State ownership and the risk‐reducing effect of corporate derivative use: Evidence from China

Guo, Huimin; Pan, Zheyao; Tian, Gary Gang

doi:10.1111/jbfa.12510

Cited by 13 publications

(6 citation statements)

References 72 publications

(145 reference statements)

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“…Drawing on Triki (2006), Chang et al (2015), and Guo et al (2021), data on the use of derivative are collected manually in firms' annual reports in the following way: Search for derivatives, hedges, forwards, futures, options, swaps, swaps, financial assets (liabilities) held for trading, assets (liabilities) at fair value through profit or loss, other (non) current assets (liabilities), etc., gains and losses on changes in fair value, investment income, and risks associated with (related to) financial instruments in the annual report, and determine whether the company uses derivatives, the fair value of derivatives and the impact of t derivatives on the gains and losses on changes in fair value and on investment income, etc., according to the context.…”

Section: Sample Selection and Data Sourcementioning

confidence: 99%

Does the Derivatives Usage Affect Corporate Capital Expenditure? Evidence from China

Zhang,

Guo,

Liu

et al. 2023

AJIBM

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Based on hand-collected data of financial derivatives in listed firms of China, this paper discusses the impact of derivative usage on capital expenditures in emerging markets. It is found that the capital expenditure of derivative users is lower than non-users, and the mechanism is that derivative usage reduces the company's borrowing capacity. The results remain robust after the test of sensitivity test and control of endogeneity. Further research shows that the higher derivative usage intensity, the lower the capital expenditure; The implementation of accounting standards such as Fair Value Measurement has mitigated the adverse impact of derivative usage on capital expenditures; The effect of using derivative to reduce capital expenditures mainly occurs in non-SOEs. From the perspective of economic consequences, the corporate value of derivative users is lower, and the change of derivative accounting standards helps to alleviate the adverse impact of derivatives on corporate value.

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Section: Sample Selection and Data Sourcementioning

confidence: 99%

Does the Derivatives Usage Affect Corporate Capital Expenditure? Evidence from China

Zhang,

Guo,

Liu

et al. 2023

AJIBM

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“…The core explanatory variable is the fintech index (Fintech). This study draws on the variable design of Deng et al [54], Liu et al [55], and others to use the digital financial inclusion index as a proxy variable for Fintech.…”

Section: The Explanatory Variablementioning

confidence: 99%

Corporate Nature, Financial Technology, and Corporate Innovation in China

Gao

Jin

2022

Sustainability

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Corporate innovation has become the main driving force for the long-term development of enterprises, but the characteristics of high risk, long cycle, and high capital demand of corporate innovation activities expose enterprises to high financial rejection. Financial technology, formed by combining digital technology with traditional financial services, is gradually changing the financial service model and providing new ideas for corporate investment and financing. In this study, using the data of non-financial and non-real estate listed companies in Shanghai and Shenzhen markets, A-shares from 2015 to 2020, we examine the effect of financial technology on corporate innovation through a fixed-effects model and investigate the influence of corporate characteristics on the relationship between financial technology and innovation through a moderating-effects model. The results show that financial technology enhances the ability to serve real enterprises by reshaping financial services, which in turn effectively drives an increase in corporate innovation, and the mechanism is conditionally heterogeneous. In addition, the moderating effect of the firm’s nature is found to be more significant in non-state-owned firms, high-technology firms, and firms in the growth and maturity stages by life cycle. The policy implications of this study are to continuously promote theoretical research, to guide the development of fintech, and to improve the construction of financial technology infrastructure. Additionally, to deepen the integration of financial technology with real enterprises and establish differentiated financial technology support tools, so as to improve the precision of promoting enterprise innovation.

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“…This makes SOEs more susceptible to political uncertainty. Because in addition to the usual political influence, their operational and personnel decisions are also under the influence of or even controlled by the local leaders, especially for SOEs that are controlled by local governments (Chen, Tang, Wu, & Yang, 2021;Guo, Pan, & Tian, 2021). As a result, strict government control and restriction continually affect firms' general operations and decision-making, leaving them more sensitive to political risk.…”

Section: The Economic Impact Of Political Uncertaintymentioning

confidence: 99%

“…Next, we examine H3 to test whether crosssectional variation in firms' ownership structure affects the relationship between political uncertainty and cost stickiness. To conduct the analysis, we create a dummy variable, SOE, which equals one if a firm's ultimate controller is the state and zero otherwise (Guo et al, 2021). We then interact SOE with the political uncertainty measure and add relative interaction terms into the baseline model.…”

Section: Cross-sectional Variationmentioning

confidence: 99%

Political uncertainty and cost stickiness: evidence from prefecture-city official turnover in China

Pan

Zhang

2022

CAFR

Self Cite

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PurposeThe aim of this study is to investigate the impact of local political uncertainty on the asymmetric cost behavior (i.e. cost stickiness) for listed firms in China.Design/methodology/approachIn this study, the authors manually collect the turnover data of prefecture-city officials as a measure of exogenous fluctuations in political uncertainty and obtain firm-level financial information from the China Stock Market Accounting Research (CSMAR) database. To perform the analysis, the authors augment the traditional cost stickiness model by including the interaction terms of the prefecture-city official turnover, and firm-level and prefecture-city level control variables.FindingsThe authors find that political turnover leads to a higher degree of cost stickiness, implying that firms retain slack resources when political uncertainty is high. Moreover, the effect of political turnover on cost stickiness is more pronounced for firms residing in regions with weaker institutional environments, and firms that are privately owned and with smaller size. The authors further provide evidence that policy uncertainty and the threat of losing political connection are two underlying channels. Overall, this study documents that the local political process is an important channel that influences corporate operational decisions.Originality/valueThis study provides the first piece of evidence on the relation between political uncertainty and cost stickiness at the local government level. Moreover, the authors propose and demonstrate two underlying channels through which political uncertainty affects firms' asymmetric cost behavior.

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State ownership and the risk‐reducing effect of corporate derivative use: Evidence from China

Cited by 13 publications

References 72 publications

Does the Derivatives Usage Affect Corporate Capital Expenditure? Evidence from China

Does the Derivatives Usage Affect Corporate Capital Expenditure? Evidence from China

Corporate Nature, Financial Technology, and Corporate Innovation in China

Political uncertainty and cost stickiness: evidence from prefecture-city official turnover in China

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