JournalTOCs

Economic Bulletin
Number of Followers: 6

Hybrid journal (It can contain Open Access articles)
ISSN (Print) 0343-754X - ISSN (Online) 1438-261X
Published by Springer-Verlag

[2469 journals]

Financial statement analysis: a review and current issues
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  Authors: Andrew B. Jackson
  Abstract: The literature on financial statement analysis attempts to improve fundamental analysis and to identify market inefficiencies with respect to financial statement information. In this paper, the author reviews the extant research on financial statement analysis. The author then provides some preliminary evidence using Chinese data and offer suggestions for future research, with a focus on utilising unique features of the Chinese business environment as motivation. The author notes that there has been no work that the author could locate specifically on Chinese FSA research. The unique business environment in China, relative to the US where the vast majority of this work has been conducted, should motivate any studies, especially given the author documents the robust finding in terms of the mean reversion in profitability.
  Citation: China Finance Review International
  PubDate: 2021-12-07
  DOI: 10.1108/CFRI-10-2021-0208
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Cryptocurrency as a safe haven for investment portfolios amid COVID-19
panic cases of Bitcoin, Ethereum and Litecoin
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  Authors: Mutaju Isaack Marobhe
  Abstract: This article examines the susceptibility of cryptocurrencies to coronavirus disease 2019 (COVID-19) induced panic in comparison with major stock indices. The author employs the Bayesian structural vector autoregression to examine the phenomenon in Bitcoin, Ethereum and Litecoin from 2nd January 2020 to 30th June 2021. A similar analysis is conducted for major stock indices, namely S&P 500, FTSE 100 and SSE Composite for comparison purposes. The results suggest that cryptocurrencies returns suffered immensely in the early days of the COVID-19 outbreak following declarations of the disease as a global health emergency and eventually a pandemic in March 2020. However, the returns for all three cryptocurrencies recovered by April 2020 and remained resistant to further COVID-19 panic shocks. The results are dissimilar to those of S&P 500, FTSE 100 and SSE Composite values which were vulnerable to COVID-19 panic throughout the timeframe to June 2021. The results further reveal strong predictive power of Bitcoin on prices of other cryptocurrencies. The article provides evidence to support the cryptocurrency as a safe haven during COVID-19 school of thought given their resistance to subsequent shocks during COVID-19. Thus, the author stresses the need for diversification of investment portfolios by including cryptocurrencies given their uniqueness and resistance to shocks during crises. The author makes use of the novel corona virus panic index to examine the magnitude of shocks in prices of cryptocurrencies during COVID-19.
  Citation: China Finance Review International
  PubDate: 2021-11-26
  DOI: 10.1108/CFRI-09-2021-0187
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Energy financing in COVID-19: how public supports can benefit'
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  Authors: Sajid Iqbal , Ahmad Raza Bilal
  Abstract: The study aims to empirically estimate the role of public supports for energy efficiency financing and presents the way forward to mitigate the energy financing barriers that incurred during the COVID-19 crisis. Using the G7 countries data, the study estimated the nexus between the constructs. Generalized method of moments (GMM) and conventional increasing-smoothing asymptotic of GMM are applied to justify the study findings. Wald econometric technique is also used to robust the results. The study findings reported a consistent role of public support on energy efficiency financing indicators, during the COVID-19 crisis period. G7 countries raised funds around 17% through public supports for energy efficiency financing, and it raised 4% of per unit energy usage to GDP, accelerated 16% energy efficiency and 24% output of renewable energy sources, during COVID-19. By this, study findings warrant a maximum support from public offices, energy ministries and other allied departments for energy efficiency optimization. The study presents multiple policy implications to enhance energy efficiency through different alternative sources, such as, on-bill financing, direct energy efficiency grant, guaranteed financial contracts for energy efficiency and energy efficiency credit lines. If suggested policy recommendations are applied effectively, this holds the potential to diminish the influence of the COVID-19 crisis and can probably uplift the energy efficiency financing during structural crisis. The originality of the recent study exists in a novel framework of study topicality. Despite growing literature, the empirical discussion in the field of energy efficiency financing and COVID-19 is still shattered and less studied, which is contributed by this study.
  Citation: China Finance Review International
  PubDate: 2021-11-23
  DOI: 10.1108/CFRI-02-2021-0046
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Pandemic, risk-adaptation and household saving: evidence from China
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  Authors: Yixing Zhang , Xiaomeng Lu , Haitao Yin , Rui Zhao
  Abstract: Scholars have not agreed with each other on how people would behave after experiencing a catastrophic event. They could save more as a precautionary action for future difficulties or save less with a carpe diem attitude. This study aims to attempt to shed light on this debate with empirical observations on how the Covid-19 pandemic has affected household saving decisions. The two waves of the survey data allowed us to investigate both instantaneous and ongoing effects of Covid-19 on household saving decisions. The instantaneous effect refers to the immediate impact of the crisis, while the ongoing effect refers to the lasting impact of the pandemic when economic recovery had started. The variation in the number of confirmed cases across cities during the two waves provides the source of power for identification. The authors extend their analyses of the impact of Covid-19 on the household saving decision by using ordinary least squares models. Due to the ordered nature of survey responses, the authors also rerun all baseline models using the ordered probit regression method. This paper studied the impact of the Covid-19 pandemic on household saving decisions in China. This study found that households in the most affected cities would save more during the Covid-19 but tend to save less when the disaster started fading away. Combining findings in Kun et al. (2013) and Filipski et al. (2015), people do become more pessimistic during and after the Covid-19, possibly driving their observed precautionary and cape diem behaviors during the two points of time. Heterogeneity analysis shows that specific households would dramatically change their saving behavior. These observations might be useful for policymakers who concern the economic recovery after this pandemic disaster. Understanding how the Covid-19 pandemic would affect household consumption vs saving decisions is important for the economic recovery after this disaster comes to an end. The analyses presented in this research could be useful for policymakers who concern appropriate policies aiming to boost consumption and economic activities after Covid.
