Do Political Connections Promote Innovation in Environmentally Polluting Enterprises?

We use an unbalanced panel data analysis to examine the effect of political connections (PCs) in state‐owned enterprises (SOE) and non‐SOEs on the innovation of Chinese environmentally polluting enterprises listed on the Shanghai and Shenzhen Stock Exchanges from 2007 to 2016. Our sample consists of 792 firms and 4587 firm‐year observations. There are several interesting findings. First, SOEs that are politically linked to the central government promote more innovation in general and more environmental innovation than SOEs without these links. Second, privately‐owned enterprises (non‐SOEs) with PCs promote less environmental innovation than non‐SOEs without PCs. Third, environmental regulation does not affect the environmental innovation of SOEs but it drives non‐SOEs with PCs to become more environmentally innovative. Our results enable us to better understand how PCs and regulations affect environmental innovation.     

Do crop purchase programs improve smallholder welfare? The case of Zambia's Food Reserve Agency

Government and parastatal crop purchase programs have regained popularity in sub-Saharan Africa, with many citing improving smallholder farmers’ welfare as a key goal. Yet there is limited empirical evidence on the topic. This paper analyzes the effects of the Zambian Food Reserve Agency's (FRA's) maize purchase activities on smallholder welfare. The FRA buys maize at a pan-territorial price that often exceeds market prices in surplus production areas. Using two household panel survey datasets spanning 15 years and exploiting variation in the scale of FRA activities over time, we employ fixed effects and control function approaches to estimate the effects of a smallholder household's maize sales to the FRA on its welfare, as well as the effects of more intense FRA maize purchase activity in a given district on the welfare of smallholder households in the district. Results suggest positive direct welfare effects on the minority of smallholders that sell to the FRA. We also find that, in the early years of the program, more intense FRA maize purchase activity in a district was associated with reductions in smallholder welfare, particularly among maize autarkic and net buying households. In later years, we find no evidence of such negative effects and some evidence of positive district-level effects on maize net buyers.     

Effects of Social Capital,Top Executive Attributes and R＆D on Firm Value in Chinese Small and Medium-sized Enterprises

This study uses an unbalanced panel data analysis to examine the effects of social capital, top executive attributes and R ＆D on firm value in Chinese small and medium-sized enterprises （SMEs） listed on the Shenzhen Stock Exchange Small and Medium-sized Enterprises Board from 2007 to 2011. There are several interesting findings. First, the gender （male） and academic degree of the chairperson in the SMEs have a positive and significant effect on firm value. Second, social capital （measured by politieal connections, managerial business association networks and technology association networks） and R＆D have a positive effect on SME firm value. Third, the effect of politieal connections on firm value for state-owned enterprises （SOEs） is stronger than for non-SOEs, while the effect of business and technology networks on firm value for non-SOEs is stronger than for SOEs. Our study has important policy implications for SMEs that want to compete successfully in China.     

Interest rate deregulation and banks’ off-balance-sheet activities: a Hong Kong perspective

Through the interest rate deregulation and banks’ off-balance-sheet activities (OBSAs) in Hong Kong, this study investigates the debate over the impact of banking deregulation on banks’ risk-taking behaviour. On the one hand, the Arrow effect implies that increased competition caused by the interest rate deregulation motivates Hong Kong banks to speed up their development of OBSAs as an additional but riskier income source. On the other hand, the Schumpeterian effect implies that the deregulation may reduce the banks’ financial capability in developing new products and thus downscale their OBSA adoption. Our findings show that, while the negative scale effect is statistically insignificant, the interest rate deregulation has a positive and significant impact on the adoption rate for all OBSA categories. We therefore conclude that the interest rate deregulation unambiguously leads to riskier bank behaviour in terms of higher OBSA adoption.     

A trade-off between non-fundamental risk and incentives

This study conjectures that CEOs are rewarded more heavily for fundamental than for non-fundamental performance, and that the impact of non-fundamental risks is more negative than that of fundamental risks on pay-performance sensitivity. While the first conjecture stems from the controllability principle, the second conjecture is attributable to the interplay between the risk-incentive trade-off and delegation of responsibility to the agent. This study devised measures for fundamental and non-fundamental performance using an ARIMA-based unobserved-component approach. The two conjectures are strongly supported by this study’s findings over a wide range of empirical specifications, indicating that the optimal level of pay-performance sensitivity depends not only on the degree, but also on the nature, of performance uncertainty.     

Examining How Attending Motivation and Satisfaction Affects the Loyalty for Attendees at Aboriginal Festivals

This study examined the causal relationships between motivation, satisfaction and loyalty among attendees at aboriginal festivals. A total of 789 usable questionnaires were collected from two aboriginal festivals, Amis Ilisin and Saisiyat Pas‐taai. Data analyses were performed using SPSS 15.0 and LISREL 8.70 for Windows. The analytical results indicate that motivation directly affects satisfaction and indirectly affects loyalty, whereas satisfaction directly affects attendee loyalty at aboriginal festivals. Moreover, satisfaction significantly affects the loyalty of attendees at aboriginal festivals and is an important mediating variable in the behavioral model of aboriginal festivals. Copyright © 2011 John Wiley & Sons, Ltd.     

The efficiency of compensation contracting in China: Do better CEOs get better paid?

Over recent years, China adopted a number of ‘western-style’ reforms of corporate governance and executive compensation. We investigate whether boards of Chinese firms evaluate CEO ability and remunerate their CEOs accordingly, an essential tenet of efficient compensation contracting. Using Data Envelopment Analysis to measure CEO ability, we do not find any evidence that CEO ability matters in compensation contracting decisions—it does not lead to either higher pay, stronger pay-for-performance sensitivity, or a higher likelihood of equity grants. This is surprising, since we find evidence that higher ability CEOs achieve superior firm performance. In contrast, we find that powerful CEOs do not overperform, while they enjoy large abnormal pay. Overall, our results suggest that Chinese firms fail to embrace new corporate governance reforms and are unable to fully utilize the reforms’ benefits.

     

Powerful Chief Executive Officers and Firm Performance: Integrating Agency and Stewardship Theory

Do agency and stewardship behaviors coexist at firms, or does one dominate the other? We use data from listed companies in China over the period 2007–2016 to show that powerful chief executive officers (CEOs) simultaneously incur self‐interested agency costs while acting as stewards to benefit the firm. In balancing the push‐and‐pull forces of stewardship and agency behaviors, powerful CEOs in Chinese firms ultimately improve short‐term and long‐term firm performance. Our results have important implications for understanding how CEOs affect firms and how cultural factors can motivate CEOs to work in the interest of the firm.     

The Deviance Information Criterion in Comparison of Normal Mixing Models

Model selection from several non‐nested models by using the deviance information criterion within Bayesian inference Using Gibbs Sampling (BUGS) software needs to be treated with caution. This is particularly important if one can specify a model in various mixing representations, as for the normal variance‐mean mixing distribution occurring in financial contexts. We propose a procedure to compare goodness of fit of several non‐nested models, which uses BUGS software in part.