Enterprise Board Research Articles

CVC Involvement, Digital Transformation, and Risk-Taking of Investee Companies: Evidence from China

ABSTRACT This paper investigates the impact of corporate venture capital (CVC) involvement on digital transformation and the risk-taking behavior of investee companies. Based on data on manufacturing companies listed on the Small and Medium-sized Enterprise (SME) board and the Growth Enterprise Market (GEM) of the Shenzhen Stock Exchange from 2015 to 2022, we find that CVC involvement helps boost the risk-taking level of investee companies. This is because CVC promotes corporate digital transformation, which in turn enhances corporate risk-taking. Finally, we show that the promoting effect of CVC on corporate risk-taking is more pronounced for investee companies with a small size and investee companies with a high degree of operating leverage. Our findings provide novel evidence for the effect of CVC on corporate risk-taking in the digital age.

Analysis of the alleviating effect of accounts receivable pledge financing on financing constraints

This paper examines the relationship between accounts receivable pledge financing and corporate financing constraints, utilizing a sample of small and medium-sized enterprises (SMEs) listed on China's Small and Medium Enterprise Board from 2014 to 2022. The findings reveal that accounts receivable pledge financing serves as an effective means to alleviate financing constraints faced by SMEs. Notably, this relief is more pronounced in regions with a higher concentration of small and medium-sized banks and weaker legal institutional environments. Furthermore, for enterprises with political connections, the financing through accounts receivable pledge exhibits an even stronger bailout effect.

How does supply chain transparency influence idiosyncratic risk in newly public firms: the moderating role of firm digitalization

PurposeThis study seeks to explore the intricate relationship among supply chain transparency, digitalization and idiosyncratic risk, with a specific focus on newly public firms. The objective is to determine whether supply chain transparency effectively mitigates idiosyncratic risk within this context and to understand the potential impact of digitalization on this dynamic interplay.Design/methodology/approachThe study utilizes data from Initial Public Offerings (IPOs) on China’s Growth Enterprise Board (ChiNext) over the last five years, sourced from the CSMAR database and firms’ annual reports. The research covers the period from 2009 to 2021, observing each firm for five years post-IPO. The final sample comprises 2,645 observations from 529 firms. The analysis employs the Hausman test, considering the panel-data structure of the sample and favoring fixed effects over random effects. Additionally, it applies the high-dimensional fixed effects (HDFE) estimator to address unobserved heterogeneity.FindingsThe analysis initially uncovered an inverted U-shaped relationship between supply chain transparency and idiosyncratic risk, indicating a delicate equilibrium where detrimental effects diminish and beneficial effects accelerate with increased transparency. Moreover, this inverted U-shaped relationship was notably more pronounced in newly public firms with a heightened level of firm digitalization. This observation implies that firm digitalization amplifies the impact of transparency on a firm’s idiosyncratic risk.Originality/valueThis study distinguishes itself by providing distinctive insights into supply chain transparency and idiosyncratic risk. Initially, we introduce and substantiate an inverted U-shaped correlation between supply chain transparency and idiosyncratic risk, challenging the conventional linear perspective. Secondly, we pioneer the connection between supply chain transparency and idiosyncratic risk, especially for newly public firms, thereby enhancing comprehension of financial implications. Lastly, we pinpoint crucial digital conditions that influence the relationship between supply chain transparency and idiosyncratic risk management, offering a nuanced perspective on the role of technology in risk management.