  Citation: China Finance Review International
  PubDate: 2021-11-01
  DOI: 10.1108/CFRI-04-2021-0077
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Management geographical proximity and stock price crash risk
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  Authors: Xin Jin , Shangkun Liang , Junli Yu
  Abstract: This study provides empirical support for the cultural economics model between executive team and firm performance and offers important implications for policy selection and appointment of managers in China. From the perspective of relationship embeddedness, the authors explore the impact of management geographical proximity (GP) on stock price crash risk in China. Using archival data from China's unique dataset about birthplace culture, the authors find that management GP experiences a large increase in corporate stock price crash risk for the period 2009–2018. The impact of management GP on stock price crash risk is more pronounced when the company is located in areas with weaker formal legal environment and stronger Confucian culture. Furthermore, the impact has a significant links with firm characteristics such as information transparency, over-investment and tax aggressiveness. First, the research extends the literature on the empirical determinants of stock price crash risk. These studies focus on formal institution, not on informal institution, such as relational culture. Second, the research provides evidence for economic consequences on relational governance from executive birthplace culture to explore the economic consequences of geographical relational governance but takes stock price crash risk to present executives' behavior strategies and market reaction via exploring asymmetrical variation of market stock price. Finally, the paper provides reference to corporate governance arrangement and executive appointment.
  Citation: China Finance Review International
  PubDate: 2021-10-26
  DOI: 10.1108/CFRI-06-2021-0117
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Financial inclusion and bank risk-taking nexus: evidence from China
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  Authors: Muhammad Umar , Muhammad Akhtar
  Abstract: This study aims to investigate the relationship between financial inclusion and risk-taking by Chinese banks. It uses the panel data from Chinese banks ranging from 2011 to 2019 and applies system generalized method of moments to measure coefficients. To get in-depth understanding of the relationship between above-mentioned variables, the analysis for commercial, cooperative, listed, unlisted, small and large banks has been done. Financial inclusion index has been measured based on demographic and geographic aspects by using the principal component analysis, and bank risk-taking has been proxied by z-score. The findings reveal an inverse relationship between financial inclusion and bank risk-taking which implies that an increase in financial inclusion results in lesser risk for the banks, i.e. diversification hypothesis applies. However, the results for unlisted and large banks show a different story where an increase in financial inclusion results in higher bank risk and vice versa. The present study offers several valid and convincing implications for consumers, policymakers and banking sector regulators.
  Citation: China Finance Review International
  PubDate: 2021-10-26
  DOI: 10.1108/CFRI-08-2021-0174
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
The impact of green finance and Covid-19 on economic development: capital
formation and educational expenditure of ASEAN economies
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  Authors: Quang-Thanh Ngo , Hoa Anh Tran , Hai Thi Thanh Tran
  Abstract: The purpose of this study is to examine the impact of green finance (i.e. green investment, green security and green credit) along with capital formation and government educational expenditures on the economic development of (ASEAN) countries. The data were gathered from the central banks of all ASEAN countries and the World Bank Indicators between 2008 and 2019. The fixed-effect model and generalized method of moments were used to check the nexus between the constructs. The results revealed that green finance along with capital formation and government educational expenditures have a positive association with the economic development of ASEAN countries. The study carries some limitations, even though it addresses the underlying variables comprehensively. These limitations provide opportunities to future researchers and authors to expand the scope and accuracy of their study. This research investigation has been supported by the data collected from a single source. Though data collection is maintained correctly, it is still recommended to the upcoming scholars to acquire data to reconfirm the same findings using multiple data sources. The data collected from using some specific data source may be limited in scope and may hinder the comprehensive elaboration of the underlying variables and their mutual relationship. Therefore, the utilization of multiple sources of data collection gives data sufficient to meet the requirement of an okay quality research study. The study is about the economies of ASEAN countries. It checks the influences of green finance development on economic activities and the country's economic growth in ASEAN countries' economies. Thus, its results are valid only in the economies of these countries, and this research investigation lacks generalizability. For generalizability, the authors must consider the underlying variables in the world's vast economies. They must adopt a standard scale to judge the impacts of green financial development on economic development. Besides, the study analyzes the economic factors, economic conditions and their effects on the country's position in the world economy in the face of a severe epidemic like COVID-19. Thus, the results may be different in the case of the normal situation. So, a general standardized study is recommended to be conducted in the upcoming days. Green finance has significant capability to improve the global economy, especially amidst the COVID-19 pandemic. This study is beneficial for policymakers to develop policies related to economic development with reference to green finance and also helps future research on a similar topic.
  Citation: China Finance Review International
  PubDate: 2021-10-13
  DOI: 10.1108/CFRI-05-2021-0087
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Last hour momentum in the Chinese stock market
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  Authors: Lu Yang
  Abstract: To capture the last hour momentum over the intraday session, the authors develop a trading strategy for the exchange-traded fund (ETF) that is effective because of the T+0 trading rule. This strategy generates annualized excess return of 9.673%. In this study, the authors identify a last hour momentum pattern in which the sixth (seventh) half-hour return predicts the next half-hour return by employing high frequency 2012–2017 data from the China Securities Index (CSI) 300 and its ETF. Overall, both the predictability and the trading strategy are statistically and economically significant. In addition, the strategy performs more strongly on high volatility days, high trading volume days, high order-imbalance days and days without economic news releases than on other days. Noise trading, late-information trading, infrequent rebalancing and disposition effects from retail investors may account for this phenomenon.
