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Foreign directors from developed nations are significant brain gains for Chinese firms because they improve board competency and board diversity. Therefore, the purpose of this study is to explore the relationship between foreign directors from developed countries on Chinese listed firms and firms’ green commitment.

For the empirical analysis, first, this study applies ordinary least square regression and firm fixed model to explore the relationship between foreign directors and green commitment. For the endogeneity concerns, this study first added more control variable in the main model, then applied instrumental variable approach and propensity score matching technique.

This study predicts and finds that percentage of foreign directors from developed countries on Chinese listed firms’ board positively enhances the firms’ green commitment. Furthermore, this study also finds that the positive relationship between foreign directors and firms’ green commitment is more significant when firms are in a low competitive industry, have no financial constraints and are overseas-listed. This study’s findings are robust after controlling for endogeneity concerns.

This is new research on the impact of foreign directors on corporate green commitment.

This paper aims to examine the relationship between the readability of annual reports and corporate performance in Chinese listed firms.

This research examined the annual report readability factors of Chinese listed companies by using a textual analysis method using Python to extract the text from the annual reports, convert it into numerical form to facilitate statistical analysis and then merge the results with data from the Chinese stock market to explain the impact on corporate performance and predict future earnings in the Chinese financial markets from 2008 to 2021.

Study findings indicate that firms with better financial reporting readability are more profitable, incur lower agency costs and have low earnings in the Chinese stock markets when readability is low (i.e. more complexity and length of annual reports). It was also found that when a listed company has a good performance, it prefers to use a short space to explain its operating and financial status. More generally, the means of the report length are short, and accounting terms are used less frequently; in the case of a poor company, the annual report is particularly long and accounting terms are more frequently used. In the context of the COVID-19 crisis, this study served as a proxy measure of returns prior to the announcement of the COVID-19 pandemic. In addition, an instrumental variable approach is used, which helps results to remain robust and control for fixed effects and potential endogeneity problems.

Although this study’s results cannot be generalised globally because of their limited scope, they can still be generalised across non-English speaking countries. Thus, future cross-country research is encouraged to examine the textual analysis of financial reports across those countries.

This study conveys two messages to investors and policymakers within the Chinese market. First, investors ought to pay greater attention to the nonfinancial information contained in annual reports to improve the accuracy of their predictions regarding future firm performance. Second, Chinese policymakers are encouraged to instate a policy for the use of plain English in annual reports to make them more readable by international investors.

This study contributes to the paucity of research that examines English-written annual reports in non-English speaking countries by examining the readability of annual reports in the Chinese market.

This study explores whether religion plays an important role in corporate poverty alleviation. Religious atmosphere affects managers' attitude towards corporate social responsibility (CSR) and then influences corporate poverty alleviation. This study first examines the impact of religious atmosphere on corporate poverty alleviation and then investigates whether formal institutions, such as law enforcement environments and ownership, influence the relationship between religious atmosphere and corporate poverty alleviation behavior.

In 2016, the Chinese government initiated a nationwide campaign aiming to eliminate poverty in China by 2020. The authors conduct empirical tests with data on Chinese listed firms from 2016 to 2020. The religious atmosphere is measured by the number of Buddhist monasteries and Taoist temples within a certain radius around Chinese listed firms' registered addresses. The authors adopt the ordinary least squares (OLS) method for regression and take the two-stage least squares (2SLS) method to address the endogeneity issue.

The results show a positive relationship between religious atmosphere and corporate poverty alleviation donations. Law enforcement attenuates the positive association between the religious atmosphere and corporate poverty alleviation donations. Religion and corporate poverty alleviation donations have a more positive association for non-state-owned enterprises (non-SOEs) than for state-owned enterprises (SOEs).

The authors' findings have important implications. First, this study inspires incorporating the ethical value of traditional culture, such as religion, into CSR. Second, the findings imply that informal institutions have a greater impact on corporate decision-making when formal institutions are weak, suggesting that informal institutions should be emphasized when promoting CSR in countries where formal institutions are relatively weak. The study investigates only religious influence on corporate poverty alleviation based on Buddhism and Taoism, but the authors do not examine the impacts of other religions. Future research may examine the relationships between other religions and corporate poverty alleviation in China.

This study illustrates the positive role played by religion in promoting CSR by relating religious atmosphere to corporate poverty alleviation. It fills the research gap between religion and CSR and also contributes to the literature on determinants of corporate poverty alleviation.

This paper examines how firms respond to local government’s environment initiatives through textual analysis of government work reports (GWRs). This study aims to provide insights into how firms strategically respond to government’s environmental initiatives through their disclosure and investment practices.

This study uses a textual analysis of GWRs from China’s provinces. The frequency and change rate of environmental keywords in these reports are used as a measure of the government’s environmental initiatives.

