings also suggest that employee ownership drives a shift in corporate strategy, leading to more aggressive approaches and improved risk preferences. These results highlight the role of employee ownership in mitigating agency problems and enhancing firms’ ability to incorporate market information into investment decisions.

Research Question/Issue: This study investigates whether and how political connections affect customer complaints in the Chinese market, using a comprehensive dataset from the country’s largest online complaint platform. Research Findings/Insights: Analyzing 22,644 firm-year observations from 2018 to 2023, we find that politically connected firms experience significantly fewer customer complaints. A one-unit increase in political connection strength is associated with a 9% reduction in complaints relative to the sample mean. This effect operates through two primary mechanisms: a reputation-motivation channel and a financial resource channel. The mitigating effect is more pronounced for firms in highly marketized regions, those with higher advertising expenditures, companies facing greater earnings pressure, and those with lower tangible asset ratios. Theoretical/Academic Implications: Our study contributes to the literature on political connections and corporate governance by demonstrating how political capital translates into tangible consumer experience advantages. It also advances research on the determinants of customer complaints by highlighting the role of internal governance mechanisms, particularly managerial political ties. Our findings support the Corporate Reputation and Financial Resource Hypotheses while challenging alternative explanations based on regulatory shielding or managerial complacency. Practitioner/Policy Implications: For corporate leaders, our results underscore the importance of reputation management and quality investment, particularly when political connections are absent. Policymakers should consider strengthening public monitoring institutions to reinforce reputational incentives across markets. Investors may use customer complaints as an indicator of product quality and operational stability in their investment decisions.

Recent technological advancements have enabled the emergence of business organizations fully managed by algorithms, such as decentralized autonomous organizations (DAOs) or through artificial intelligence (AI), as observed in China’s online food delivery sector. These organizations are collectively referred to as algorithm-managed firms (AMFs). Given machines’ capabilities in data collection and analysis, human directors are increasingly being replaced by algorithms or AI in specific sectors. This article contends that algorithms can effectively take over human directors’ managerial, monitoring, and mediating roles. The diminishing role of human directors raises certain concerns of stakeholder protection. Unlike human directors, algorithm directors or managers would not consider stakeholders’ interests unless clearly instructed to do so. However, the algorithm supplier and the AMFs may lack the incentives to fully consider stakeholders because they do not always internalize the social costs. To address the challenges of AMFs, policymakers need to consider different regulation strategies. First, they must choose between command-and-control regulations and target-based regulations. Command-and-control regulations often do not work well because regulators lack enough information or control over complex algorithms. Instead of setting detailed technical rules, policymakers should adopt target-based regulations that let the algorithm balance various interests and regulate its own operations. Second, policymakers should decide between entity-based and algorithm-based regulations. Algorithm-based regulation is more suitable because it prevents companies from passing costs onto society. The state could consider regulating the composition of the board of directors of the algorithm supplier to ensure that they incorporate the concerns of stakeholders’ interests in the development of the algorithm. Additionally, corporate law doctrines that protect creditors and other stakeholders, such as piercing the corporate veil and limiting liability for corporate torts, must be revisited and modified because their foundational assumptions no longer align with the realities of AMFs.