Editorial

Ding Lu (Department of Economics, University of the Fraser Valley, Abbotsford, Canada)

China Finance Review International

ISSN: 2044-1398

Publication date: 16 February 2015

Citation

Lu, D. (2015), "Editorial", China Finance Review International, Vol. 5 No. 1. https://doi.org/10.1108/CFRI-11-2014-0091

Publisher

:

Emerald Group Publishing Limited


Editorial

Article Type: Editorial From: China Finance Review International, Volume 5, Issue 1

Since its inception in 1990, China’s stock market has grown to be the world’s second largest by total market capitalization. Its dynamic trading has produced a rich mine of data for empirical research in financial economics, as illustrated by five papers of this issue. In the first paper, Wang and Zhang probe into the data for an inquiry into the roles of accounting earnings and book value of assets in equity evaluation. Their findings reveal that, at low profit levels, the explanatory power of book value overwhelms that of accounting earnings. With rising profitability, the explanatory power of book value diminishes while that of accounting earnings increases. The second paper by Li, Zheng, Chang, and Li offers an analytical framework to identify and separate the regime effect and the signal effect in the correlation between corporate governance and corporate performance. Applying the framework to data, the authors discern the two effects of various corporate features and observe several characteristics of corporate governance in China. In the third paper, Wang and Sun explore the motivation of investors’ use of technical analysis by testing two hypothetical explanations: one is information discovery and the other is herding behavior. Their analysis of excess returns to equity indicates that technical analysis works better for firms with higher degree of information asymmetry and fewer technical traders, thus lending support to the first hypothesis. The fourth paper by Ye, Li and Huang is an empirical work that confirms the effectiveness of media coverage in checking corporate tunneling, particularly for non-state-owned companies and firms operating in areas of better legal environment. Similar effectiveness is also found for reduction in tunneling to improve companies’ financial performance. The last paper by Xu, Wu and Wu investigate the degree of co-movement between RMB and six East Asian currencies in foreign exchange spot market during the four-year periods before and after the 2008 Global Financial Crisis. The study presents a rising trend of co-movement through these years and indicates that the Asian currencies were more likely to follow a RMB depreciation than a RMB appreciation after the crisis.

Ding Lu