ABSTRACT Using the pilot policy for carbon emission trading (PPCET) in China as a quasi-natural experiment setting, we construct a staggered difference-in-difference design to examine the impact of PPCET on ESG (Environmental, Social, and Governance) disclosure. Using a sample of Chinese listed firms over 2009–2020, our findings reveal that the degree of ESG disclosure is significantly higher for treatment firms after implementing PPCET than that before implementing. Moreover, the effect of PPCET on ESG disclosure is more pronounced for state-owned enterprises (SOEs) than for non-SOEs. Our findings are robust to a variety of sensitivity tests, are valid after excluding shocks from other policies, and stand after controlling for the endogeneity. Furthermore, the relation between PPCET and ESG disclosure is more pronounced for firms with weak environmental regulation intensity, in non-heavily polluting industries, and with low analyst coverage. Lastly, PPCET promotes environmental and social disclosures, and reduces carbon emission intensity.

ABSTRACT This study examines how state-owned capital investment and operation companies (SCIOCs), a key reform of China’s state-owned capital authorised operation system with a foucs on managing capital, influence firms’ expense stickiness. Using a staggered difference-in-differences approach with data from Chinese state-owned listed companies, we find that SCIOCs significantly reduce expense stickiness. Mechanism analysis reveals that SCIOCs enhance shareholder supervision and strengthen executive incentives, while simultaneously reducing employee redundancy and overinvestment, indicating that decreased agency costs and government intervention are the key underlying channels. Additional analyses show that the mitigating effect of SCIOCs on expense stickiness is stronger in local and commercial state-owned enterprises, and in firms with weaker supervisory governance. This study contributes novel insights into how SCIOCs reshape firms’ cost behavior, offering empirical support and important policy implications for deepening reform of the state-owned capital authorised operation system and improving the operational efficiency of state-owned enterprises.

ABSTRACT The implementation of unified tax incentive policies across China is a core issue for effectively advancing the creation of a unified national market and is related to how to effectively promote high-quality development of enterprises. Exploiting the issuance of the Notice on Cleaning up and Regulating Preferential Taxation Policies, this study empirically examines the impact of unified tax incentive policies on the investment efficiency of micro-enterprises. The results reveal that by promoting fair competition among enterprises and curbing managerial shirking behaviour, these policies help companies improve their investment efficiency. Cross-sectional tests indicate that the main effect is more pronounced in companies with poorer operating performance and weaker market competitiveness.

ABSTRACT The advancement of digital transformation in tax administration and the rise of novel business models make firms increasingly recognise the strategic importance of integrating business and finance departments (referred to as ‘business-finance integration (BFI)’) in tax management. Our study analyzes recruitment data from Chinese A-share listed firms between 2014 and 2021 based on machine learning methods to identify the shift towards BFI and evaluate its impact on corporate tax management. We find that BFI significantly reduces tax avoidance. However, this effect is more pronounced in firms facing higher potential tax risks, such as those with complex organisational structures or greater exposure to tax audits. Additionally, BFI can reduce corporate tax risks. The conclusions indicate that BFI curbs corporate tax avoidance by reducing tax risks, thereby enhancing tax management efficiency. The findings provide significant theoretical and practical insights for promoting interdepartmental collaboration, advancing financial management, and improving tax management within firms.

ABSTRACT If the countryside prospers, the country prospers. By taking the private A-share listed companies in Shanghai and Shenzhen as research samples, we examine how state-owned equity participation affects private enterprises’ fulfilment of social responsibilities and its consequences. We find that state-owned equity participation significantly increases the probability and scale of investment by private enterprises in rural revitalisation, and this effect is primarily observed in samples with greater financial pressure, lower farmer incomes, higher media attention and lower levels of market competition. Mechanism analysis suggests that state-owned equity participation influences private enterprises’ participation in rural revitalisation primarily through alleviating financing constraints, affecting attention allocation and increasing policy-related burdens. In terms of economic consequences, participation in rural revitalisation driven by state-owned equity participation is beneficial for improving private enterprise performance. Our research not only enriches the research on corporate social responsibility fulfilment from the perspective of state-owned equity participation but also provides a policy basis for the government to deepen the reform of mixed ownership.

