Business Commons^™

Institutional Investors, Controlling Shareholders And Ceo Pay‐Performance Relationship: Evidence From China, Dan Zhang, Shiguang Ma, Xiaofei Pan

Faculty of Business - Papers (Archive)

Using a large sample of China's listed firms between 2005 and 2015, we find that domestic mutual funds have a positive effect on the CEO pay‐performance relationship, and this effect becomes stronger when their ownership is higher and closer to the controlling shareholder's ownership. This effect is stronger in non‐state‐owned enterprises (non‐SOEs), firms facing weaker industry competition incentives, and firms located in more developed regions. However, Qualified Foreign Institutional Investors (QFIIs) do not have such an influence. Overall, our study contends that the effectiveness of institutional investors' monitoring role is subject to their identity, controlling shareholders and institutional environments.

State Ownership And Earnings Management In Highly-Valued Firms: Evidence From China, Leye Li, Gary S. Monroe, Jing Wang

Faculty of Business - Papers (Archive)

We examine how state ownership affects Chinese firms’ earning management during a period of high valuation. Based on a sample of 19,107 firm-year observations with sufficient data on the China Securities Markets and Accounting Research (CSMAR) database over the period from 2003 to 2017, we find the magnitude of accruals management first increases for up to three years of high valuation, and then reduces after the fourth year. This finding is consistent with the view that the difficulty of consistently using accruals to manage earnings upwards increases over time because of the reversing nature of accruals. We find that managers …

Decentralization And Firm Investment: Evidence From China, Xiaofei Pan, Yiping Wu, Huihang Wu

Faculty of Business - Papers (Archive)

Taking advantage of decentralization reform that enlarges the authority of county government in China, we construct a quasi-experiment. Using a large sample of Chinese firms, we show that after the implementation of decentralization reform, firms located in decentralized counties experienced a significant increase in investment expenditure compared with other firms. We also find that after the decentralization reform, state owned enterprises (SOEs) experienced greater increase in investment expenditure on average compared with non-SOEs, and that, within non-SOEs, collective firms have an even larger increase in investments, followed by foreign firms and private firms. Further analysis shows that the influence of …

Bi-Lateral Co2 Emissions Embodied In Australia-China Trade, Kankesu Jayanthakumaran, Ying Liu

Faculty of Business - Papers (Archive)

This paper quantifies the CO2 emissions embodied in bi-lateral trade between Australia and China using a sectoral input-output model. The results revealed: (1) that China performs lower than Australia in clean technology in the primary, manufacturing, energy sectors due to their overuse of coal and inefficient sectoral production processes, and (2) that China had a 30.94 Mt surplus of bi-lateral CO2 emissions in 2010-2011 and (3) overall global emissions were reduced by 20.19 Mt through Australia-China trade in 2010-2011. The result indicates that the greater the energy efficient a country among the trading partners the lower will be the overall …

People's Republic Of China (Prc): Thailand Economic Relationship After Signing Of Free Trade Agreement In 2005, Ying Liu, Kankesu Jayanthakumaran

Faculty of Business - Papers (Archive)

People's Republic of China (PRC) is the third biggest nation globally situated in East Asia with the land area of 9.6 million km2 , population of 1.36 billion people and population density of 139 km - 2 . PRC's capital is Beijing and comprises of 22 provinces, five autonomous regions, four municipalities and two special administrative regions. Special administrative regions are Hong Kong and Macao. Thailand is the world's 51st largest country situated in Southeast Asia with the land area of 513,000 km2 and population of 67.1 million people. The population density of Thailand is around 131 km - 2 …

Shame And Authority: Tracing The Cultural Antecedents Of Internal Protocols In China, Jing Wang

Faculty of Business - Papers (Archive)

Paper presented at the 8th Asia-Pacific Interdisciplinary Research in Accounting Conference, 13-15 July 2016, Melbourne, Australia

Recognition And Disclosure Of Impairment In China, Jing Wang, Keith Hooper

Faculty of Business - Papers (Archive)

This paper aims to examine the extent of goodwill impairment in listed companies of China and the audited disclosure of goodwill. China is an important adopter of International Financial Standards but the question remains that, as a recent adopter, to what extent contentious issues such as goodwill impairment are implemented. The research analyzes the financial and share market information gathered from the top 50 companies listed on the Shanghai Stock Exchange. The findings reveal that goodwill amortization has been discontinued and replaced by goodwill impairment, but interestingly the Big Four firms seem more likely to recognize a goodwill impairment loss …

Does Control-Ownership Divergence Impair Market Liquidity In An Emerging Market? Evidence From China, Xiaojun Chu, Qigui Liu, Gary Tian

Faculty of Business - Papers (Archive)

This paper examines how institutional characteristics of emerging economies influence the effect of control-ownership divergence on market liquidity. We find that the divergence is negatively associated with liquidity and that this negative relationship is more pronounced in firms with more severe agency problems and information asymmetry. We argue that in an emerging market, the negative effect of the divergence on liquidity is worsened by state ownership and poorer shareholder protection, both of which result in more severe agency conflicts; we also find, however, that this effect is alleviated by the NTS reform, which aligns the interest of different shareholders.

