Financing,reputation and information disclosure quality in the Chinese market

In this article, we propose a theoretical model based on the reputation theory and hypothesize a positive relation between the information disclosure quality and the company’s refinancing decision. We collected data from the listed companies, which refinances in Shenzhen main board and SME board during 2006–2012, as a panel sample, and tested the hypothesis empirically. The results indicate that there exists a significant positive correction short-term relation between refinancing decision and the information disclosure quality, but in the long term the relationship between the information disclosure quality and refinancing decision is not significant.     

Environmental disclosure as a proactive tool to intra-industry market reaction in China

This article examines the intra-industry market reaction to successive environmental accidents associated with Sinopec and PetroChina in China. Evidence indicates that a significantly negative intra-industry reaction occurred after these accidents. Furthermore, intra-industry firms with ex-ante environmental disclosures experienced a less negative reaction after successive accidents. Specifically, the mitigating effect of ex-ante environmental disclosures has certain extent of time delay, which differs from the immediate impact of ex-ante environmental disclosure within the context of developed countries.     

The impact of international information disclosure requirements on market discipline

Financial regulators are challenged with finding the most efficient and effective ways to monitor banks given an expanding and complex international financial system. Market discipline has grown in importance as a way to discourage banks from taking on unnecessary risk. One of the main drivers of market discipline is information disclosure. While the literature on market discipline is expansive, there are no known studies on the impact of individual information disclosure requirements on market discipline. Our study investigates which specific disclosure requirements influence financial investors to discipline banks and which do not. We find that information disclosure requirements primarily reduce or have no impact on market discipline practices.     

Imprecise information disclosure and truthful certification

This article studies the interaction of information disclosure and reputational concerns in certification markets. We argue that by revealing information less precisely, a certifier reduces the threat of capture because this reduces her gains from selling fraudulent certificates. As a result, only imprecise disclosure rules are implementable for intermediate discount factors. Our results therefore suggest that contrary to the common view, imprecise disclosure may be socially desirable. Regulatory intervention may provoke market failure especially in industries where certifier reputational rents are low.     

Environmental disclosure and stock market liquidity: evidence from Arab MENA emerging markets

The objective of this study is to examine the impact of environmental disclosure levels on the stock market liquidity of Arab Middle Eastern and North African (MENA) companies. For that, a self-constructed disclosure index was applied to the annual reports for the years 2010, 2011 and 2012 and the bid-ask spread was used as a proxy for stock market liquidity. Results indicate that levels of environmental disclosure in MENA companies are quite low. In addition, using a sample of 276 firm-year observations, multivariate analysis shows that the higher the level of environmental disclosure provided in the annual reports, the lower the spread between the market bid and ask prices, thereby indicating an increase in stock market liquidity.     

Information disclosure and price manipulation during the pre-closing session: evidence from an order-driven market

On 20 February 2012, the Taiwan Stock Exchange Corporation launched an order-matching simulation mechanism for five minutes during the start of the pre-closing session, in order to increase information disclosure during this period (13:25–13:30). Pre-closing information disclosure significantly reduces both trading costs and closing-price volatility, as well as price manipulation. The decrease in price manipulation found in this work is due to pre-closing information disclosure, not the behaviour of investors shifting to an earlier time. Further, if a stock price rises or falls by more than 3.5% in the simulation in the last minute during the closing session, trading of the stock will be suspended for two minutes from 13:31 to reduce volatility. However, this trading mechanism (suspended-closing) does not seem to have achieved the intended goals of the authorities, as it has not been able to significantly reduce closing-price volatility and price manipulation.     

Innovation,product development and market value: evidence from the biotechnology industryinnovation in biotechnology industry

The subject of the paper is financial valuation of firm's knowledge assets and returns to innovation in the biotechnology industry, where such assets appear to play key role in the commercial success of a product. The biotechnology industry is extremely research-intensive, and successful R&D drives profitability. Further, the pharmaceutical product development advances in a number of well-defined stages that allow relatively precise measurement of product development outcomes. The study reports recent biotechnology R&D statistics, and provides estimates of private returns to innovation and product development activity in the biotechnology industry. The conclusions indicate that the financial market recognizes the value of drugs in product development stage, as it expects the innovative knowledge embodied in drug development projects to become marketable products in the future.     

