Raising short-term debt for long-term investment and stock price crash risk: Evidence from China

Cheng, Feiyang; Chiao, Chaoshin; Zhen-ming, Fang; Wang, Chunfeng; Yao, Shouyu

doi:10.1016/j.frl.2019.05.018

Cited by 80 publications

(31 citation statements)

References 44 publications

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“…(2016) and Cheng et al . (2020), we divide the sample into three sub‐groups: the Big‐4/non‐Big‐4 sub‐group, the high/low‐analyst coverage sub‐group, and the high/low‐institutional ownership sub‐group. Then, we re‐estimate Equation (4) for each sub‐group.…”

Section: Further Analysismentioning

confidence: 99%

“…As discussed, EPU may aggravate the cash flow volatility and financial distress of firms, which can increase managers’ incentives to engage in earnings management (Hirshleifer et al ., 2012; Frijns et al ., 2013; Habib et al ., 2013; Cheng et al ., 2020). In addition, from the discussion in Subsection 4.2.1, the financial leverage and growth rate of a stock are the significant factors that can influence EPU exposure.…”

Section: Further Analysismentioning

confidence: 99%

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Economic policy uncertainty exposure and earnings management: evidence from China

Cui

Yao

Zhen-ming

et al. 2020

Accounting & Finance

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We investigate the impact of economic policy uncertainty (EPU) exposure on the earnings management behaviour of Chinese firms. We find a significantly positive relation between EPU exposure and firms’ earnings management. In addition, the EPU exposure effect is more pronounced for firms with weaker external monitoring mechanisms. We also find that the financial leverage and growth rate of individual stocks have significant predictive ability for EPU exposure. When we examine the potential mechanisms linking EPU exposure to earnings management, we find that financial distress is the dominant mechanism for firms with high leverage, while it is cash flow volatility for the high‐growth firms.

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Section: Further Analysismentioning

confidence: 99%

Section: Further Analysismentioning

confidence: 99%

Economic policy uncertainty exposure and earnings management: evidence from China

Cui

Yao

Zhen-ming

et al. 2020

Accounting & Finance

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“…A highly concentrated ownership structure dominated by state-owned controlling shareholders is still the norm in Chinese listed firms (Wei et al, 2005;Chen et al, 2011;Yuan et al, 2016). Given that government agencies have the ultimate control over company decisions, corporate governance is generally weak in Chinese listed firms and the conflicts of interest between the controlling and minority shareholders are severe (Young et al, 2008;Cheng et al, 2020). In addition, external governance settings such as external auditing mechanisms and investor protection are also less effective in China (Yuan et al, 2016;Li et al, 2017).…”

Section: Long-lasting Effects Of Early-life Experiencesmentioning

confidence: 99%

“…In addition, prior studies have found that effective external monitoring mechanisms (such as institutional ownership, high-quality external auditing and higher analyst following) can reduce managers' earnings management and opportunism behaviours (Cheng et al, 2020). Therefore, whether external monitoring mechanisms shape the relationship between the famine experience and financial reporting quality is also of interest.…”

Section: Conditional Analysis On Different Firm Characteristics and Ementioning

confidence: 99%

Top executives’ early‐life experience and financial disclosure quality: impact from the Great Chinese Famine

Yao

Wang

Sun

et al. 2020

Accounting & Finance

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This study investigates the impact of top executives’ Great Chinese Famine experience on firm financial disclosure quality. We find firms led by top executives who experienced the great famine in early life are less likely to conduct fraudulent financial reporting. The famine effect is more pronounced in state‐owned enterprises (SOEs), smaller‐cap, lower‐profitability level firms and firms with weaker external monitoring. Further evidence suggests that top executives with great famine experience show greater tendency to implement secured debt structure, effective internal control and spend less on entertainment and travel costs, which in turn reduce the likelihood of fraudulent financial reporting.

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“…This uncontrollable problem, strictly related to international (receivable and payable) contracts, is disrupted by the instability of the exchange rate and may not be able to survive in weaker economies due to such an unpredictable financial situation. Specific CCC, companies finance their working capital as much as possible for short-term assets and short-term loan firms perform poorly through times of the financial crisis (Cheng et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

Cash Conversion Cycle Sensitivity by Moderating Role of Exchange Rates Volatility on Firm’s Financial Performance

Hussain

Hassan

Quddus

et al. 2021

Business: Theory and Practice

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The cycle of cash conversion relates to the time spread between the value of cash paid for purchases and the cash receipt from turnover. Using the State Bank of Pakistan data, this study introduces the direct and moderating role of the exchange rate, effective through the efficient execution of the cash conversion cycle between Pakistani 302 manufacturing companies from 1999–2015. Using the fixed effect as the static panel model and system GMM as a dynamic panel, it is observed that the exchange rate plays an authoritative moderating role between the cash conversion cycle and the financial performance. Results of the investigation have shown that in static panel analysis with the cash conversion period, the exchange rate has a positive and substantial moderating effect on return on assets and return on equity whereas that ER has a major negative impact on return on assets and return on equity using dynamic panel data analysis GMM. The issue of endogeneity in the static panel is addressed using the advanced approach of the standard error of the panel correction standard error method that changed the position of the significance of the moderator variable. Observers, therefore, intend to evaluate the fluctuations in the exchange rate as one of the variables of the financial output moderator in the context of current metrics such as asset’s returns, equity’s returns and gain more practical expression within their investigated results.

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Raising short-term debt for long-term investment and stock price crash risk: Evidence from China

Cited by 80 publications

References 44 publications

Economic policy uncertainty exposure and earnings management: evidence from China

Economic policy uncertainty exposure and earnings management: evidence from China

Top executives’ early‐life experience and financial disclosure quality: impact from the Great Chinese Famine

Cash Conversion Cycle Sensitivity by Moderating Role of Exchange Rates Volatility on Firm’s Financial Performance

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