  Citation: China Finance Review International
  PubDate: 2021-09-24
  DOI: 10.1108/CFRI-06-2021-0106
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Are corporate social responsibility reports informative' Evidence from
textual analysis of banks in China
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  Authors: Jerry C. Ho , Ting-Hsuan Chen , Jia-Jin Wu
  Abstract: The authors investigate the association of the constructed corporate social responsibility (CSR) measures with the banks’ profitability, social contributions and CSR spending as well as the market reaction to CSR spending. Using textual analysis of the CSR reports of banks listed on the Chinese market, the authors construct CSR measures in six domains: business, environment, human rights, corporate governance, charity and social capital. Our textual-based CSR measures contain substantial and valuable information beyond what Rankins CSR ratings offer. The findings suggest that banks with stronger engagements and interests in the business-related CSR domain experience higher profitability, while those that are more committed to the corporate governance and charity-related domains create larger social contributions. Banks tend to incur higher CSR spending when they are more active in corporate governance. Although the stock market reacts positively to CSR expenditures, the reaction is less favorable for banks with CSR expenditures above the industry norm. This study offers insights to policymakers of the regulatory bodies and the banks in China. To enhance the financial safety and soundness of the banking system, the regulatory bodies should encourage banks to strategically allocate corporate resources to achieve higher CSR ratings and engage more business-related CSR activities. To create larger social values, bank management should invest more in philanthropic CSR initiatives such as corporate governance and charity activities. To pursue higher corporate profits, they should engage more in self-centered business-related CSR activities. However, according to the reaction of the market, they should not over-invest in CSR activities. While the use of textual analysis to evaluate CSR disclosure has recently emerged in the literature, few studies focus on banks in China. Using the term frequency–inverse data frequency (TF-IDF) method, the authors constructed a score for each of the six CSR domains: business (BUS), environment (ENV), human rights (HR), corporate governance (GOV), charity (CHY) and social capital (SCAP). To the best of our knowledge, no studies have adopted the textual approach to evaluate social reporting quality and CSR activities in the context of the banking industry in China.
  Citation: China Finance Review International
  PubDate: 2021-09-07
  DOI: 10.1108/CFRI-04-2021-0081
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Role of green financing and corporate social responsibility (CSR) in
technological innovation and corporate environmental performance: a
COVID-19 perspective
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  Authors: Ala Eldin Awawdeh , Mohammed Ananzeh , Ahmad Ibrahiem El-khateeb , Ahmad Aljumah
  Abstract: The aim of this study is to estimate the relationship between technological innovation and corporate environmental performance among energy companies working in Egypt. The study extended the aim with the intention to assess the role of green financing in enhancing corporate environmental performance. Partial least squares (PLS)-based structural equation modeling (SEM) is applied to estimate the nexus among study variables. The results indicated that technological innovation influenced environmental performance and has a positive impact on company performance. The role of green financing for environmental performance is also significant and positive. Moreover, corporate social responsibility (CSR) has insignificant role in environmental performance of the energy companies in the study context. The study offers a valuable model for general managers of manufacturing organizations and policymakers to manage CSR, environmental strategy and green innovation in examining environmental performance. It can help to assist general managers of large manufacturing organizations to strengthen their internal resources like CSR, environmental strategy and green innovation to enhance environmental performance. The findings of this article will help the practitioners to design policies regarding sustainable energy systems and green finance in the presence of any natural calamity. This study primarily complements the existing literature by establishing how green financing and CSR can augment and/or interact between technological innovation and corporate environmental performance under COVID-19 crises, in a developing country.
  Citation: China Finance Review International
  PubDate: 2021-08-27
  DOI: 10.1108/CFRI-03-2021-0048
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Does green finance matter for sustainable entrepreneurship and
environmental corporate social responsibility during COVID-19'
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  Authors: Muhammad Sadiq , Sakkarin Nonthapot , Shafi Mohamad , Ooi Chee Keong , Syed Ehsanullah , Nadeem Iqbal
  Abstract: The discourse aimed to investigate green finance practices under the assumptions of several notable climate advisors and speculators in Asia and particularly in Southeast Asia. The study intrigues by considering financial specialists to vent government spending on green restoration plans leading toward green bankable venture openings for the public and private sector. This section distinguishes a few of the green fund components and approaches that can be joined by national and neighborhood governments, essentially in Southeast Asia, into their post-COVID-19 techniques, but are too valuable inputs for domestic commercial banks and private corporates. It can be defined as a functional type for Cobb Douglas development. ARDL technology is a way of calculating complex forces at the classification level at long-term and short-term stages. This ARDL approach has many advantages and can be implemented when incorporated in level I (0) and level I first (1) with the original variable. Still, it offers robust ability to the outcomes and standardizes the lag, considering the number and sample size used. Pooled mean group (PMG) method is becoming a convenient technique for monitoring data over the period and a good approach for energy impact panels – growth ties for creating links between energy emissions and environmental sustainability and businesses in the nation. There is a positive partnership between creativity and a sustainable world. Corporations are recommended to uphold the principles of CSR in the development process by introducing environmentally friendly advanced technologies. The main objectives of corporate social responsibility (CSR) are economic growth, environmental sustainability and social justice. Several programs have been established to expand businesses' responsibilities to improve their confessions in sustainable growth. SMEs are a primary source of production of innovative products and technologies. The key concerns of stakeholders and politicians in the new competitive business climate are the protection of environmental sustainability and social responsibility, recognizing factors driving economic development for SMEs. During the COVID-19 era, the prime responsibility of pandemic confronting governments is to spend on help activities (that have been started in earlier phase) and recovery endeavors (yet to start in the situation). Therefore, the governments may devise policies to pool resources from commercial, private, public-private partnerships and other capital market sources. With rising hazard recognitions particularly emerging from at-threat income projections, governments ought to make the correct mechanisms and instruments that can perform this catalytic part of derisking and drawing in such capital. This too can be an opportunity for governments to enhance and execute such financial instruments that offer assistance, quicken their commitments to climate alter beneath the Paris Agreement and the sustainable development goals (SDGs), and thus “build back better” is being progressively voiced over the world.