ABSTRACT In this paper, we examine the impact of product market competition on enterprise digital transformation. We extracted the product description texts from the annual reports of China’s listed companies from 2012 to 2021，and measured product market competition at the firm－year level by using the computational linguistics method. Our analysis shows that product market competition plays a positive role in the enterprises digital transformation. The mechanism analysis shows that product market competition can exert both escape-competition effect and governance effect, thus prompting enterprises to undergo digital transformation. The heterogeneity analysis shows that this relationship is affected by production efficiency, factor intensities, financial constraints, and analyst coverage. The analysis of economic consequences shows that external pressure from product market competition improves future firm performance. Overall, this study enriches the literature related to the drivers of enterprises digital transformation from the perspective of market competition.

ABSTRACT Delivering information through regular or temporary reports is not the final step in disclosure. Using the Word2Vec model, we assess the interaction quality of earnings communication conferences, and find that high interaction quality mitigates the post-earnings-announcement drift (PEAD). Interaction quality on performance-related questions, especially performance interpretation questions, plays a crucial role. Mechanism test reveals that investors interpret annual report information more comprehensively and consistently after earnings communication conference. The mitigating effect is more pronounced in firms with longer interval between the conference and the annual report, firms not involved in margin trading and short selling, and those reporting negative unexpected earnings. The disclosure of first quarter reports after earnings communication conferences can offset this effect. We provide empirical evidence, from the perspective of interaction quality, to validate the ‘quality of content’ in the earnings communication conference and its contribution to enhancing information efficiency in the Chinese capital market.

ABSTRACT Accounting information has long been regarded as a crucial source of information in the capital market. However, the advent of big data and advancements in information technology raise questions about the implications of these developments on the usefulness of accounting information. This paper aims to address this issue, with a specific focus on the role of social media, a product of the big data era, in shaping the significance of accounting information. We find that, prior to earnings announcements, information shared on social media tends to weaken the usefulness of accounting information. Conversely, after earnings announcements, the communication and interaction among investors on social media platforms strengthen the usefulness of accounting information. Despite the dual impacts of social media on the usefulness of accounting information, empirical evidence suggests an overall net enhancement in its significance, attributable to social media.

ABSTRACT The traditional view is that the more regulatory staff is, the stronger regulatory enforcement is, and the better regulatory effect is. However, from the perspective of team coordination, the more regulatory staff is, the higher the regulatory team coordination cost is, and the worse regulatory effect is. Based on the CSRC’s random examination system, it is found that under this system, corporate financial misreporting decreases firstly and then increases with the increase of on-site examiners. Mechanism tests indicate that this result is more significant when the regulatory team coordination cost is higher, such as the time team members having worked together is shorter, team diversity is higher, or team members are busier. It is also found that auditors nonlinearly adjust their audit fees according to the change of regulatory pressure. The above results suggest that the regulatory team coordination cost does influence the regulatory human resource allocation efficiency.

ABSTRACT Based on the tax credit rating disclosure system, we examine the impact of the tax credit rating on trade credit levels within non-public companies and analyse the specific mechanisms through which the tax credit rating affects trade credit financing. Our results indicate that companies with the tax credit rating of A (indicative of a higher tax credit) tend to receive increased trade credit. Further analysis reveals that the positive relationship between tax credit and trade credit financing is more pronounced when the customer firm lacks transaction history with its suppliers, operates in the region with a lower trust level or a lower degree of marketisation, or holds weaker bargaining power compared to its suppliers. This study enriches the relevant literature on the economic consequences of tax credit rating, highlighting its effectiveness in alleviating information asymmetry and financial constraints among non-public firms, and also extends the field of how impartial and authoritative regulators affect trade credit financing.