Search results

1 – 10 of 16
Content available
Article
Publication date: 7 October 2014

Haizhi Wang

655

Abstract

Details

Managerial Finance, vol. 40 no. 10
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 3 November 2021

Jianrong Wang, Haizhi Wang, Desheng Yin and Yun Zhu

The purpose of this paper is to investigate the role of social capital in the issuances of Rule 144A debt. Using a sample of 1,378 debt offerings from 1997 to 2015 in the…

Abstract

Purpose

The purpose of this paper is to investigate the role of social capital in the issuances of Rule 144A debt. Using a sample of 1,378 debt offerings from 1997 to 2015 in the US, this paper provides empirical evidence on whether and to what extent social capital affects the cost of Rule 144A debt.

Design/methodology/approach

This paper employs a county-level measure of social capital and links social capital to the yield spreads of Rule 144A debt. A Heckman selection model is sued to address the sample selection bias, and an instrumental variable approach and propensity score matching methodology are implemented to deal with the potential endogeneity issue. The authors check for robustness using an alternative measure of social capital.

Findings

The results of the analysis provide evidence that issuers headquartered in the counties with higher levels of social capital experience lower yield spreads in their Rule 144A debt offerings. The findings are robust to a Heckman selection model, an instrumental variable approach and propensity score matching. Furthermore, the analysis reveals the marginal effect of social capital that the effect of social capital is more pronounced for the issuing firms with higher agency cost of debt and lower institutional ownership. The effect of social capital is more prominent after financial crisis.

Originality/value

This paper provides novel evidence of the effect of social capital on the cost of privately placed debt. The issuances of Rule 144A debt are subject to significant information asymmetry and are targeted at sophisticated institutional investors. This paper sheds further light on how institutional investors incorporate the regional social capital in their pricing scheme of private placement of Rule 144A debt.

Details

Managerial Finance, vol. 48 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 30 September 2022

Dawei Jin, Hao Shen, Haizhi Wang and Desheng Yin

The purpose of this paper is to empirically explore whether and to what extent the changes in state corporate income tax rates affect corporate tax aggressiveness.

Abstract

Purpose

The purpose of this paper is to empirically explore whether and to what extent the changes in state corporate income tax rates affect corporate tax aggressiveness.

Design/methodology/approach

Using a differences-in-differences approach with dynamic treatment, the authors investigate the effect of staggered changes in state corporate income tax rates in the USA on corporate tax aggressiveness.

Findings

Firms become more aggressive in avoiding taxes following state tax increases but are insensitive to tax cuts. The effect of state tax increases on tax aggressiveness is weaker for firms with greater debt tax shields and marginal tax rates. Firms are more likely to shift their operations and relocate their headquarters out of states experiencing tax increases.

Originality/value

To the best of the authors' knowledge, this paper is the first to study the relation between state tax policy changes and corporate tax aggressiveness. This paper finds an asymmetrical pattern of corporate tax aggressiveness in response to state tax changes.

Details

Pacific Accounting Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 15 August 2019

Haizhi Wang, Desheng Yin, Xiaotian Tina Zhang and Xinting Zhen

The purpose of this paper is to empirically investigate universal banks as an important source of external funding and their effects on borrowing firms’ innovation outputs.

Abstract

Purpose

The purpose of this paper is to empirically investigate universal banks as an important source of external funding and their effects on borrowing firms’ innovation outputs.

Design/methodology/approach

The authors employ regression analyses including a difference-in-difference approach and a two-sided matching method to ensure the robustness of the findings. The authors further explore some potential channels and boundary conditions for the main findings.

Findings

The authors find that borrowing from universal banks is negatively associated with the quantity of firm innovation, but not the quality of firm innovation. The authors document that borrowing firms reduce their R&D expenditures and rely more on external partners to produce innovation outputs after loan originations from universal banks. The negative relation between universal bank lending and the quantity of firm innovation is more prominent for unrelated innovation and for financially constrained firms.

Research limitations/implications

The evidence reveals that universal banks may use their informational advantage and market power to limit their corporate borrowers’ investment in innovation activities.

Originality/value

The paper extends the line of research on the source of financing and firm innovation, and establishes a robust relationship between capital market and product market.

