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