Environmental information disclosure in capital raising

In 2010, the Chinese Government issued a policy to require enterprises to disclose environmental information. Using the environmental disclosure information of 204 Chinese listed companies in 20 polluting sectors over the period of 2011–2015, we find that managers tend to withhold environmental information and selectively disguise sensitive environmental information in the face of financial pressure, and where the disclosure of sensitive environmental information would significantly increase the cost of debt financing. Furthermore, agency conflicts and information asymmetry between managers and outside investors promote the managers' tendencies to withhold environmental information when facing financial pressure.     

The impact of product market regulation on productivity through firm churning: Evidence from European countries

Productivity performance in European countries has been a policy concern for several decades. This paper shows that productivity can be enhanced by product market policies which, by increasing competition and efficiency, facilitate higher rates of firms’ entry and exit (i.e. firm churning). Drawing on annual country-sector data for the period 2000–2014 across the EU countries, we find that: (i) competition-enhancing regulation is associated with a higher rate of firm churning; (ii) firm churning, in turn, appears to be positively related to higher total factor productivity at the sector level by facilitating the entry of new competitive firms and the exit of less productive ones. Overall, we conclude that stringent product market regulation can be indirectly associated, via its impact on business dynamism, with the somewhat weak productivity performance in a number of EU countries. Thus, our results point towards substantial productivity gains that could follow from the introduction of further competition-enhancing measures in product markets.     

The role of short selling threat in corporate environmental disclosure strategies: Evidence from China

Using staggered deregulation of short sales constraints in the Chinese capital market, this study investigates how short selling threat related to corporate environmental disclosure strategies. Our study finds that pilot firms experience a larger increase in hard disclosures, and a larger decrease in soft disclosures after short selling deregulation. Specifically, the increase in hard disclosure is found primarily at good environmental performers, whereas the decrease in soft disclosure is primarily found at poor environmental performers. Further analysis shows that the increase in hard disclosure and the decrease in soft disclosure is significantly more pronounced at firms that are covered by small number of media and analysts, with low institutional ownership and stock liquidity. Overall, our findings suggest that firms might change the type of environmental disclosure to mitigate their exposures to short selling threat, and provide evidence of the disciplining effect of short sales on environmental disclosures.     

产品市场扭曲对居民消费潜力的影响研究——基于制造业数字化转型视角

随着统一大市场的加速构建,培育一个具有良好竞争环境的“内循环”消费市场是实现中国经济平稳复苏的有效途径。基于2001—2015年中国工业企业数据库,结合地区投入产出表匹配数据,以制造业数字化转型视角深入探究由区域市场势力引致的产品市场扭曲对居民消费潜力的影响。研究发现：(1)产品市场扭曲对居民消费潜力存在显著的抑制作用,主要通过加剧价格波动、降低产品质量、缩减供给规模、减少劳动收入四条途径抑制居民消费潜力;(2)数字化转型的调节效应显著弱化了产品市场扭曲对居民消费潜力的抑制作用,其中,产业互联网相对于其他维度的数字化转型表现出更强的调节效应;(3)考虑产品类别、行业及地区异质性发现,对于基础型和普通品质产品、资本密集和低竞争度行业、城镇和西部地区,数字化转型更能显著缓解产品市场扭曲对居民消费潜力的抑制作用。研究结论为优化市场供给环境,推进数字化转型,实现消费潜力有效释放提供了产业层面的证据和决策依据。     

A reconsideration of the impact of recalls on the market valuation of a product

This paper looks at the problem of determining the effect on the market valuation of a product of recalls due to safety defects when the analytical framework is misspecified. Using the car market, the results show that it is difficult, if not impossible, to distinguish the effect on the price of recalls from the impact of quality differentials among makes and models.     

Product market deregulation and the US employment miracle

We consider the dynamic relationship between product market entry regulation and equilibrium unemployment. The main theoretical contribution is combining a job matching model with monopolistic competition in the goods market and individual bargaining. We calibrate the model to US data and perform a policy experiment to assess whether the decrease in trend unemployment during the 1980s and 1990s could be directly attributed to product market deregulation. Under our baseline calibration, our results suggest that a decrease of less than two-tenths of a percentage point of unemployment rates can be attributed to product market deregulation, a surprisingly small amount.     