The Impact of Supply Chain Digitalization on Financing Efficiency of Small and Medium Enterprises: A Perspective of Supply Chain Resilience

Unlocking supply-demand bottlenecks, extending chains, supplementing links, and strengthening chains to enhance supply chain resilience are key to improving financing efficiency for small and medium enterprises (SMEs). This paper, based on panel data of all SMEs listed on the Small and Medium Enterprise Board and the Growth Enterprise Board of the Shenzhen Stock Exchange from 2015 to 2022, constructs a double-difference model to explore, for the first time, the impact of supply chain digitalization on the financing efficiency of SMEs and its transmission mechanism from the perspective of supply chain resilience. The research findings indicate that supply chain digitalization significantly enhances the financing efficiency of SMEs. Mechanism analysis suggests that supply chain resilience is the key transmission path through which supply chain digitalization enhances financing efficiency for SMEs. By optimizing supply chain dynamic capabilities, including proactive capability, reactive capability, and quality capability, to promote key resource integration such as cost control, fund circulation, and innovation collaboration, SMEs’ financing efficiency is empowered. Further analysis reveals that state-owned enterprises and SMEs in the central and eastern regions of China experience more significant improvements in financing efficiency. The conclusions of this paper provide policy implications for government initiatives to promote supply chain digitalization, ensure industrial chain security, and formulate differentiated policies targeting weak links in the process of supply chain digitalization.

Аналіз сприйняття корупції в період дії воєнного стану в Україні

The article summarizes the main scientific approaches to determining the essence of the category of «corruption». Based on the analyses of domestic and foreign publications, the authors’ own definition of corruption is proposed, which is considered as the purposeful dishonest actions of a person/persons aimed at using their powers not in an officially formally defined way, but in order to obtain unlawful benefits for themselves or a third party/parties, leading to the emergence of potential negative material and non-material losses for other individuals, their groups, the State and society in general. The data on the value of the Corruption Perceptions Index, the scale for assessing its level and sources of information for studying the perception of corruption in Ukraine are systematized. The possible reasons for Ukraine’s lagging behind in terms of the Corruption Perceptions Index compared to neighboring countries are substantiated. The main recommendations on the part of Transparency International Ukraine, an accredited representative of the global movement Transparency International, regarding Ukraine’s further steps for 2024 in the fight against corruption are highlighted as follows: to increase the efficiency of the fight against corruption at the highest levels of big business and public service; improve the system of using the assets of corrupt officials and pro-russian accomplices; improve the system of transparency and monitoring of public procurement. Practical recommendations for reducing the level of corruption in Ukraine during martial law are proposed, which, in turn, will contribute to improving the socioeconomic development of the country and serve as a foundation for further European integration processes in Ukraine. In particular, emphasis is placed on the need to pay special attention to taking into account the recommendations of international partners in a timely manner; further improvement of anti-corruption legislation in Ukraine; creation of «profiled codes of conduct» for public servants; resumption of the processes of competitive selection of managers, heads of executive bodies, and members of supervisory boards of the State-owned enterprises and submission of their financial statements, which is now an urgent task to restore public confidence in the government.

Can the Super‐deduction of R&D Expenses Boost R&D Investment?

AbstractThe super‐deduction of research and development (R&D) expenses is at the core of the policy to stimulate enterprise innovation in China. This paper identifies whether firms are supported by the super‐deduction policies for R&D expenses and uses the difference‐in‐differences method to investigate the impact of the policies on R&D investment. The results show that changes in policy in 2013 significantly increased the R&D investment of firms engaging in key state‐supported technologies. Policy changes in 2016 significantly increased the R&D investment of firms engaging in non‐key‐state‐supported technologies. Enterprises not only invested all their tax incentives in R&D activities but also increased their investment in self‐raised funds. The super‐deduction policy had different impacts on different industries, firms with different boards, and firms with different ownership. The policy significantly affected the manufacturing and construction industries, the Small and Medium Enterprise Board, and non‐state‐owned enterprises. Through a mechanism analysis, we found that the policy significantly reduced the user cost of R&D and increased the net cash flow of enterprises, which could raise a firm's R&D investment. It is necessary to increase policy support, expand the scope of super‐deductible expenses, and increase the super‐deduction rate based on industry classification according to the sensitivity of different industries to the policy.