Disproportionate Ownership Structure And Ipo Long-Run Performance Of Non-Soes In China, Xiaoming Wang, Jerry Cao, Qigui Liu, Jinghua Tang, Gary Tian

Faculty of Business - Papers (Archive)

This paper examines the relationship between ownership structures and IPO long-run performance of non-SOEs in China. Although non-SOEs underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Non-SOEs with one share one vote structure outperform those with control-ownership wedge by 30% for three years post-IPO performance in adjusted buy-and-hold returns. Non-SOEs with control-ownership wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that non-SOEs need to improve corporate governance such as disproportionate ownership structure to better safeguard the interest of long-run shareholders.

Ownership Characteristics And Earnings Management In China, Fei Guo, Shiguang Ma

Faculty of Business - Papers (Archive)

Chinese firms are characterized by multiple ownership and high ownership concentration. In this research, we conduct an intensive investigation into the determination of ownership characteristics in earnings management behaviors for Chinese domestic listed firms. Our results indicate that earnings management is determined by the motivations of different types of ownerships. In particular, when a state agency is the largest owner, firms are less likely to undertake earnings management, although the state ownership ratio is positively associated with earnings management. Tradable ownership and particularly concentrated tradable ownership reduce earnings management, while total ownership concentration fosters earnings management.

Stakeholders' Power, Corporate Characteristics, And Social And Environmental Disclosure: Evidence From China, Yingjun Lu, Indra Abeysekera

Faculty of Business - Papers (Archive)

This paper investigates the influences of stakeholders' power and corporate characteristics on social and environmental disclosure practices of socially responsible Chinese listed firms identified by a social responsibility ranking list. A stakeholder-driven, three-dimensional social and environmental disclosure index including disclosure quantity, disclosure type quality and disclosure item quality, is constructed to assess sample firms' social and environmental disclosures in their two public reports: annual reports and corporate social responsibility reports. Findings indicate that corporate social and environmental disclosures have significant and positive associations with firm size, profitability, and industry classification. The roles of various powerful stakeholders in influencing corporate social …

Ownership Control And Debt Maturity Structure: Evidence From China, Wenjuan Ruan, Grant Cullen, Shiguang Ma, Erwei Xiang

Faculty of Business - Papers (Archive)

Purpose - The authors examine the debt maturity structure of Chinese listed companies during the period when bond market was under-developed and the majority of commercial banks were owned by the state. The purpose of this paper is to answer why and how the different ownership control types impact the firms' preference and accessibility to either long- or short-term debts.

Design/methodology/approach - The univariate analysis was used to test the differences of debt maturity choices for firms grouped by ownership control types, profitability and institutional development. Then, logit regression and ordinary least squares regression were applied to examine the determinants …

Does Banks' Dual Holding Affect Bank Lending And Firms' Investment Decisions? Evidence From China, Xiaofei Pan, Gary Tian

Faculty of Business - Papers (Archive)

This study investigates the effect of banks' dual holding on bank lending and firms' investment decisions using a sample of listed firms in China. We find that dual holding leads to easier access to bank loans, a result that is more pronounced for non-state-owned enterprises (non-SOEs) than SOEs. We also find that dual holding distorts banks' lending decisions and harms the investment efficiency for SOEs, while resulting in optimal lending decisions and enhanced investment efficiency for non-SOEs. For non-SOEs, further analysis suggests that optimal lending decisions and efficient investment can be achieved for firms with higher ownership concentration, and firms …

Housing Property Rights And Subjective Wellbeing In Urban China, Zhiming Cheng, Stephen P. King, Russell Smyth, Haining Wang

Faculty of Business - Papers (Archive)

This study explores the relationship between home ownership and subjective wellbeing in urban China. We first present a theoretical model examining the relationship between housing property rights and subjective wellbeing in China. We then test the predictions of the theoretical model using a nationally representative dataset. We find that not only home ownership, but the property rights one acquires and the source of those property rights matters for subjective wellbeing. Moreover, not only whether one has a home loan, but the type of home loan one has matters for subjective wellbeing.