  Citation: China Finance Review International
  PubDate: 2021-08-19
  DOI: 10.1108/CFRI-02-2021-0038
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
The impact of green finance, economic growth and energy usage on CO
emission in Vietnam – a multivariate time series analysis
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  Authors: Quyen Ha Tran
  Abstract: This study aims to examine the relationship between green finance, economic growth, renewable energy consumption (energy efficiency), energy import and CO2 emission in Vietnam using multivariate time series analysis. The data were collected from 1986 to 2018 since Vietnam initiated the economic reforms, namely “Doi Moi” in 1986. The concept and methods of cointegration, Granger causality and error correction model (ECM) were employed to establish the relationship between the variables of interest. Our results confirmed the existence of cointegration among the variables. The Granger causality test revealed unidirectional causality running from renewable energy consumption to CO2 emission and green investment to CO2 emission. This study results confirm the existence of cointegration among the variables. The results of the study imply that policies on economic development impose a significant impact on pollution in Vietnam. This study has described Vietnam, its economic development, green manufacturing practices, its environmental health and level of carbon dioxide emission which was enhanced due to COVID-19.
  Citation: China Finance Review International
  PubDate: 2021-08-10
  DOI: 10.1108/CFRI-03-2021-0049
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Making of an innovative economy: a study of diversity of Chinese
enterprise innovation
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  Authors: Nimesh Salike , Yanghua Huang , Zhifeng Yin , Douglas Zhihua Zeng
  Abstract: This research examines the effects of firm ownership and size on innovation capability using data from the World Bank China Enterprise Survey (WBCES), which provides directly measurable innovation-related variables. Key consideration is given to the role and innovation capability of state-owned enterprises (SOEs) compared with domestic and foreign private enterprises in the Chinese economy. In its quest for technological self-reliance and a new developmental path, China is focusing on its enterprise innovation capability. The findings suggest that SOEs and domestic private enterprises are similar in terms of innovation participation but differ in terms of innovation diversification, which implies ownership-specific innovative advantages. In general, the authors find that SOEs are more innovative with respect to processes innovation but less so with respect to product, management and promotion innovations. Foreign-owned enterprises are superior in all types of innovation except product innovation. The authors also find that size is an important determinant of innovation capability, with the effect varying depending on location and industry. Moreover, the joint effect of firm ownership and size on innovation declines with increasing size. These findings provide new insights into the evaluation of China's major policies. This research examines the effects of ownership and size on enterprise innovation capability, using the WBCES (2013) data, which include direct measurable innovation related variables.
  Citation: China Finance Review International
  PubDate: 2021-07-14
  DOI: 10.1108/CFRI-10-2020-0135
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Is Baidu index really powerful to predict the Chinese stock market
volatility' New evidence from the internet information
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  Authors: Qiaoqi Lang , Jiqian Wang , Feng Ma , Dengshi Huang , Mohamed Wahab Mohamed Ismail
  Abstract: This paper verifies whether popular Internet information from Internet forum and search engine exhibit useful content for forecasting the volatility in Chinese stock market. First, the authors’ study commences with several HAR-RV-type models, then the study amplifies them respectively with the posting volume and search frequency to construct HAR-IF-type and HAR-BD-type models. Second, from in-sample and out-of-sample analysis, the authors empirically investigate the interpretive ability, forecasting performance (statistic and economic). Third, various robustness checks are utilized to reconfirm the authors’ findings, including alternative forecast window, alternative evaluation method and alternative stock market. Finally, the authors further discuss the forecasting performance in different forecast horizons (h = 5, 10 and 20) and asymmetric effect of information from Internet forum. From in-sample perspective, the authors discover that posting volume exhibits better analytical ability for Chinese stock volatility than search frequency. Out-of-sample results indicate that forecasting models with posting volume could achieve a superior forecasting performance and increased economic value than competing models. These findings can help investors and decision-makers obtain higher forecasting accuracy and economic gains. This study enriches the existing research findings about the volatility forecasting of stock market from two dimensions. First, the authors thoroughly investigate whether the Internet information could enhance the efficiency and accuracy of the volatility forecasting concerning with the Chinese stock market. Second, the authors find a novel evidence that the information from Internet forum is more superior to search frequency in volatility forecasting of stock market. Third, they find that this study not only compares the predictability of the posting volume and search frequency simply, but it also divides the posting volume into “good” and “bad” segments to clarify its asymmetric effect respectively.
  Citation: China Finance Review International
  PubDate: 2021-07-05
  DOI: 10.1108/CFRI-03-2021-0047
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Lottery preference and stock market participation: evidence from China
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  Authors: Tingting Zhang , Desheng Wei , Zhifeng Liu , Xihao Wu
  Abstract: This paper studies the effects of lottery preference on stock market participation at the macro level. The authors use the abnormal search volume intensity for lottery-related keywords from the Baidu search engine to capture retail investors' lottery preference. To measure stock market participation, they use five different macro-level measures from various angles. They perform the time series regression analysis in their empirical study. First, the validation tests show that the lottery preference index in this study is reasonable. Further, the authors find that lottery preference increases people's propensity to enter and trade in the stock market. Besides, they find that the effect on trading behavior is asymmetric, that is, high lottery preference has a more significant impact on trading behavior than low lottery preference. However, lottery preference has no significant effect on the stockholding. This paper contributes to the growing literature that examines the determinants of stock market participation and the role of lottery/gambling preference in the financial market. It also provides direct and novel evidence for Statman's (2002) conclusions about the similarity of lottery players and stock traders.
