This study examines the relations between leverage and investment in China’s listed firms, where corporate debt is principally provided by stateowned banks. We obtain three major findings. First, there is a negative relation between leverage and investment. Second, the negative relation between leverage and investment is weaker in firms with low growth opportunities and poor operating performance than in firms with high growth opportunities and good operating performance. Third, the negative relation between leverage and investment is weaker in firms with a higher level of state shareholding than in firms with a lower level of state shareholding. Overall, our results are consistent with the hypothesis that the state-owned banks in China impose fewer restrictions on the capital expenditures of low growth and poorly performing firms and also firms with greater state ownership. This creates an over-investment bias in these firms.

We developed a theoretical framework which articulates the relationship between global and local experiences of the venture capitalists investing in China and the risk mitigation strategies they employ. We predicted that venture capitalists with little experience are more likely to join syndicates. We also predicted that the relationship between late stage strategic focus and VCs’ global and local experiences is positive. We tested our hypotheses using database covering all first round venture related investments made by foreign VCs in China until Oct 2006. Controlling for a variety of factors our data supported our predications.

Currency logistics is becoming a field of increasing interest and importance both in government and academic circles. In this paper, a basic description of China's nationwide logistics network for the Renminbi is discussed and analyzed. In addition to its basic structure, its key problems such as production costs, inventory levels, and transportation and storage security are discussed.

The extraordinary performance of China and India's economies raises questions about the traditional measures of the size and depth of financial systems. While banks and markets have played a limited role in providing funds for corporate sectors and supporting economic growth in these two countries, non-state, non-listed firms, relying mostly on internal and alternative financing channels, have been growing faster than the state and listed sectors and contributing much of the growth. The alternative financing channels, excluded in the traditional measures of financial systems, operate outside legal institutions and are backed by alternative mechanisms such as reputation, relationships, and trust. We define the capacity of a financial system to be the total funding available for all corporate sectors in an economy. Our findings from China and India demonstrate that alternative finance can significantly expand the financial system capacity and promote growth at the firm level and economy wide.

党的十一届三中全会以来，我国经济体制改革不断深入，社会主义经济建设取得了有目共睹的丰硕成果。“经济决定金融，金融是现代经济的核心”，三十年的改革历程不断印证着伟人的预言，金融改革伴随着中国经济改革共进。入世过渡期的结束，预示着我国金融业正式对外全面开放，金融改革与金融创新踏上了新的征程。如今我国已形成中央银行与监管机构分家，银行、证券、保险、信托分业经营，中资机构和外资机构同台竞争的日趋完善的金融体系。回顾二十九年前，小平同志提出的“要把银行真正办成银行”成为金融改革的先声，从此我国金融改革正式拉开序幕，并先后通过人民银行成为中央银行、专业银行到商业银行，从混业到分业、政策性银行的建立、农村信用社的回归，一直到股份制银行的改革试验、国有银行的股改和金融法治化步伐的跃进；在带给人们初偿改革喜悦的同时，更引发了我们对中国金融业改革与发展的深层次思考。特别是当前动荡不安的国际金融形势和不确定的国内经济走势，更增加了我们对金融市场、尤其是金融创新的危机意识。金融业是高风险行业，众多失败的教训和成功的经验，需要我们在珍视改革取得巨大成就的同时，居安思危，力争少一点亡羊补牢之痛、多一点未雨绸缪之举，防范于未然。

In 2005-08, over a dozen put warrants traded in China went so deep out of the money that they were certain to expire worthless. Nonetheless, these warrants attracted a speculative frenzy: for each warrant, billions of Yuan traded with an average daily turnover rate close to 300%, and at substantially inflated prices. The publicly observable underlying stock prices make the zero warrant fundamentals common knowledge to all market participants. This warrants bubble thus presents a unique opportunity to study bubble mechanisms, so far only available in laboratory environments. We find evidence supporting the resale option theory of bubbles: investors overpay for a warrant hoping to resell it at an even higher price to a greater fool.

This paper examines the role of earnings management in the underpricing and long-term performance of Chinese initial public offerings (IPOs) issued during the 1998-2003 period. It tests the earnings extrapolation hypothesis that naive investors extrapolate pre-issue earnings without fully adjusting for potential manipulation of accounting accruals, thereby inflating the initial trading price. If the hypothesis holds, underpricing will be positively related to initial earnings management. However, since the latter is subsequently corrected over time, it will lead to inferior long-term stock performance. The empirical evidence is consistent with both the earnings extrapolation and the long run underperformance hypotheses for our sample of 506 IPOs.

In this paper, we examine the cost of equity capital for politically connected firms. After controlling for several firm- and country-level determinants, our results show that politically connected firms have a lower cost of equity capital than their nonconnected peers. Our results are robust to alternative measures and proxies for the cost of equity capital. We thus provide strong evidence that investors require a lower cost of capital for politically connected firms, suggesting that these firms are generally considered to be less risky than non-connected firms. Our findings imply that the benefits of political connections outweigh their costs. We conjecture that this perception is fueled by the soft budget constraints generally enjoyed by politically connected firms, and by their lower default probability, given the assurance of corporate bailout in the event of financial downturns.

This paper examines the association between ownership structure and the extent of Web disclosure of 1056 listed companies of differential privatization stage in China. Literature suggests that state controlled economies are expected to have restricted forms of information disclosure and blockholder’s equity can reduce the needs for information disclosure. Our results show that state ownership will curtail the extent of Web disclosure in the post-privatization stage and private block shareholding is positively related to Web disclosure for low privatization firms, but not for highly privatized companies. The findings indicate that state and private blockholders have diverse Web reporting policies during ownership evolution and information asymmetry may exist in post-privatization stage. The results suggest that reinforcement of the institutional environment and continuous scrutiny of a company’s reporting practices in the post-privatization stage should be emphasized.

Property casualty insurance insurers’ investment in risky assets appears to be cyclical. Insurance investment cycle is correlated with underwriting cycle. Insurers invest less in stocks in hard markets and more in soft markets. Nevertheless, the correlation between investment and underwriting cycles exists only for stock insurers, not for mutual insurers. Furthermore, investments of mutual and stock insurance firms react differently to capital market indicators reflecting investor sentiment, such as equity market indices and aggregate newly issued equity.