We examine the impact of tax incentives on private firms’ earnings management based on a tax reform in China. Firms established after January 2002 face significant tax reduction, thus creating a large and persistent discontinuity in tax rates by establishment date. Using the regression...

This study examines perk consumption in the business group when the unlisted parent firms experience an adverse shock of financial conditions. We exploit a quasi-experiment in China, the mandatory dividend of a state-owned business group in 2007, to conduct difference-in-differences estimation,...

This article examines the effects of directors’ and officers’ liability (D&O) insurance on the quality of environmental information disclosure in China. We present strong evidence that the D&O insurance enhances the quality of environmental information disclosure, consistent with governance...

Although risk-taking plays a crucial role in corporate innovation and performance, little attention is paid on the impact of social credit on corporate risk-taking from an informal institutional perspective. Using the shock of Chinese social credit reform policy, we conduct...

We investigate the causal impacts of air pollution on analyst forecast accuracy around earnings announcements. Using the air quality index in analyst workplaces, we provide direct evidence of the following. First, air pollution significantly reduces analysts' earnings forecast accuracy in...

This paper investigates how policy certainty affects firm innovation activities.The identification hinges on the overlap of the elite dualism system in China. Naturally, a city Party leader served as the prior mayor in the same city is more likely to carry out the policy decisions made by the...

This study identifies information accessibility as a determinant of corporate innovation. Using the sudden termination of Google's search services in China, we find a persistently large negative effect on the intensity and quality of innovation among firms relying on foreign technology. The...

Using the US-China trade war as a quasi-natural experiment, we investigate how downstream firm shrinkage affects upstream firm employment from the perspective of supply chain transmission effects with a difference-in-differences (DID) design. We reveal a significant negative impact of downstream...

This study examines the impact of enhanced court enforcement within a pro-creditor legal framework on corporate innovation. We exploit the staggered establishment of bankruptcy tribunals in China as a natural experiment to reveal that enhanced court enforcement dramatically increases corporate...

We examine how mutual funds’ trading and performance respond to corporate misconduct. We exploit a combined dataset of corporate misconduct and holding information of mutual funds and show that mutual funds tend to sell and buy more stocks of corporations with misconduct. Mutual funds with...