  Citation: China Finance Review International
  PubDate: 2021-06-15
  DOI: 10.1108/CFRI-01-2021-0008
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Energy efficiency financing and the role of green bond: policies for
post-Covid period
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  Authors: Chuc Anh Tu , Ehsan Rasoulinezhad
  Abstract: One of the major negative effects of the Coronavirus outbreak worldwide has been reduced investment in green energy projects and energy efficiency. The main purpose of this paper is to study the role of green bond proposed by the World Bank in 2008, as a reliable instrument to enhance the capital flow in energy efficiency financing and to develop green energy resources during and post the current challenging global time. We model energy efficiency for 37 members of OECD through a panel data framework and quarterly data over 2007Q1–2020Q4. The major results reveal the positive impacts of issued green bonds and regulatory quality index on energy efficiency, while any increase in inflation rate and urbanization decelerates the progress of raising energy efficiency. As highlighted concluding remarks and policy implications, it can be expressed that the tool of green bond is a potential policy to drive-up energy efficiency financing and enhancing environmental quality during and post-COVID period. It is recommended to follow green bond policy with an efficient regulation framework and urbanization saving energy planning. To the best of the authors' knowledge, although a few scholars have investigated the impacts of COVID-19 on green financing or examined the energy efficiency financing, the matter of modeling energy efficiency–green bond relationship has not been addressed by any academic study. The contributions of this paper to the existing literature are: (1) it is the first academic study to discover the relationship between energy efficiency and green bond in OECD countries, (2) since our empirical part provides estimation results based on quarterly data covering the year of 2019 and 2020, it may offer some new policy implications to enhance energy efficiency financing in and post-COVID period, (3) furthermore, we consider energy efficiency indicator (mix of industrial, residential, services and transport energy efficiency) as the dependent variable instead of using the simple energy intensity variable as a proxy for energy efficiency.
  Citation: China Finance Review International
  PubDate: 2021-06-10
  DOI: 10.1108/CFRI-03-2021-0052
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
The impact of chief executive officer turnover on strategic change: a
model of mediating effect and joint moderating effect
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  Authors: Renhuai Liu , Chao Li , Mengjun Huo
  Abstract: The purpose of this paper is to empirically analyze the impact of chief executive officer (CEO) turnover on strategic change and explore the mediating role of organizational slack between them, as well as the moderating role and joint moderating role of top management team (TMT) external social network, ownership nature and industry type. Based on the upper echelons theory, resource allocation theory and structuration theory, this paper takes the unbalanced panel data of A-share listed companies in Shanghai and Shenzhen Stock Exchanges of China from 2001 to 2018 as the research sample, uses ordinary least squares (OLS) regression method and fixed effect model to study the relationship between CEO turnover and strategic change, and focuses on the mediating mechanism and moderating mechanism between them. The authors find that CEO turnover is positively related to strategic change. When a CEO turns over, a new CEO will initiate strategic change. Precipitation organizational slack plays a mediating role between CEO turnover and strategic change. Non-precipitation organizational slack has no mediating effect between CEO turnover and strategic change, which is embodied as “suppressing effects.” When the non-precipitation organizational slack variable is controlled, the impact of CEO turnover on strategic change will be enhanced. TMT external social network, ownership nature and industry type all negatively moderate the relationship between CEO turnover and strategic change. TMT external social network and ownership nature have a joint moderating effect between CEO turnover and strategic change. When TMT external social network is small, CEO turnover has a positive effect on strategic change in both state-owned enterprises and non-state-owned enterprises, but the promotion effect is stronger in non-state-owned enterprises. When TMT external social network is large, the positive effect of CEO turnover on strategic change in state-owned enterprises is from strong to weak, but in the non-state-owned enterprises is from weak to strong. TMT external social network and industry type have a joint moderating effect between CEO turnover and strategic change. When TMT external social network is small, CEO turnover has a positive impact on strategic change in high-tech enterprises and non-high-tech enterprises, but the promotion effect is stronger in non-high-tech enterprises. When TMT external social network is large, the positive impact of CEO turnover on strategic change in high-tech enterprises is from strong to weak, but in the non-high-tech enterprises is from weak to strong. On the basis of previous studies, this paper further expands the research scope of the mechanism of CEO turnover on strategic change, echoing the research arguments of relevant scholars. At the same time, the research results reveal the mechanism of organizational slack, TMT external social network, ownership nature and industry type in the relationship between CEO turnover and strategic change, and further deepen the application of upper echelons theory, resources allocation theory and structuration theory in China. In addition, the research conclusions of this paper also provide reference value for Chinese enterprises in carrying out strategic change, promoting enterprise transformation and improving the level of corporate governance, and help to enhance the understanding and attention of Chinese enterprises to CEO turnover, organizational slack, TMT external social network, strategic change and corporate governance under the background of high-quality economic development.
  Citation: China Finance Review International
  PubDate: 2021-05-31
  DOI: 10.1108/CFRI-03-2021-0055
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
How does investor sentiment impact stock volatility' New evidence from
Shanghai A-shares market
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  Authors: Dejun Xie , Yu Cui , Yujian Liu
  Abstract: The focus of the current research is to examine whether mixed-frequency investor sentiment affects stock volatility in the China A-shares stock market. Mixed-frequency sampling models are employed to find the relationship between stock market volatility and mixed-frequency investor sentiment. Principal analysis and MIDAS-GARCH model are used to calibrate the impact of investor sentiment on the large-horizon components of volatility of Shanghai composite stocks. The results show that the volatility in Chinese stock market is positively influenced by B–W investor sentiment index, when the sentiment index encompasses weighted mixed frequencies with different horizons. In particular, the impact of mixed-frequency investor sentiment is most significantly on the large-horizon components of volatility. Moreover, it is demonstrated that mixed-frequency sampling model has better explanatory powers than exogenous regression models when accounting for the relationship between investor sentiment and stock volatility. Given the various unique features of Chinese stock market and its importance as the major representative of world emerging markets, the findings of the current paper are of particularly scholarly and practical significance by shedding lights to the applicableness GARCH-MIDAS in the focused frontiers. A more accurate and insightful understanding of volatility has always been one of the core scholarly pursuits since the influential structural time series modeling of Engle (1982) and the seminal work of Engle and Rangel (2008) attempting to accommodate macroeconomic factors into volatility models. However, the studies in this regard are so far relatively scarce with mixed conclusions. The current study fills such gaps with improved MIDAS-GARCH approach and new evidence from Shanghai A-share market.