Details

Managerial Finance, vol. 45 no. 8
Type: Research Article
ISSN: 0307-4358

Keywords

Book part
Publication date: 12 September 2022

Dawei Jin, Hao Shen, Haizhi Wang and Desheng Yin

This chapter investigates whether and to what extent tax benefits affect the likelihood of firms undertaking leveraged buyout (LBO) transactions.

Abstract

Purpose

This chapter investigates whether and to what extent tax benefits affect the likelihood of firms undertaking leveraged buyout (LBO) transactions.

Design/Methodology/Approach

With an identified sample of LBO firms and similar non-LBO counterparts, this chapter utilizes staggered changes in state corporate income tax rates as exogenous shocks and adopts a Logistic regression to analyze how these tax changes affect firms' probability of engaging in LBOs.

Findings

Firms are more likely to engage in LBOs after increases in corporate income tax rates. Specifically, the increase in the likelihood of firms undertaking LBOs following tax increases is between 6.9% and 12.9%. We also find that this positive relation is more pronounced for firms with higher levels of return on assets (ROA) and marginal tax rates (MTR). Finally, we report that the mean value of tax benefits accounts for between 28.5% and 170% of the premium paid to pre-buyout shareholders.

Originality/Value

This chapter provides strong evidence that tax benefits constitute an important source of value creation in LBOs and adds to the debate regarding the role of tax benefits in LBOs.

Details

Empirical Research in Banking and Corporate Finance
Type: Book
ISBN: 978-1-78973-397-6

Keywords

Article
Publication date: 7 October 2014

Xiaotian Tina Zhang and Yong Wang

The last decade witnessed the reform of China's financial sector, during which Chinese commercial banks’ ownership and operation had been significantly changed in order to…

Abstract

Purpose

The last decade witnessed the reform of China's financial sector, during which Chinese commercial banks’ ownership and operation had been significantly changed in order to improve efficiency. The purpose of this paper is to investigates whether these banks have improved their productivity efficiency during their rapid expansion and growth in the post reform era from 2004 to 2011.

Design/methodology/approach

Data envelopment analysis is used to investigate the production efficiency of Chinese commercial banks during 2004-2011. First, the technical efficiency (TE) score is constructed to evaluate bank productivity. The TE score is disintegrated into pure technical efficiency (PTE) and scale efficiency (SE) to examine the effects of technical factors and scale economies. Second, the Malmquist index is constructed to explore the year-by-year productivity. Lastly, regression analysis examines how bank characteristics and ownership structure affect productivity efficiency.

Findings

The Big Four banks are less efficient than other commercial banks, and public banks are less efficient than private banks. The low efficiency is primarily due to scale inefficiency, rather than PTE. In addition, ownership structure impacts production efficiency. Specifically, foreign ownership is related to high efficiency while state ownership is associated with lower productivity.

Research limitations/implications

There were small observations of public banks in China. Thus, a more comprehensive test is impractical to explore whether or not annual changes in ownership structure improve their production efficiency. With more date, such a test will reveal further information about the relationship between ownership and productivity.

Originality/value

The authors are the first to assess the production efficiency of Chinese commercial banks after the recent financial reform during which Chinese commercial banks had undergone significant structural changes. The lower overall productivity of Big Four and public banks is a result of scale inefficiency, although these banks are better than their peers with respect to input-output transformation.

Details

Managerial Finance, vol. 40 no. 10
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 7 October 2014

Peng Wang

This paper addresses the topic “The interaction between financial institutions and firms in the nonfinancial sectors” in the special issue of “Banking and finance in…

1233

Abstract

Purpose

This paper addresses the topic “The interaction between financial institutions and firms in the nonfinancial sectors” in the special issue of “Banking and finance in China.” The purpose of this paper is to examine the trading behavior and price effects of foreign institutions under the celebrated Qualified Foreign Institutional Investor (QFII) scheme on all non-financial firms in the Chinese A-share markets.

Design/methodology/approach

Using quarterly equity-level foreign institution transactions from 2005Q1 to 2011Q4 in the Chinese A-share market, the author finds a positive and significant contemporaneous relationship between foreign flows and equity returns. For each quarter, the author sorts the stocks into ten portfolios based on the percentage of foreign flows, and employs the bivariate vector autoregression (VAR) model to examine the contemporaneous association in detail.

