A c c e p t e d M a n u s c r i p t Highlights Chinese firms' leverage ratios decrease when the economic policy uncertainty increases. This effect is heterogeneous across firms in terms of regional marketization, ownership and bank-firm relationship. This effect is sourced from the deterioration of the external financing environment imposed by economic policy uncertainty Firms adjust their financing structures by using more trade credit when economic policy uncertainty increases. relationships, mitigate the negative effect of policy uncertainty. Moreover, we provide consistent evidence that this negative effect is sourced from the deterioration of the external financing environment. We also find that firms adjust their financing structures by using more trade credit when economic policy uncertainty increases. Our results are robust to sample selection, data frequency, model specification and endogeneity.
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The Chinese capital market has attracted increasing academic attention due to its rising global influence, ongoing regulatory reforms, and distinct institutional background. In this paper, we review scholarly accounting and finance research pertaining to the Chinese capital market in Mainland China published in Tier 1 and Asia-Pacific regional journals during the 1999-2018 period. Our review is based along four dimensions: top-cited articles, main research fields, frequently contributing authors, and emerging research trends. We find that the increasing presence of China in global capital markets, along with its ongoing economic reforms, provides academics with opportunities to investigate distinct institutional environments and utilize natural experiments. This has led to the formulation of novel accounting and finance research questions, greatly advancing our understanding of accounting and finance research.
This paper provides a new explanation for investment‐cash flow sensitivity from the perspective of CEO inside debt holdings. We examine the effect of CEO pensions and deferred compensation (inside debt) on investment‐cash flow sensitivity for a sample of U.S. manufacturing firms from 2006 to 2012. We find that the firms with higher relative CEO leverage ratios (CEO's debt/equity ratio scaled by the firm's debt/equity ratio) generate higher investment‐cash flow sensitivity. Moreover, one standard deviation increase in the logarithm of the relative CEO leverage ratio enlarges investment‐cash flow sensitivity by 50 per cent. This positive relationship still holds even after we take account of endogeneity and financial constraints.
We investigate the role of culturally diverse board of directors on firm outcomes in China. We examine whether the diverseness of the educational, professional and cultural backgrounds of board members influences firm innovation. We find that firms whose directors have international experience are more innovative. In addition, the positive cultural diversity effect is more pronounced for returnee directors with postgraduate and science-related degrees, and longer international work experience. Further, the directors who gain international experience from the countries with higher standards of management practice, corporate governance and intellectual property rights protection have a higher impact on corporate innovative activities.
Cite this article as: Jianlei Han and Zheyao Pan, On the relation between liquidity and the futures-cash basis: evidence from a natural experiment, Journal of Financial Markets, http://dx.doi.org/10.1016/j.finmar. 2016.12.002 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting galley proof before it is published in its final citable form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
AbstractAs a response to the 2015 Chinese stock market crash, regulators prohibited arbitrage activities in the index futures and cash markets. We use this natural experiment to test the hypothesis that liquidity and pricing efficiency causally affect each other. We find that resulting shift in the arbitrage boundary led to the breakdown of the two-way causality relation between liquidity and the absolute futures-cash basis. We thus confirm that the relation between liquidity and the absolute futures-cash basis is not driven by the omitted variable bias, but is indeed due to arbitrage.JEL classification: G01, G14, G18
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