  Citation: China Finance Review International
  PubDate: 2021-05-24
  DOI: 10.1108/CFRI-01-2021-0007
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Can we-media information disclosure drive listed companies'
innovation'—From the perspective of financing constraints
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  Authors: Hongbin Huang , Yani Sun , Qingling Chu
  Abstract: The purpose of this paper is to investigate to what extent the amount, information source and the content of the microblog information disclosure of listed companies could impact on innovation from the perspective of financing constraints. The propensity score matching (PSM) and two-stage least square (2SLS) are used in estimations to deal with the endogeneity problem. Evidence shows that the amount of we-media information disclosure significantly drives the innovation of enterprises. The mechanism is that we-media information disclosure drives the innovation by easing the financing constraints and bringing funds to the R&D activities. Further research shows that only the original information can drive the innovation. In particular, the R&D information promotes the R&D input and innovation output more significantly. The conclusion of this paper provides a reference for the listed companies to drive innovation with the help of we-media information disclosure, a new solution for the small and medium-sized listed companies in China which have difficulty in carrying out innovation activities due to financing constrains and also provides useful practical enlightenment for the government and the capital market regulatory authorities to issue relevant policies to regulate we-media information disclosure. This paper introduces a new information disclosure channel--we-media into the research on influencing factors of innovation and discusses the influence of the amount, different sources and disclosure contents from we-media on enterprise innovation, which enriches the existing research on enterprise innovation influencing factors, providing a new perspective for driving enterprises to innovate.
  Citation: China Finance Review International
  PubDate: 2021-04-30
  DOI: 10.1108/CFRI-09-2020-0127
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Public pension and borrowing behavior: evidence from rural China
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  Authors: Conglong Fang , Qinghua Shi
  Abstract: The purpose of this paper is to investigate how China's rural public pension affects farmers' formal borrowing, which has always been rationed. This paper uses a difference-in-difference (DID) estimation to evaluate the effect of the implementation of the New Rural Pension Scheme (NRPS) at the end of 2009 on farmers' formal borrowing. The results show that the NRPS significantly reduces farmers' formal borrowing from rural credit cooperatives (RCCs). The effect is significant among the elderly, eastern China and high-income groups. This study contributes to the literature by identifying another potential reason for rural formal credit shortage. Policymakers and rural formal financial institutions should consider the demand side problem of lending.
  Citation: China Finance Review International
  PubDate: 2021-01-26
  DOI: 10.1108/CFRI-07-2020-0103
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
Does the research meeting affect the shareholding ratio of institutional
investors in listed companies' Empirical evidence from China
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  Authors: Jingqin Zhang , Yong Ye
  Abstract: This paper discusses whether institutional investors change the shareholding ratio of listed companies through research meeting, and whether this active investment mode can really improve the investment efficiency of institutional investors. Using empirical research method, this study designs and conducts an empirical research according to empirical research's basic norms. Thus, we acquire needed and credible empirical data. This study analyzes whether institutional investors seek their private interest in researched companies by analyzing their research meetings and the shareholding ratios of different types of institutional investors using Shenzhen Stock Exchange data on listed firms from 2014 to 2018. This study finds that the research meetings of institutional investors provide participants with reliable information which supports the decision of institutional investors to change their shareholding ratio. The stock price growth rate strengthens the positive correlation between the research meetings of institutional investors and the shareholding ratio of institutional investors. Additionally, transactional institutional investors increase the shareholding ratio, while holding institutional investors do not. This paper combines the behavior of institutional investors with the holding status of institutional investors, and discusses the impact of institutional investors' behavior on investment decisions. At the same time, it classifies the institutional investors and discusses the attitude of different types of institutional investors towards this active investment mode.
  Citation: China Finance Review International
  PubDate: 2021-01-22
  DOI: 10.1108/CFRI-08-2020-0112
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
China's outward foreign direct investment and bilateral export
sophistication: a cross countries panel data analysis
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  Authors: Faheem Ur Rehman , Abul Ala Noman
  Abstract: China's outward foreign direct investment (OFDI) has risen remarkably over the past two decades. Does such increase affect the sophistication of Chinese exports, is a significant issue that has surprisingly remained unaddressed' The purpose of this study is to investigate the impact of Chinese OFDI on bilateral export sophistication of China and its OFDI receiving partner countries during 2003–2017 by applying Poisson pseudo-maximum likelihood approach based on gravity model. The analysis has been performed for total sample, region-wise grouped sample (Europe and Central Asia, Middle East and North Africa, Latin America and Caribbean, East Asia and Pacific, South Asia, North America and sub-Saharan Africa) and income-wise grouped sample (high income, upper middle income, lower middle income and lower income group sample). The results confirmed the significant and positive effect of Chinese OFDI on bilateral export sophistication in total sample, regions-wise and income groups sample. The study provides a helpful suggestion regarding policy towards achieving more sophistication in export and thus to achieve comparative advantage in trade.