Findings

Foreign institutions in the Chinese A-share markets do not show positive or negative feedback trading; however, their flows have a strong impact on future equity returns because of informational advantage. Additionally, different associations are found between foreign flows and equity returns.

Research limitations/implications

Constraints on data availability exist, and a quarterly dimension is too coarse to provide a statistically precise result, although certain related papers use quarterly dimension data. Further research is required using higher frequency data.

Originality/value

This paper provides a first look at foreign institution trading patterns and price effects on local equity returns in the Chinese A-share markets. Additionally, the equity level data allow the author to exclude the stocks that were not bought by foreign institutions and to detect the “pure effect” of foreign flows on equity returns.

Article
Publication date: 7 October 2014

Dawei Jin, Jianghui Liu, Liuling Liu and Desheng Yin

– The purpose of this paper is to investigate the quality of financial reporting by banks in China, and the profit hiding behavior of banks in particular.

1024

Abstract

Purpose

The purpose of this paper is to investigate the quality of financial reporting by banks in China, and the profit hiding behavior of banks in particular.

Design/methodology/approach

Reported profit is compared with actual profit using multiple regression analysis. The identification strategy allows the authors to quantify the degree of profit hiding in banking institutions.

Findings

Profit hiding exists in the whole banking sector in China regardless of the ownership structure of individual banks, though joint-stock banks have higher degree of profit hiding. Banks that are more financially constrained hide more profit than those less constrained ones. The competition in the banking industry competition impacts the extent of profit hiding, with higher competition being associated with lower degree of profit hiding.

Research limitations/implications

This paper documents the prevailing behavior of profit hiding in Chinese banks. It raises issues regarding the conventional methods of measuring bank efficiencies using accounting information reported by banking institutions.

Originality/value

This paper empirically examines the profit hiding behavior of banks in a transitional country.

Details

Managerial Finance, vol. 40 no. 10
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 16 January 2009

Iftekhar Hasan, Haizhi Wang and Mingming Zhou

The purpose of this paper is to investigate the role of institutional developments – market economy, financial deepening, private sector, property rights and rule of law …

1750

Abstract

Purpose

The purpose of this paper is to investigate the role of institutional developments – market economy, financial deepening, private sector, property rights and rule of law – affecting the bank efficiency in China.

Design/methodology/approach

First, profit efficiency and cost efficiency scores of banks at the firm‐year level were estimated using a stochastic efficiency frontier approach. Then the results were aggregated at the regional level. Regional differences in the timing and extent of the institutional developments impacting bank efficiency were exploited.

Findings

It was observed that most institutional variables play an important role in affecting bank efficiency and additionally banks tend to operate more efficiently in those regions with greater presence of private sector and more property rights awareness.

Research limitations/implications

The data on a number of important institutional variables such as property rights and rule of law are not easily available or importantly do not vary that much across years. However, based on whatever information available, it is apparent that institutional development is crucial to bank performance and also eventual economic growth.

Originality/value

This paper is believed to be the first attempt to empirically examine the role of institutional factor affecting bank efficiency especially in a transition country.

Details

Managerial Finance, vol. 35 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Book part
Publication date: 19 May 2009

Liang Song and Haizhi Wang

In practice, it is increasingly common for companies to use NON-COMPETITION covenants in employment contracts that put restrictions on post-employment activities. Making…

Abstract

In practice, it is increasingly common for companies to use NON-COMPETITION covenants in employment contracts that put restrictions on post-employment activities. Making use the variation of legal enforcement of NON-COMPETITION agreements in different states (NON-COMPETITION index) across the U.S., this chapter empirically examines whether and to what extent labor market concern will affect firm payout policy when managers are bound to their firms by NON-COMPETITION agreements. We find that the likelihood for a firm to pay DIVIDEND or conduct repurchasing is positively related to NON-COMPETITION index. We directly measure PAYOUT RATIO and find a significant positive relation between firm PAYOUT RATIO and NON-COMPETITION index. Our results indicate that managers with increased stability and reduced job opportunity in the external labor market are more likely use cash payout as a pre-commitment device and send a signal that they will not entrench themselves.

Details

Corporate Governance and Firm Performance
Type: Book
ISBN: 978-1-84855-536-5

1 – 10 of 16