Saving or tunnelling: value effects of tax avoidance in Chinese listed local government-controlled firms

This paper investigates the value effect of tax avoidance and its underlying mechanisms among Chinese listed local government-controlled (LG) firms. We show that tax avoidance does not promote firm value in LG firms with government ownership smaller than 40 percent and the above negative tunnelling effect is more pronounced when the control rights are concentrated in the local government and weaker when other large shareholders can act as a countervailing force. Finally, we observe a positive relation between tax avoidance and related-party transactions as well as overinvestment, again indicating a tunnelling effect in LG firms with government ownership smaller than 40 percent.     

财政压力、地方政府行为与环境污染

地方政府是生态环境治理的关键主体，财政压力以地方政府行为作为传导变量，对环境污染及其治理效果有深刻影响。实证检验地方政府行为的促污和治污效应对财政压力冲击的响应。结果表明：激励生产型地方政府行为促进污染增加，在财政压力下促进污染增加效应的激化，即压力越大越污染。环境治理型地方政府行为中的环境保护支出对污染治理有效，财政压力对其治污效应有提升作用；排污费征收不治污、反促污，财政高压使其促污效应强化。在财政增支减收、压力不断攀升的背景下，可从治理体制性财政压力诱因、强化对地方政府行为监督和约束以及优化治理工具提升环境治理绩效等方面来平抑财政压力通过地方政府行为引发的环境污染加剧。     

Logarithmic calibration for multiplicative distortion measurement errors regression models

In this article, we propose a new identifiability condition by using the logarithmic calibration for the distortion measurement error models, where neither the response variable nor the covariates can be directly observed but are measured with multiplicative measurement errors. Under the logarithmic calibration, the direct-plug-in estimators of parameters and empirical likelihood based confidence intervals are proposed, and we studied the asymptotic properties of the proposed estimators. For the hypothesis testing of parameter, a restricted estimator under the null hypothesis and a test statistic are proposed. The asymptotic properties for the restricted estimator and test statistic are established. Simulation studies demonstrate the performance of the proposed procedure and a real example is analyzed to illustrate its practical usage.     

The role of ownership structure in integrated reporting policies

Integrated reporting (IR) is used to demonstrate a firm's capacity to create value in the short, medium, and long term. It can better represent existing relationships between the company and its stakeholders, with a particular focus on investors. Attention to IR has grown considerably in recent years. However, studies on the determinants of IR quality are still limited. This study aims to bridge this literature gap by being the first study to analyse the role of ownership structure in IR context. To this end, it uses agency theory and is based on a sample of 152 international companies that have adopted IR. The results indicate a positive effect of institutional ownership and a negative effect of ownership concentration, managerial ownership and state ownership on the quality of integrated reports. These results are also consistent with the level of alignment of integrated reports with the <IR> framework. To our knowledge, this is the first study that analyses the role of ownership structure in the IR policies.     

A review of tax avoidance in China

This paper synthesizes the major empirical findings of the burgeoning tax avoidance research in China from the accounting, finance, and economics literature over the last 13 years. It surveys the evidence in four main areas: (1) the mechanisms through which Chinese firms avoid income taxes; (2) the effects of government ownership and agency problem on tax avoidance; (3) tax avoidance and political connections; and (4) the roles of book-tax conformity, tax enforcement, and corporate governance. It also discusses the appropriateness of tax avoidance measures in the Chinese setting. Finally, it proposes important directions for future research.     

Opening Up the “Black Box” of Audit Firms: The Effects of Audit Partner Ownership on Audit Adjustments

Audit firms need to provide high-quality audits but they also need to please their clients. We argue that these conflicting incentives become manifest when comparing the incentive effects of equity ownership on engagement quality (EQ) reviewers and audit engagement partners. We predict that EQ reviewers monitor audit quality more closely when they hold greater ownership. In contrast, we expect that equity ownership has conflicting effects on the incentives of engagement partners because they need to please their clients as well as provide high-quality audits. Consistent with these predictions, we find that the associations between audit adjustments and partner equity ownership are (1) significantly positive for EQ reviewers, (2) significantly negative or insignificant for audit engagement partners, and (3) significantly more positive for EQ reviewers than engagement partners. Our findings suggest that larger ownership stakes motivate EQ reviewers to monitor audit quality more closely, whereas larger ownership stakes do not motivate engagement partners to deliver higher quality audits.     