This study finds that environmental disclosure scores in environmental, social and governance (ESG) reports increase with the frequency or change rate of environmental keywords in provincial GWRs. This effect is more pronounced for non-state-owned enterprises, firms in highly marketized provinces or those listed in a single capital market. However, there is no significant relationship between firms’ environmental investments and government initiatives, except for cross-listed firms in provinces with consistently high frequency of environmental keywords in their GWRs.

The findings indicate that government environmental initiatives can shape firms’ disclosure behaviors, yet have limited influence on investment decisions, suggesting that environmental disclosure could potentially be opportunistic. This underscores the need for more effective strategies to stimulate firms’ environmental investments.

This study provides valuable insights into the differential impacts of government environmental initiatives on firms’ disclosure and investment behaviors, contributing to the understanding of corporate environmental responsibility in the context of government initiatives.

This study aims to investigate earnings management practice of classification shifting of revenues in Chinese-listed firms.

The study employs a dataset of 2,920 A-listed firms from Chinese stock exchanges of Shanghai and Shenzhen for the period of 2003–2019. We apply both univariate and panel regression analysis by using fixed effect estimation with robust standard errors.

Our findings reveal that firms misclassify revenues by taking advantage of the flexibility provided by applicable financial reporting standards. The empirical evidence obtained through regression analysis suggest that managers reclassify non-operating revenues as operating revenue to alter the economic reality while seeking the advantage of financial reports users’ vulnerability for valuing the upper half of income statement items more as compared to lower part. The results further indicate that international financial reporting standards adoption inhibits the earnings management practices using classification shifting of revenues. It is also concluded that firms, which are suffering losses or having low growth, are more persistently involved in misclassification of revenues.

The study is unique from the point of view that it investigates earnings management from the prospective of revenue’s classification in an emerging market characterized by various market imperfections such as lower investor protection and higher information asymmetry.

This study aims to investigate whether gender diversity in audit committees affects the purchase of nonaudit services in China. Results from family and nonfamily firms are compared and the critical mass participation of females are further examined.

The sample comprises 1,834 Chinese listed companies from 2012 to 2021, among which 910 are family firms. The Heckman (1979) two-stage model is used to mitigate the potential endogeneity issue in the selection of gender diversity. Propensity score matching is also used to further alleviate the endogeneity problem in relation to family firms.

Results show a significant and negative correlation between the gender diversity in audit committees and nonaudit service fees. This association is more apparent in nonfamily than in family firms. Findings are consistent and robust to endogeneity tests and sensitivity analyses. The analysis of critical mass and symbolic participation shows that three female directors can more significantly restrain nonaudit fees than one to two females on the board.

This study contributes to literature on resource dependence theory, which posits that audit committees help enterprises establish contact with auditors, improve the company legitimacy, assist in communication and provide relevant expertise. This study also relates to agency theory, which holds that differences in the severity of types I and II agency problems between family and nonfamily firms lead to differences in auditor selection and related costs.

Extending from previous research on the relation between the gender diversity in audit committees and nonaudit fees, the present study delves into this connection within the context of China, an emerging economy. As a result, this investigation offers novel insights and expands upon current knowledge. In addition, the correlation between the gender diversity of audit committees and nonaudit fees is explored for family and nonfamily firms.

A new round of technological revolution is impacting various aspects of society. However, the importance of technology adoption in fostering firm innovation is underexplored. Therefore, this study aims to investigate whether robot adoption affects technological innovation and how human capital plays a role in this relationship in the era of circular economy.

Based on the robot adoption data from the International Federation of Robotics (IFR) and panel data of China's listed manufacturing firms from 2011 to 2020, this study uses regression models to test the impact of industrial robots on firm innovation and the mediating role of human capital.

The results demonstrate that the adoption of industrial robots can significantly promote high-quality innovation. Specifically, a one-unit increase in the number of robots per 100 employees is associated with a 13.52% increase in the number of invention patent applications in the following year. The mechanism tests show that industrial robots drive firm innovation by accumulating more highly educated workers and allocating more workers to R&D jobs. The findings are more significant for firms in industries with low market concentration, in labor-intensive industries and in regions with a shortage of high-end talent.

Due to data limitations, the sample of this study is limited to listed manufacturing firms, so the impact of industrial robots on promoting innovation may be underestimated. In addition, this study cannot observe the dynamic process of human capital management by firms after adopting robots.

The Chinese government should continue to promote the intelligent upgrading of the manufacturing industry and facilitate the promotion of robots in innovation. This implication can also be applied to developing countries that hope to learn from China's experience. In addition, this study emphasizes the role of human capital in the innovation-promoting process of robots. This highlights the importance of firms to strengthen employee education and training.

The adoption of industrial robots has profoundly influenced the production and lifestyle of human society. This study finds that the adoption of robots contributes to firm innovation, which helps people gain a deeper understanding of the positive impacts brought about by industrial intelligence.