Impact of digital finance on the asset allocation of small- and medium-sized enterprises in China: Mediating role of financing constraints

Digital finance has provided informal financial support to small- and medium-sized enterprises (SMEs) and solved the dilemma of acquiring formal financial support in emerging economies such as China. However, this may lead to structural changes in entity enterprises’ asset allocations. Based on SMEs listed on the Shenzhen Stock Exchange: Small and Medium Enterprise Board from 2011 to 2018, this study empirically examines the underlying mechanism of digital finance on the asset allocation behaviors of SMEs. The results show that digital finance enables SMEs to allocate more financial assets, thus intensifying the level of financialization of asset allocation. Furthermore, financing constraints partially mediate the relationship between digital finance and the financialization of asset allocation. Further, we investigate financialization motivation in particular and find that the impact of digital finance on the financialization of enterprises is more significant in enterprises with more investment opportunities and in areas with a speculative atmosphere. The results support that SMEs’ financial asset investment has an investment substitution motive rather than a reservoir effect. Digital finance relieves SMEs’ financing constraints and reduces their financing costs. When financing constraints are alleviated, digital finance also prevents the tendency of financialization in SMEs’ asset allocation. This study offers useful policy implications for preventing SMEs’ investment distortions in the development of digital finance.

How upstream innovativeness of ecosystems affects firms' innovation: The contingent role of absorptive capacity and upstream dependence

This study attempts to examine how upstream innovativeness affects firm innovation, as well as the contingent role of absorptive capacity and upstream dependence associated with the effects of upstream innovativeness. Specifically, based on an empirical study of a set of panel data of Chinese listed firms in the manufacturing sector of the Growth Enterprise Board from 2012 to 2017, this paper shows that upstream innovativeness has a positive effect on firms' innovation performance and that the effect of upstream innovativeness is positively moderated by firms' absorptive capacity. Moreover, the positive moderating role of absorptive capacity will be strengthened when upstream dependence increases. The findings indicate that higher absorptive capacity enables firms to better understand, assimilate and exploit upstream innovative components, and that higher upstream dependence could increase firms' willingness to invest in ecosystem actor-specific absorptive capacity and utilize such capability, thereby enabling a firm to better recognize, assimilate, and exploit external knowledge from the specific upstream actors. Thus, we build a new framework related to how firms' response to ecosystem upstream innovativeness by increasing their innovation based on their capability and willingness.

Firm location, investor recognition, and the liquidity of Chinese publicly listed SMEs

We assemble data of non-financial stocks on the Shenzhen small and medium-sized enterprise (SME) board over the 2005–2019 sample period to explore the liquidity drivers of listed SMEs. With the complete dominance of retail investors, two competing hypotheses are derived from familiarity. The empirical results reveal the insignificant role of firm location, whereas investor recognition exerts the largest effect on the liquidity of Chinese listed SMEs. This finding implies that having a large pool of potential investors with local bias does not give SMEs headquartered in megacities the home advantage in their quest for higher liquidity. Instead, liquidity improves because considerable shareholders hold stocks that they are familiar with or have knowledge about. The nonlinear relationship, however, highlights the costs of an expanded shareholder base because diffuse ownership exacerbates agency conflicts between the controlling shareholders and small individual investors.

The Comparison and Analysis of Exchange Traded Funds (ETFs) Return Rates

Abstract Based on the trading data of A-share listed companies held by ETFs and the shareholding data of exchange-traded funds during 2011-2022 in China stocks markets, this paper uses the dynamic panel differential GMM model to study the shareholding ratio of exchange-traded funds and the impact of its changes on the liquidity of the underlying stocks. First, all the samples were regression and empirical results were analyzed. Then, the main board of Shanghai and Shenzhen, small and medium-sized board and growth enterprise board stocks were respectively regression to draw conclusions, and the robustness of the above research was tested. In the end, two main conclusions are drawn from the above research: (1) There is a significant positive correlation between the shareholding ratio of ETFs and stock liquidity, that is, the higher the shareholding ratio of ETFs, the higher stock liquidity. (2) The positive change of ETFs shareholding ratio will significantly increase the liquidity of the underlying listed companies' stocks. JEL classification numbers: G11. Keywords: Exchange-traded fund, Rate of return, Research and analysis.