Product market competition and productivity shocks

I investigate the interaction effects of competition and productivity shocks on stocks’ earnings and returns. I find that the sensitivities of earnings and returns to productivity shocks are negatively associated with competition intensity. I also find that the excess returns of productivity shocks-sorted portfolios are lower when competition intensity is high, even after controlling for known return predictors. Overall, the empirical evidence shows firms are less exposed to productivity shocks when competition is high. As such, this study provides a possible mechanism through which the structure of product markets affects stock returns.     

浅析网上无形市场与传统专业市场的替代性与互补性

网上无形市场和传统专业市场的互替与互补取决于交易主体的理性选择。买卖双方会通过对网上交易的内生交易成本与两种市场交易方式的外生交易成本进行博弈比较来选择最优的流通方式,从而使不同交易制度间呈现出互替与互补状态。网上交易的内生交易成本量则由当该内生交易成本和降低其发生所造成的外生交易成本这两者的总和达到最低时的资源配置量所决定。     

会计信息披露与资本市场效率的关系研究

会计信患披露及其公开程度是影响资本市场资源配置效率、运行效率等的关键性因素。为促使我国资本市场良好的发展,本文分析了会计信息披露与资本市场效率之闻的相互关系,并提出了建立完善会计信息披露制度,提高资本市场效率的有力措施。     

Corporate governance structure and product market competition

This article assesses the effects of the competitive structure of a product market on a firm’s corporate governance structure. Our model demonstrates that shareholders strategically determine the corporate governance structure, including the manager’s stock ownership and his controlling power over the firm, in order to maximize their utility in the product market competition. We find that the manager’s stock ownership is lower and his controlling power over the firm is higher when the firm’s product is more profitable or when competition within the product market is more severe. The inefficiency of the wealth transfer from shareholders to the manager also affects the corporate governance structure.     

Trade liberalisation,market competition and wage inequality in China's manufacturing sector

Economic reforms of the late 1980s have contributed to rapid economic growth in China. While the overall standard of living has improved, economic growth has also resulted in an increase in income inequality. Rising income inequality can increase social tensions that can impede further economic growth. By making use of firm level panel data, this paper focuses on the impact of increased market competition and trade liberalisation on skilled–unskilled wage inequality in China's manufacturing sector. A theoretical model is used to argue that trade liberalisation and market competition can affect skilled–unskilled wage inequality. Based on this result, an econometric model is specified. The empirical analysis presented in this paper shows that increased trade liberalisation has contributed to an increase in skilled–unskilled wage inequality in China's manufacturing sector. However, increase in market competition has the opposite effect.     

The insider's curse

The paper shows that in an open-ascending bid auction with multi-dimensional uncertainty about private and common value components, private information about the common value has negative value for a bidder if there are sufficiently many bidders. We discuss the role of the visibility of bids and the multi-dimensionality of private information for this result.     

EDGAR on the internet: The welfare effects of wider information distribution in an experimental market for risky assets

Policies such as the SEC’s Fair Disclosure Rule, and technologies such as SEC EDGAR, aim to disseminate corporate disclosures to a wider audience of investors in risky assets. In this study, we adopt an experimental approach to measure whether this wider disclosure is beneficial to these investors. Price-clearing equilibrium models based on utility maximization and non-revealing and fully-revealing prices predict that in a pure exchange economy, an arbitrary trader would prefer that no investors are informed rather than all are informed; non-revealing theory further predicts that an arbitrary trader would prefer a situation in which all traders are informed rather than half the traders are informed. These predictions can be summarized as “None > All > Half”. A laboratory study was conducted to test these predictions. Where previous studies have largely focused on information dissemination and its effects on equilibrium price and insider profits, we focus instead on traders’ expected utility, as measured by their preferences for markets in which none, half, or all traders are informed. Our experimental result contradicts the prediction and indicates “Half > None > All”, i.e. subjects favor a situation where a random half is informed. The implication is that in addition to testing predictions of price equilibrium, experiments should also be used to verify analytical welfare predictions of expected utility under different policy choices. JEL Classification D82, D53, G14, L86 This work was largely completed while this author was at The Hong Kong University of Science and Technology.