Ideology Diffusion And The Role Of Accounting: A Gramscian Approach To Understanding China's Transition From 1949 To 1957, Lina Xu, Corinne Cortese, Eagle Zhang

Faculty of Business - Papers (Archive)

Using Gramsci's concept of hegemony, the aim of this article is to explore the role of ideology diffusion in creating and maintaining Mao's political hegemony during the period 1949 to 1957, and to consider how accounting practices were reflected in this period of transition in China. In particular, we provide an understanding of how accounting systems have changed under the influence of various political ideologies in China, being the New Democracy and the socialist ideology adopted from the Soviet Union, by considering the relationships and struggles between organic and traditional intellectuals that Gramsci has theorized. We find that the diffusion …

Does Bank Ownership Imply Efficient Monitoring? Evidence From Bank Lending And Firm Investment Efficiencies In China, Gary G. Tian, Xiaofei Pan

Faculty of Business - Papers (Archive)

This study investigates the effect of bank ownership on lending and firm investment efficiencies to give reasons for the mixed evidence that exists on the impact of bank ownership on firm performance. Using China's listed firms as an example, we find that bank ownership reduces the efficiency of bank lending and harms investment efficiency for state-owned enterprises (SOEs), while simultaneously relating to optimal lending decisions and enhanced investment efficiency for non-SOEs. Our findings suggest that banks monitor non-SOEs effectively, but are less effective at monitoring SOEs. We document that banks' ex post monitoring on non-SOEs' investment policy results from their …

Mutual Fund Ownership, Firm Specific Information, And Firm Performance: Evidence From China, Wenhua Sharpe, Gary Tian, Hong Feng Zhang

Faculty of Business - Papers (Archive)

This paper shows empirically that the positive association between mutual fund ownership and firm value in China is mainly driven by the informed trading of mutual funds. Utilizing the unique short term feature of mutual fund holdings for the period from 2001 to 2010, we provide an informational link between a decomposed component of market-to-book ratio (firm specific valuation component) and mutual fund holdings. Specifically, we find that firms with a higher level of mutual fund ownership are associated with a higher specific value. Moreover, the positive association between the specific value of a firm and mutual fund ownership is …

Bank Connection, Corruption And Collateral In China, Xiaofei Pan, Gary Tian

Faculty of Business - Papers (Archive)

Using a sample of China's listed entrepreneurial firms, we investigate the relationship between bank connection, corruption and collateral requirements. We find that when a firm is connected with banks, collateral requirements are significantly lower. We also find that bank connection is the channel through which corruption is exercised to benefit those firms with favoured loan terms. Our analysis further reveals that bank connection and corruption have jointly improved bank lending efficiency. However, these positive effects become weaker with government intervention in the form of an economic stimulus package. We argue that in an emerging market, bank connection facilitates rent seeking …

Performance Of Automakers In China And India: An Empirical Investigation Using Ratio Analysis, Ying Deng, Anura De Zoysa, Shyam Bhati

Faculty of Business - Papers (Archive)

Automakers in China and India are continually increasing their shares of the automobile market by adopting cost leadership strategy. In this study, we examine the operational and financial performance of automobile firms in China and India through a range of accounting ratios. This analysis provides a snap shot of operating and financial performance of Chinese automakers in comparison to one of their main competitors, India. The results of the analysis suggests that despite the public view that Indian automakers are posing serious challenge to Chinese automaker in recent years on the cost competitiveness, Chinese automakers have shown continuous improvement in …

Happiness And Job Satisfaction In Urban China: A Comparative Study Of Two Generations Of Migrants And Urban Locals, Haining Wang, Zhiming Cheng, Russell Smyth

Faculty of Business - Papers (Archive)

This study investigates determinants of happiness and job satisfaction of urban locals, first-generation migrants and new-generation migrants in China's urban workforce. We present evidence to suggest that new-generation migrants are less satisfied with their jobs and lives than first-generation migrants, despite having higher income. This finding is consistent with aspirations rising faster than income in China's fast growing urban economy.

Determinants Of Wage Arrears And Their Implications For The Socioeconomic Wellbeing Of China's Migrant Workers: Evidence From Guangdong Province, Zhiming Cheng, Ingrid Nielsen, Russell Smyth

Faculty of Business - Papers (Archive)

This study has three purposes. The first is to examine the determinants of wage arrears among rural-urban migrants in China. The second is to examine the effect of wage arrears on economic wellbeing as proxied by wages. The third is to examine how experiencing wage arrears affects several subjective indicators of wellbeing, such as feelings of belongingness and discrimination in the city. To examine the determinants of wage arrears and its implications for socioeconomic wellbeing, we employ pooled data from a unique representative dataset collected in Guangdong province, one of the major destinations for migrants in China, for the years …

Who Is Responsible For The Co2 Emissions That China Produces?, Ying Liu, Kankesu Jayanthakumaran, Frank Neri

Faculty of Business - Papers (Archive)

Most climate scientists around the world are concerned about global warming. These concerns have resulted in calls for reductions in CO₂ emissions over time. If these calls are to be heeded, an appropriate emissions accounting method must first be agreed upon by CO₂ emitting countries, none of which are more important than China. This paper estimates China′s CO₂ emissions in 2002 and in 2007 using firstly a production-based, and then a consumption-based, accounting method, both in aggregate and at the sectoral industry level. Our objectives are first to investigate the recent trends in Chinese emissions of CO …