By exploring the impact of industrial robots on firm innovation, this study offers crucial evidence at the firm level to comprehend the economic implications of robot adoption based on circular economy and human perspectives. Moreover, this study reveals that human capital is an important factor in how industrial robots affect firm innovation, providing an important complement to previous studies.

The Chinese data setting allows researchers to explore the influence of local versus national (central) government ownership on companies. This study aims to examine the influence of government ownership (local versus national) and auditor choice (choosing larger or smaller firms) on audit pricing in China.

This study executed three panel data regressions to examine the two hypotheses using 19,626 observations from 2009 to 2017 in the Chinese data setting. This study also uses the Sobel test to investigate the moderating effect of auditor choice.

This study first examines whether choosing a large audit firm positively influences audit pricing and whether listed state-owned enterprises (SOEs) charge less audit fees to audit firms after controlling for various variables. However, the interaction influence of government ownership and audit firm size on audit pricing is positive, suggesting that a large audit firm charges a client company more, even if the client is an SOE. More importantly, when we divide SOEs into national- and local-SOEs, the results of the influence of auditor choice, government ownership and the interaction of government ownership on audit pricing are consistent (plus, minus, plus), and audit firms charge local-SOEs less than national-SOEs. Furthermore, from the additional analysis, this study finds that the strong auditor type has a moderate effect on the case of local-SOEs on audit pricing and local-SOEs choose smaller auditors.

Research on the differences between local and national government ownership is limited. This study adds empirical results from this perspective. In particular, the findings suggest a further audit pricing research direction to consider the influence of client companies’ ownership types and auditor choice, especially in countries with planned economies.

This paper aims to investigate the relationship between corporate environmental, social and governance (ESG) ratings and leverage manipulation and the moderating effects of internal and external supervision.

The authors draw on a sample of Chinese non-financial A-share-listed firms from 2013 to 2020 to explore the effect of ESG ratings on leverage manipulation. Robustness and endogeneity tests confirm the validity of the regression results.

ESG ratings inhibit leverage manipulation by improving social reputation, information transparency and financing constraints. This effect is weakened by internal supervision, captured by the ratio of institutional investor ownership, and strengthened by external supervision, captured by the level of marketization. The effect is stronger in non-state-owned firms and firms in non-polluting industries. The governance dimension of ESG exhibits the strongest effect, with comprehensive environmental governance ratings and social governance ratings also suppressing leverage manipulation.

Firms should strive to cultivate environmental awareness, fulfil their social responsibilities and enhance internal governance, which may help to strengthen the firm’s sustainability orientation, mitigate opportunistic behaviours and ultimately contribute to high-quality firm development. The top managers of firms should exercise self-restraint and take the initiative to reduce leverage manipulation by establishing an appropriate governance structure and sustainable business operation system that incorporate environmental and social governance in addition to general governance.

Policymakers and regulators should formulate unified guidelines with comprehensive criteria to improve the scope and quality of ESG information disclosure and provide specific guidance on ESG practice for firms. Investors should incorporate ESG ratings into their investment decision framework to lower their portfolio risk.

This study contributes to the literature in four ways. Firstly, to the best of the authors’ knowledge, it is among the first to show that high ESG ratings may mitigate firms’ opportunistic behaviours. Secondly, it identifies the governance factor of leverage manipulation from the perspective of firms’ subjective sustainability orientation. Thirdly, it demonstrates that the relationship between ESG ratings and leverage manipulation varies with the level of internal and external supervision. Finally, it highlights the importance of governance in guaranteeing the other two dimensions’ roles by decomposing overall ESG.

This study aims to explore the internationalization of multinational enterprises (MNEs) from China and aims to examine the relationship between Chinese MNEs’ duration of internationalization and export intensity, and the contingent roles of the home country government.

By extending the springboard theory with institutional and cost-benefit analyses, the authors elaborate a two-phase framework of internationalization to explain how Chinese MNEs develop their international business under the influences of the home country government. Furthermore, the authors apply the Heckman two-stage method based on a panel data set of 19,994 firm-year observations of Chinese listed firms in 2008–2018 to test the hypotheses.

The research findings demonstrate an inverted U-shape relationship between the duration of internationalization and the export intensity of MNEs from China. The export intensity of MNEs from China increases during the initial phase of internationalization, and decreases during the subsequent. A further study reveals that the inverted U-shape of Chinese non-SOEs is steeper than that of SOEs, and this moderating effect is more salient after the Belt and Road Initiative. These results highlight the influence of the home government through state ownership and policies on the inverted U-shaped relationship.

This study helps to refine the understanding of Chinese MNEs’ global expansion by addressing time as an explicit dimension and revealing the mechanism of state ownership and the home country governmental policy in the dynamic internationalization process.