State ownership and the cost of debt: Evidence from corporate bond issuances in China

Corporate credit risk can be reduced through implicit government guarantees. State-owned enterprises (SOEs) in China provide a distinctive setting to investigate government roles in corporate debt financing. We find that non-SOEs’ corporate bond issuance costs are significantly higher than those of SOEs. We also observe relatively lower bond issuance costs for firms controlled by the central government (CSOEs) than those controlled by local governments (LSOEs). In addition, we demonstrate that compared with SOEs, non-SOEs’ financial constraints are mitigated to a larger extent after the bond issuances. Overall, we show that state ownership plays an important role in determining corporate bond issuance costs.     

Women Mayors and Management of Spanish Councils: An Empirical Analysis

This paper analyzes the relationship between the gender of mayors in Spanish local government and different budget items. It uses a sample of local budgets for 8,112 town councils between 2002 and 2010, totaling 64,361 observations. The Spanish context is characterized by decentralization of public responsibility to a greater extent than in neighboring countries, feeding the debate on the operational efficiency of local government and the importance of gender in public management. Results show that councils with women mayors have lower annual interest and debt repayment obligations and have higher expenditure on security, protection, and social promotion. Thus, the presence of women in politics may serve to improve councils’ economic situations, which is necessary not only for social justice but also for economic efficiency. In addition, in councils with more inhabitants, women mayors are more common, but women are less likely to occupy the office for longer periods.     

Zoning plan-based legal confiscation without expropriation in Turkey in light of ECHR decisions

The right to property is a fundamental human right guaranteed by international conventions. In countries like Turkey, where the principles of private ownership apply, this right is guaranteed by laws. The right to property may be restricted by law only in the case of public interest. Nevertheless, the right of ownership of immovable property can be transferred to the public authority only with payment. However, in some cases, a person's immovable property may be de facto converted into a public facility without expropriation. This process is called “confiscation without expropriation”. This concept was introduced into the Turkish Legal System in 1956 by the unauthorized conversion of immovable property for a road. Today, especially in planned areas, a different type of confiscation without expropriation is often seen. Zoning plans are known to be public tools that reorganize properties in public interest. However, the uncertainty in the implementation process of these plans negatively affects the owners of parcels reserved for public use in the zoning plan. This situation is defined in terminology as “legal confiscation without expropriation”. In this study, the subject has been discussed in the light of the European Court of Human Rights (ECHR) decisions and Turkish judicial decisions, and which institutions are responsible for what kind of zoning functions within zoning plans have been investigated. Official (ex officio) applications and voluntary applications have been compared. Conceptual illustrations on the subject have been prepared. According to the results obtained from the study, it has been stated that all public spaces in the zoning plan are not subject to legal confiscation. Due to their location or characteristics, protected areas, unsuitable geological areas and parcels remaining in agricultural areas can be allocated as public spaces in the zoning plan. In such a case, it is not possible to say that there is legal confiscation. In terms of plan classification, there may be legal confiscation in areas if only a 1/1000-scale implementary zoning plan is in practice. As a solution for legal confiscation, land and real estate arrangements should be made ex officio and without delay. In addition to this, alternative models are also needed. Otherwise, public institutions will be subject to severe financial burdens. Some of the proposals include: granting construction right to zone cadastral parcels affecting public facility areas, or granting the right to construct all cadastral parcels in the plan in specified amounts and also developing a zoning right transfer system.     

Option valuation with liquidity risk and jumps

This article provides a simple model for pricing and hedging options in the presence of jumps and liquidity costs. In the article, liquidity risk is modelled via a stochastic supply curve function and a jump-diffusion process is approximated by a Markov chain. Local risk minimization incorporating liquidity risk is proposed to price and hedge European options in this discrete-time model. Moreover, an example is provided to implement the modified risk minimization method and to demonstrate the performance of hedging strategies.