Does Political Capital Create Value In The Ipo Market? Evidence From China, Qigui Liu, Jinghua Tang, Gary Gang Tian

Faculty of Business - Papers (Archive)

This study examines the value of political capital in the Chinese IPO market. We find a positive relationship between a politically connected executive and the probability of IPO approval of entrepreneurial firms. We further identify that shareholders value those connections and give a market premium to connected firms after the firms go public. We provide evidence that other types of political capital gained through external sources, such as politically connected sponsors and PE investors, also bring benefits to the firms in their IPO approval, and these connections substitute for the effect of the executive's political connections on IPO approval. We …

Exploring Hegemonic Change In China: A Case Of Accounting Evolution, Lina Xu, Corinne Cortese, Eagle Zhang

Faculty of Business - Papers (Archive)

Purpose - This paper provides an understanding of how accounting systems have changed across four distinct periods of hegemonic leadership in China.

Design/methodology/approach - Using Gramsci's concept of hegemony, periods of leadership and accounting change throughout Chinese history are examined, including the Confucian tradition, the rise of the socialist system followed by the Cultural Revolution under the Maoist era, and the move towards the socialist-market system in the Dengist era.

Findings - This paper shows how political leaders in these different time periods effectively achieved leadership by destroying an existing hegemony, creating a new ideology, and implanting this into people's …

The Impact Of China's New Labour Contract Law On Socioeconomic Outcomes For Migrant And Urban Workers, Zhiming Cheng, Russell Smyth, Fei Guo

Faculty of Business - Papers (Archive)

This paper examines the effect of having a labour contract on a range of employee outcomes (hours worked, social insurance coverage, subjective wellbeing and wages) for a sample of urban and migrant workers in China. A methodological contribution is that we use propensity score matching, which allows us to draw causal inferences about the relationship between having a labour contract and each of these variables. We find that the effect of having a labour contract on employee outcomes is generally large and larger than the findings in other studies suggest. As such, our results suggest that China's Labour Contract Law, …

Political Connection, Founder-Manager And Their Impact On Tunneling In China's Listed Firms, Liangbo Ma, Shiguang Ma, Gary G. Tian

Faculty of Business - Papers (Archive)

Reciprocal relationship, often regarded as mutually beneficial and secure, can actually be destructive and result in inefficiency. We provide evidence of such double-blade by studying the impact of political connection on corporate governance. Private firms in countries where the government controls the allocation of resources have incentives to seek political connections by hiring politicians or ex-politicians as top executives. Such political capital, however, may turn into political constraint when the CEOs fail to perform but use connections to entrench themselves. We take advantage of the unique setting in China to illustrate this argument. We show that politically connected CEOs have …

The Changing Pattern Of State Workers' Labour Resistance In Shaanxi Province, China, Zhiming Cheng

Faculty of Business - Papers (Archive)

State workers in China have been suffering multiple negative shocks due to state sector reforms and massive lay-offs since the 1990s. One of their responses has been to engage in conventional forms of rightful resistance to assert their rights and benefits. The recent development of such labour resistance, however, has been less studied. This paper examines the recent collective rights action among state workers in Shaanxi province to examine the evolving pattern of resistance that changed from relatively non-threatening to radical, and from offline to a mixture of real-life and cyberspace actions. Because the recent movements directly challenged the authoritarian …

Exploring Hegemonic Change In China: A Case Of Accounting Evolution, Lina Xu, Corinne L. Cortese, Ying Zhang

Faculty of Business - Papers (Archive)

This paper uses Gramsci’s concept of hegemony to investigate periods of leadership and accounting change throughout Chinese history. In particular, this paper provides an understanding of how accounting systems have changed across four distinct periods of hegemonic leadership in China: the Confucian tradition, the rise of the socialist system followed by the Cultural Revolution under the Maoist era, and the move towards the socialist-market system in the Dengist era. This paper shows how political leaders in these different time periods effectively achieved leadership by destroying an existing hegemony, creating a new ideology, and implanting this into people’s daily lives in …

The Ownership And Ownership Concentration? The Impact On The Performance Of China's Firms, Shiguang Ma, Tony Naughton, Gary G. Tian

Faculty of Business - Papers (Archive)

This paper investigates the impact of ownership and ownership concentration on the performance of China's listed firms. By recognizing the differences between ownership and ownership concentration, and between total ownership concentration and tradable ownership concentration, we find that ownership concentration is more powerful than any category of ownership in determining firm performance and that it has approximately positive linear relations with firm value. The tradable ownership concentration has a more significant and positive influence on firm performance than total ownership concentration. The highest level of firm performance is approached when a firm is characterized with both total ownership concentration and …