  Citation: China Finance Review International
  PubDate: 2021-01-12
  DOI: 10.1108/CFRI-04-2020-0040
  Issue No: Vol. ahead-of-print , No. ahead-of-print (2021)
The global business cycle and speculative demand for crude oil
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  Authors: Elisabete Neves , Vítor Oliveira , Joana Leite , Carla Henriques
  Abstract: This paper aims to better understand if speculative activity is a factor or even the main factor in the run-up of oil prices in the spot market, particularly in the recent price bubble that occurred in the period from mid-2003 to 2008. The methodology used is based on an existing vector autoregressive model proposed by Kilian and Murphy (2014), which is a structural model of the global market for crude oil that accounts for flow demand and flow supply shocks and speculative demand oil shocks. From the output of the authors’ structural model, the authors ruled out speculation as a factor of rising oil prices. The authors have found instead that the rapid oil demand caused by an unexpected increase in the global business cycle is the most accurate culprit. Despite the change of perspective in the speculative component, the authors’ conclusions concur with the findings of Kilian and Murphy (2014) and others. As far as the authors are aware, this is the first time that a study has used as a spread oil variable, a speculative component of the real price, replacing the oil inventories considered by Kilian and Murphy (2014). Another contribution is that the model used allows estimating traditional oil demand elasticity in production and oil supply elasticity in spread movements, casting doubt on existing models with perfect price-inelastic output for crude oil.
  Citation: China Finance Review International
  PubDate: 2021-09-03
  DOI: 10.1108/CFRI-05-2021-0091
  Issue No: Vol. 11 , No. 4 (2021)
Catastrophe risk, reinsurance and securitized risk-transfer solutions: a
review
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  Authors: Yang Zhao , Jin-Ping Lee , Min-Teh Yu
  Abstract: Catastrophe (CAT) events associated with natural catastrophes and man-made disasters cause profound impacts on the insurance industry. This research thus reviews the impact of CAT risk on the insurance industry and how traditional reinsurance and securitized risk-transfer instruments are used for managing CAT risk. This research reviews the impact of CAT risk on the insurance industry and how traditional reinsurance and securitized risk-transfer instruments are used for managing CAT risk. Apart from many negative influences, CAT events can increase the net revenue of the insurance industry around CAT events and improve insurance demand over the post-CAT periods. The underwriting cycle of reinsurance causes inefficiencies in transferring CAT risks. Securitized risk-transfer instruments resolve some inefficiencies of the reinsurance market, but are subject to moral hazard, basis risk, credit risk, regulatory uncertainty, etc. The authors introduce some popular securitized solutions and use Merton's structural framework to demonstrate how to value these CAT-linked securities. The hybrid solutions by combining reinsurance with securitized CAT instruments are expected to offer promising applications for CAT risk management. The authors introduce some popular securitized solutions and use Merton's structural framework to demonstrate how to value these CAT-linked securities. The hybrid solutions by combining reinsurance with securitized CAT instruments are expected to offer promising applications for CAT risk management. This research reviews a broad array of impacts of CAT risks on the (re)insurance industry. CAT events challenge (re)insurance capacity and influence insurers' supply decisions and reconstruction costs in the aftermath of catastrophes. While losses from natural catastrophes are the primary threat to property–casualty insurers, the mortality risk posed by influenza pandemics is a leading CAT risk for life insurers. At the same time, natural catastrophes and man-made disasters cause distinct impacts on (re)insures. Man-made disasters can increase the correlation between insurance stocks and the overall market, and natural catastrophes reduce the above correlation. It should be noted that huge CAT losses can also improve (re)insurance demand during the postevent period and thus bring long-term effects to the (re)insurance industry.
  Citation: China Finance Review International
  PubDate: 2021-08-13
  DOI: 10.1108/CFRI-06-2021-0120
  Issue No: Vol. 11 , No. 4 (2021)
Earnings management when firms face mandatory contributions
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  Authors: Yiyi Qin , Jun Cai , Steven Wei
  Abstract: In this paper, we aim to answer two questions. First, whether firms manipulate reported earnings via pension assumptions when facing mandatory contributions. Second, whether firms alter their earnings management behavior when the Financial Accounting Standard Board (FASB) mandates disclosure of pension asset composition and a description of investment strategy under SFAS 132R. Our basic approach is to run linear regressions of firm-year assumed returns on the log of pension sensitivity measures, controlling for current and lagged actual returns from pension assets, fiscal year dummies and industry dummies. The larger the pension sensitivity ratios, the stronger the effects from inflated ERRs on reported earnings. We confirm the early results that the regression slopes are positive and highly significant. We construct an indicator variable DMC to capture the mandatory contributions firms face and another indicator variable D132R to capture the effect of SFAS 132R. DMC takes the value of one for fiscal years during which an acquisition takes place and zero otherwise. D132R takes the value of one for fiscal years after December 15, 2003 and zero otherwise. Our sample covers the period from June 1992 to December 2017. Our key results are as follows. The estimated coefficient (t-statistic) on DMC is 0.308 (6.87). Firms facing mandatory contributions tend to set ERRs at an average 0.308% higher. The estimated coefficient (t-statistic) on D132R is −2.190 (−13.70). The new disclosure requirement under SFAS 132R constrains all firms to set ERRs at an average 2.190% lower. The estimate (t-statistic) on the interactive term DMA×D132R is −0.237 (−3.29). When mandatory contributions happen during the post-SFAS 132R period, firms tend to set ERRs at 0.237% lower than they would do otherwise in the pre-SFAS 132R period. When firms face mandatory contributions, typically firm experience negative stock market returns. We examine whether managers manage earnings to mitigate such negative impact. We find that firms inflate assumed returns on pension assets to boost their reported earnings when facing mandatory contributions. We also find that managers alter earnings management behavior, in the case of mandatory contributions, following the introduction of new pension disclosure standards under SFAS 132R that become effective on December 15, 2003. Under the new SFAS 132R requirement, firms need to disclose asset allocation and describe investment strategies. This imposes restrictions on managers' discretion in making ERR assumptions, since now the composition of pension assets is a key determinant of the assumed expected rate of return on pension assets. Firms need to justify their ERRs with their asset allocations.
