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An Investigation Of Credit Borrower Concentration, Heng Yue, Pingui Rao, Jigao Zhu
An Investigation Of Credit Borrower Concentration, Heng Yue, Pingui Rao, Jigao Zhu
Research Collection School Of Accountancy
Credit borrower concentration arises when a bank or financial institution lends a large amount of its funds to a few large borrowers. We find that borrower concentration is positively related to non-performing loans and negatively related to financial performance. We also find that the voting power of bank’s controlling shareholder is positively related to the borrower concentration. The evidence is consistent with the view that controlling shareholders divert resources away from banks by extending a high volume of loans to a few related parties, which leads to high borrower concentration. Further evidence indicates that some seemingly unrelated large borrowers, as …
Tunneling Through Non-Operational Fund Occupancy: An Investigation Based On Officially Identified Activities, Guohua Jiang, Pingui Rao, Heng Yue
Tunneling Through Non-Operational Fund Occupancy: An Investigation Based On Officially Identified Activities, Guohua Jiang, Pingui Rao, Heng Yue
Research Collection School Of Accountancy
In this paper, we investigate the problem of controlling shareholder Non-Operational Fund Occupancy (NOFO) in China, where controlling shareholders directly take funds away from listed firms without matching business transactions. The NOFO problem was an evident and widely used tunneling activity in China and was identified by the securities market regulators. Unlike previous literature that used indirect measures of tunneling, we directly collect the actual amounts of NOFO from mandated disclosures and utilize this direct measure of tunneling in a series of empirical tests. First, we examine and find that various mechanisms such as ownership structure, corporate governance and institutional …
Causes And Consequences Of Corporate Asset Exchanges By Listed Companies In China, Fang Lou, Jiwei Wang, Hongqi Yuan
Causes And Consequences Of Corporate Asset Exchanges By Listed Companies In China, Fang Lou, Jiwei Wang, Hongqi Yuan
Research Collection School Of Accountancy
China's listed companies often exchange corporate assets with their parent companies. We find that listed companies that have been incompletely restructured from former state-owned enterprises and in sound financial condition tend to exchange higher quality assets for lower quality assets (i.e., tunneling). However, when there is a need to avoid reporting a loss and to raise additional capital, listed companies tend to exchange lower quality assets for higher quality assets (i.e., propping). We also find that the market reacts indifferently to asset exchange announcements. Finally, we find asset exchanges motivated by a tunneling (propping) incentive to be associated with poorer …