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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

Abstract

Details

The Political Economy of Chinese Finance
Type: Book
ISBN: 978-1-78560-957-2

Book part
Publication date: 12 November 2016

Jongmoo Jay Choi, Michael R. Powers and Xiaotian Tina Zhang

The paper provides an overview of material helpful in placing the subsequent papers in context, as well as a summary of the research contributions made by the individual…

Abstract

Purpose

The paper provides an overview of material helpful in placing the subsequent papers in context, as well as a summary of the research contributions made by the individual papers themselves.

Methodology/approach

We begin with a timeline of China’s Economic Reform, including both major events that permitted the opening and expansion of the nation’s economy, and important milestones of the historical movement. We then consider the impact of philosophy and culture (particularly, Confucianism and socialism) on China’s society and government, which leads naturally to certain observations regarding the political-economic model in which state-owned enterprises play a central role. In the final section, we briefly summarize the contents of the remaining papers.

Details

The Political Economy of Chinese Finance
Type: Book
ISBN: 978-1-78560-957-2

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

Book part
Publication date: 1 January 2006

Yong Wang and Xiaotian (Tina) Zhang

Initial public offering (IPO) underpricing remains a puzzle after decades of investigation. The stock markets in emerging economies are attractive to international…

Abstract

Initial public offering (IPO) underpricing remains a puzzle after decades of investigation. The stock markets in emerging economies are attractive to international investors but their unique characteristics need to be examined. Chinese stock markets experienced much more significant IPO underpricing than most other stock markets in the world. This paper offers a two-period wealth maximum model to explain the strategic IPO underpricing by state owners. Given the fact that the entire IPO procedure, including IPO price, is regulated and controlled by state owners, we argue that state owners strategically underprice the IPO, because they care less about the IPO proceeds but more about the wealth gain after IPO. The empirical finding of a positive relationship between IPO underpricing and state ownership in Chinese stock market is consistent with the wealth maximization hypothesis of IPO pricing. The paper offers better understanding for IPO procedure of state-owned enterprises in emerging markets.

Details

Value Creation in Multinational Enterprise
Type: Book
ISBN: 978-1-84950-475-1

Book part
Publication date: 21 October 2019

Yung-Jae Lee and Xiaotian Tina Zhang

Literature has numerous debates about the relation between emerging financial environmental, social, and governance (ESG) factors and financial performance with mixed…

Abstract

Literature has numerous debates about the relation between emerging financial environmental, social, and governance (ESG) factors and financial performance with mixed results. The authors use a unique data set generated by big data analytics (from web-based data mining) for three environmental areas (water, land, and air) to test hypothesis in the extreme events (defined as those that are over/under ±2.58 multiplied by the standard deviation) have a high chance of predicting equity price movements within an window of −3/+10 days, respectively, prior to and after the event. The authors repeat the similar robustness study for a sample of 2018 and the results still holds. The authors interpret these findings to suggest that: (1) studies using continuously AI-generated data for ESG categories can have significant predictive power for extreme events; and (2) that such high correlations can be used to confirm the materiality of some ESG data. The authors conclude with noting limitation of this initial study, and present specific areas for future research.

Details

Disruptive Innovation in Business and Finance in the Digital World
Type: Book
ISBN: 978-1-78973-381-5

Keywords

Content available
Book part
Publication date: 21 October 2019

Abstract

Details

Disruptive Innovation in Business and Finance in the Digital World
Type: Book
ISBN: 978-1-78973-381-5

Content available
Book part
Publication date: 12 November 2016

Abstract

Details

The Political Economy of Chinese Finance
Type: Book
ISBN: 978-1-78560-957-2

Article
Publication date: 14 March 2018

Keryn Chalmers, David Hay and Hichem Khlif

In 2001, the US moved to regulate internal control reporting by management and auditors. While some jurisdictions have followed the lead of the US, many others have not…

Abstract

In 2001, the US moved to regulate internal control reporting by management and auditors. While some jurisdictions have followed the lead of the US, many others have not. An important question, therefore, is the relevance of internal control to stakeholders. The more specific issue of the benefits of US-style regulation of internal control reporting is also topical. We review studies on the determinants of internal control quality and its economic consequences for stakeholders including investors, creditors, managers, auditors and financial analysts. We extend previous reviews by focusing on US studies published since 2013 as well as all non-US studies investigating IC quality including countries regulating IC disclosure as well as unregulated settings and both developed and developing economies. In doing so, we identify research questions where evidence remains mixed and new directions in which there are research opportunities.

Three main insights arise from our analysis. First, evidence on the economic consequences of internal control quality suggests that the quality of internal control can have a significant effect on decision making by users of financial information. Second, the results of research on the empirical association between ownership structure, certain board characteristics and internal control quality is generally mixed. Empirical evidence concerning the association between audit committee characteristics and internal control quality generally supports a positive and significant association. Finally, while studies in non-US jurisdictions are increasing, opportunities remain to explore the determinants and consequences of internal control in other jurisdictions. Our review provides evidence for policy makers of whether there are benefits from requiring management and auditors to report on internal control over financial reporting.

Details

Journal of Accounting Literature, vol. 42 no. 1
Type: Research Article
ISSN: 0737-4607

Keywords

Content available
Book part
Publication date: 1 January 2006

Abstract

Details

Value Creation in Multinational Enterprise
Type: Book
ISBN: 978-1-84950-475-1

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