  Citation: China Finance Review International
  PubDate: 2021-06-28
  DOI: 10.1108/CFRI-01-2021-0020
  Issue No: Vol. 11 , No. 4 (2021)
Familial altruism and reputation risk: evidence from China
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  Authors: Hanqing “Chevy” Fang , Yulin Shi , Zhenyu Wu
  Abstract: The authors study the effects of altruism and intention for succession on family firm's reputation risk-taking behaviors in Chinese publicly listed companies. The authors use earnings management as a proxy for reputation risk in family firms, and hand-collected relationship between family members to measure the closeness of incumbent family members and their potential successors as a proxy for the altruistic degree. Results show that, in developing countries like China, familial altruism in family firms with succession plans, which does not reduce the practice of earnings management, should be considered by practitioners while detecting it. The hand collected data are very unique; the authors have focused on the relationship between incumbents and successors and the authors define their closeness by using genes shared between them.
  Citation: China Finance Review International
  PubDate: 2021-04-01
  DOI: 10.1108/CFRI-01-2021-0016
  Issue No: Vol. 11 , No. 4 (2021)
Geopolitical risk, economic policy uncertainty and asset returns in
Chinese financial markets
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  Authors: Thomas C. Chiang
  Abstract: This paper investigates the impact of a change in economic policy uncertainty (ΔEPUt) and the absolute value of a change in geopolitical risk ( ΔGPRt ) on the returns of stocks, bonds and gold in the Chinese market. The paper uses Engle's (2009) dynamic conditional correlation (DCC) model and Chiang's (1988) rolling correlation model to generate correlations of asset returns over time and analyzes their responses to (ΔEPUt) and ΔGPRt . Evidence shows that stock-bond return correlations are negatively correlated to ΔEPUt, whereas stock-gold return correlations are positively related to the ΔGPRt , but negatively correlated with ΔEPUt. This study finds evidence that stock returns are adversely related to the risk/uncertainty measured by downside risk, ΔEPUt and ΔGPRt , whereas the bond return is positively related to a rise in ΔEPUt; the gold return is positively correlated with a heightened ΔGPRt . The findings are based entirely on the data for China's asset markets; further research may expand this analysis to other emerging markets, depending on the availability of GPR indices. Evidence suggests that the performance of the Chinese market differs from advanced markets. This study shows that gold is a safe haven and can be viewed as an asset to hedge against policy uncertainty and geopolitical risk in Chinese financial markets. This study identify the special role for the gold prices in response to the economic policy uncertainty and the geopolitical risk. Evidence shows that stock and bond return correlation is negatively related to the ΔEPU and support the flight-to-quality hypothesis. However, the stock-gold return correlation is positively related to ΔGPR , resulting from the income or wealth effect. The presence of a dynamic correlations between stock-bond and stock-gold relations in response to ΔEPUt and ΔGPRt has not previously been tested in the literature. Moreover, this study finds evidence that bond-gold correlations are negatively correlated to both ΔEPUt and ΔGPRt .
  Citation: China Finance Review International
  PubDate: 2021-03-16
  DOI: 10.1108/CFRI-08-2020-0115
  Issue No: Vol. 11 , No. 4 (2021)
What do we know about cryptocurrency' Past, present, future
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  Authors: Mohammed Sawkat Hossain
  Abstract: The authors make a fundamental initial effort to conduct a systematic review analysis on “cryptocurrency,” mainly to analyze the way it has been changing the “stereotype” financial transactions, and also identify the probable unexplored research avenues on this innovative investment regime. The study aims to draw the landscape of the current state, prospects, challenges, trends and possible agendas of cryptocurrency in the global market. Using a quali-quantitative approach widely known as meta-literature review, the synthesis analysis on “cryptocurrency” is conducted. Methodologically, the authors review and analyze the most recent and relevant papers preferably published between 2016 and 2020 in leading business and finance journals of ISI Web of Science (ISI WOS) through bibliometric analysis particularly coupled with content analysis. The findings of the meta-analysis summarize the relevant stylized facts of the cryptocurrency market: distinctive features of blockchain technology, decentralized payment method, low-cost facility, ensuring pseudo-anonymity, independence from central authority, double spending attack protection, organic and instantaneous nature, among others. In addition, the analysis identified several future research regimes: pricing model, prospect of investment regime, hedging properties, volatility dynamics, information asymmetry, underlying risk factors and bubble-like nature in global cryptocurrency market. This academic novelty significantly contributes to enhance our knowledge on the current state-of-the-art of digital finance, outlines the research agenda and eventually provides important investment implications for financial managers, research analysts, investors, market practitioners, regulatory compliance professionals and policymakers. Therefore, the findings shed the lights on new investment opportunity in the global market. Cryptocurrency, virtual currency or digital asset having cryptography for idiosyncratic security features, seems to be a persistent paradigm shift in the digitalized financial system. Despite the continuing growth, the academic research on cryptocurrency is still at nascent stage, particularly because researchers did not deeply draw attention at this financial innovation. In addition, the authors argue that none of the earlier studies yet conducted a meta-analysis on this latest investment regime. Therefore, this review study is the initial attempt to fill up the gap in the finance literature.
  Citation: China Finance Review International
  PubDate: 2021-02-03
  DOI: 10.1108/CFRI-03-2020-0026
  Issue No: Vol. 11 , No. 4 (2021)
China Finance Review International
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