Public Enterprises – Old and New Challenges

In this paper, the author analyses rules which regulate public enterprises. The definition of public enterprises is provided after presenting the terminological issues. The paper points out that the existence of public enterprises as a special type of business entities is unnecessary, as well as that coordinated strategy regarding the future of all public enterprises, not only those founded by the state, should be drawn up. Also, the need to harmonize laws is highlighted as well as the necessity of adjusting the rules regarding the organization of public enterprises to the needs of multiple founders. Furthermore, the differences between the rules on the management of public enterprises and commercial companies are described. The author concludes that, in principle, it is necessary to apply general rules to public enterprises as well, whereby any special rules may be stipulated by general or special law. Finally, the issue of gender balance on management and supervisory boards of public enterprises is also examined.

Board diversity as strategic choice and why it should matter to SMEs

PurposeDiversity in boards has gained attention as a reflection of societal imbalances. The purpose of this paper is to investigate the impact of diversity in terms of both gender and nationality in management boards of small and medium-sized enterprises (SMEs) on firm performance from an upper echelons perspective. The authors also examine how board-specific characteristics influence the structural makeup of boards in gender and nationality diversity terms.Design/methodology/approachThe authors focus on the UK because of its individualistic society and flexible labour market and assess 309 SMEs in the manufacturing industry over 2009–2019. A 3-stage least squares (3SLS) estimator is used to analyse the data, the Shannon index to measure board diversity, return on assets as proxy for firm performance, and owner-manager presence, board member age and tenure are the board-specific characteristics of primary interest.FindingsBoth gender and nationality diversity contribute to firm performance and represent distinct upper echelon characteristics that change the cognitive and psychological dynamics of boards. Firms with larger boards do not perform better, but diverse boards reduce the narrowing view of CEOs. Yet the presence of owner-managers, despite their performance-enhancing contribution, holds firms back from benefitting from diversity as a strategic choice.Originality/valueThis study extends the upper echelons theory to include board diversity as an important aspect that should become more central in upper echelon thinking when understanding firm performance. The authors’ findings suggest that theoretical developments in search of understanding firm behaviour must proceed by accounting for diversity and not simply focusing on decision-making styles.

Regional culture: The role of the invisible hand in shaping local family firms' top management team.

Research on family businesses has focused on the differences between family and non-family firms regarding the top management team (TMT), while this study further explores the difference within family firms from different regional culture based on the perspective of socio-emotional wealth (SEW) and evolutionary psychology. Using a sample comprised of all 625 family firms listed on the Small & Medium Enterprise Board and Growth Enterprise Board in Shenzhen Stock Exchange, this study finds that in regions of strong clan culture, family members are more willing to be involved in a family business and accept lower economic rewards. Particularly, when financial risk is high, these relationships mentioned above become more significant. Based on the results, this study proves that regional culture can affect the characteristics of top management teams in family firms, explains the heterogeneity of family firms' decision-making from a culture-based perspective and extends existing research on family business from the level of "family firm vs. non-family firm" to that of "family firms affected by different regional cultures".

Fitting the name or unworthy of the name?-Does the name of family firm major shareholder influence family's egoistic behavior?

