Agency costs and tax planning when the government is a major Shareholder

In state owned enterprises (SOEs), taxes are a dividend to the controlling shareholder, the state, but a cost to other shareholders. We examine publicly traded firms in China and find significantly lower tax avoidance by SOEs relative to non-SOEs. The differences are pronounced for locally versus centrally-owned SOEs and during the year of SOE term performance evaluations. We link our results to managerial incentives through promotion tests, finding that higher SOE tax rates are associated with higher promotion frequencies of SOE managers. Our results suggest managerial incentives and tax reporting are conditional on the ownership structure of the firm.     

Capital gains lock-in and governance choices

Differences in accrued gains and investors’ tax-sensitivity induce variation in a capital gains lock-in effect across mutual funds even for the same stock at the same time. Exploiting this variation, we show this effect influences funds’ governance decisions: higher capital gains decrease the likelihood a fund exits prior to contentious votes and increase the likelihood a fund votes against management. Consistent with tax motivation, these findings are concentrated among funds with tax-sensitive investors. Further, high aggregate capital gains across funds holding a stock predict a higher likelihood management loses a vote and a lower likelihood a contentious vote is proposed.     

Promotion and Prevention Contracts in Industry Level Firm to Firm Dyad

ABSTRACT

Purpose

This article aims to introduce and distinguish two features of contract design – prevention and promotion contracts – and compares their effects on opportunism within the distributor–supplier relationship. It also examines the moderating role of ex post contract enforcement strategies.     

Do mutual fund flows affect the French corporate bond market?

We study whether investors’ withdrawals from mutual funds affect corporate bond prices. As mutual funds have become major players in the financial markets, they are likely to exert downward pressures on asset prices when facing investors’ redemptions, particularly in the less liquid markets such as corporate bonds. We use a novel dataset on the French bond funds and show that both flows in and out of mutual funds lead to a significant effect on the corporate bond yields. This effect is asymmetric as redemptions provoke a change in yields of greater magnitude than inflows. Moreover, all corporate bonds are not equally affected by investors’ withdrawals from funds: The more a bond is detained by funds, the higher the impact of redemptions on its yield. These three results are robust to various changes in econometric specifications.     

中国工业企业动态演化效率研究：所有制视角

不同所有制企业陆续进入、退出市场以及在市场中展开竞争,是中国渐进式改革在企业层面的一个重要特征。本文借助中国工业企业数据库(1998~2007年),在VDF总量生产率增长分解框架下,测度了不同所有制企业的动态演进效率。研究发现国有企业在总量上的效率贡献最大,民营企业在增量上的效率贡献则最大。经济总量上,内部效率提升环节对总量生产率贡献最大,而增量上,退出环节对总量生产率贡献最大,表明中国经济已经走上了一条内生增长、创新驱动与优胜劣汰的发展道路。进入环节无论在何种情况下效率贡献均为负,说明中国依然是一个进入门槛较高的国家。不同所有制企业对总量生产率的贡献与企业生命周期有关。本文对澄清我国企业改革的所有制误区,推进混合所有制经济改革与寻找经济增长新动力有着重要的理论价值与现实意义。     

Gold price risk and the returns on gold mutual funds

A model is presented for estimating the theoretical gold price elasticity of the value of mutual funds investing in gold mining companies. The theoretical elasticity shows that if the funds invest in companies whose assets are comprised primarily of operating gold mines, then the return of an investment in the fund will be at least as great as an investment in gold (i.e., the gold price elasticity of the gold fund is greater than 1). Empirical tests of the above propositions are presented. Empirical tests also show, however, that the gold mutual funds contain a substantial amount of risk which is not explained either by market risk or gold price risk. Accordingly, gold mutual funds and gold bullion do not bring identical risks to an investor's portfolio.     

Unobserved ties between corporate executives and mutual fund managers

After corporate executives relocate from origin firms to destination firms, only 3.6 percent of mutual fund managers follow the departing executives: they divest from origin firms while initiating investments in destination firms. This phenomenon is more pronounced for those funds that earned superior returns from investments in the origin firms, and that demand more information regarding the destination firms. Further, comigration funds’ holding changes in destination firms more accurately predict cumulative abnormal returns around earnings announcements than do their investments in other stocks and non‐comigration funds’ new investments. Hiring the migrating executives does not improve the destination firms’ operating performance.     

Mutual monitoring and corporate governance

Mutual monitoring in a well-structured authority system can mitigate the agency problem. I empirically examine whether the number two executive in a firm, if given authority, incentive, and channels for communication and influence, is able to monitor and constrain the potentially self-interested CEO. I find strong evidence that: (1) measures of the presence and extent of mutual monitoring from the No. 2 executive are positively related to future firm value (Tobin’s Q); (2) the beneficial effect is more pronounced for firms with stronger incentives for the No. 2 to monitor and with higher information asymmetry between the boards and the CEOs; and (3) mutual monitoring is a substitute for other governance mechanisms. The results suggest that mutual monitoring provides important checks and balances on CEO power.     

电网企业完善土地权属的效益探讨

近年来,电网企业在系统内部正在大力开展土地权属清理完善工作。随着不动产物权管理的有关法规政策不断完善,不动产登记已成为维护企业合法财产权益的重要环节。文章旨在提出电网企业完善土地权属管理需要解决的问题及改进措施,并对取得效益进行分析。     

Pitfalls and perils of financial innovation: The use of CDS by corporate bond funds

We use the financial crisis of 2007–2009 as a laboratory to examine the costs and benefits of teams versus single managers in asset management. We find that when a fund uses complex trading strategies involving the use of CDS team-managed funds outperform solo-managed funds. This may be due to the greater diversity of expertise, experience and skill of teams relative to single managers. During the financial crisis, however, the performance premium of teams becomes negative, which may be because of the slower decision times of teams, which are especially costly during times of rapidly changing market conditions.