It has been generally believed that the major shareholders of family firms are more willing to implement egoistic behaviors aimed at benefiting the family. This study analyses whether the major shareholder of the family firm whose name contains "Confucian symbols" such as benevolence, righteousness, loyalty, and kindness will reduce family self-interested behaviors as his name indicates. Using a sample consisting of all 425 family firms listed on Small and Medium Enterprise Board and Growth Enterprise Board, the result shows that the major shareholder whose name contains Confucian symbols is less likely to misappropriate corporate assets and less likely to make "family-first" personnel arrangements, meanwhile is more open to external supervision. Further mechanism testing reveals that the major shareholder whose name contains Confucian symbols also tends to choose corporate culture that reflects Confucianism. The study confirms that the name of the major shareholder is one of the factors which can affect the operation of the family business, demonstrates that different family firms have different attitudes towards family self-interest, and promotes the extant research from the "differences between family and non-family firms" level further to the "differences among family firms running by different families" level.

Board Gender Diversity and Corporate Green Innovation: Evidence from China

A green economy is the current trend of sustainable development for the global economy. Using Chinese A-share listed enterprises from 2010 to 2020, this study examines how board gender diversity affects green innovation. Results show that board gender diversity significantly promotes the number and quality of green innovations and that R&D and governments support, as essential intermediary mechanisms have positive effects on the relationship between female directors and green innovation. Moreover, heterogeneous analyses show that high levels of ESG, gender diversity of directorial boards of state-owned enterprises, and large enterprises have a more significant role in promoting green innovation. The study provides empirical evidence for the development of green innovation and theoretical support for the transformation of corporate strategic thinking with more women participating in executive decision-making.

Feasibility of Implementation of Public Entity Corporate Governance Act's Best Practices to Enhance Good Performance in a State-Owned Enterprise

This study examined the feasibility of implementing the Public Entity Corporate Governance Act's (PECGA) best practices to enhance good performance at a State Owned Entity (SOE). Boards of State enterprises and parastatals (SEPs) had encountered impediments in promoting corporate governance best practices in Africa. Identified factors hindering the implementation of PECGA of 2018 were examined to proffer recommendation for its adoption. Zimbabwe came up with the PECGA of 2018. The feasibility of implementing PECGA's best practices to enhance good performance at the SOE is not well known when this study was conducted. Mixture research methods were adopted where questionnaires were used to collect data. Purposive sampling methods were used to examine the populations of 38 head office managerial staff. Chi-square and regression analysis were used for analysis. It is found that job title and education level are related and the execution of sound PECGA best practices and the SOE's operational performance are related. The results confirmed that there were hindrances on the execution of sound PECGA best practices on the SOE's operational performance. The study concluded that it is not feasible to fully implement the PECGA best practices in SEPs to enhance performance in Zimbabwe. The Zimbabwean's PECGA must be moved from the

Information asymmetry and capital structure: Evidence from the Chinese stock market

AbstractUsing a unique data set of information ratings (IRs) for firms listed on the Shenzhen Stock Exchange from 2001 to 2018, we examine the impact of information asymmetry on capital structure decisions in China. We determine that firms with higher IRs have fewer debt issuances and lower leverage. This negative relationship is consistent for firms listed on the Main Board, Small and Medium‐sized Enterprise (SME) board and Growth Enterprise Market (GEM) board. We further decompose IR into accounting‐associated and nonaccounting‐associated components and find that both are negatively correlated with leverage. Additional analyses reveal that for firms listed on the SME and GEM boards, the nonaccounting‐associated component exhibits a stronger relationship with leverage than does the accounting‐associated component. Our results suggest that information asymmetry is instrumental in capital‐structure decision‐making.

Interdependence with suppliers in the innovation ecosystem: the effects of supplier concentration on firm innovation

PurposeBased on the strategy and new institutional economic literature, this study aims to explore how different levels of supplier concentration (SC) will be characterized by differences in switching cost and coordinated adaptation in an ecosystem, thereby shaping its research and development (R&D) intensity, innovation performance and innovation efficiency.Design/methodology/approachThis study adopted a set of panel data of Chinese listed firms in the Growth Enterprise Board and their top five suppliers from 2012 to 2016. A Tobit model is used to test the hypotheses.FindingsThe study finds that SC has an inverted U-shape effect on R&D intensity. This finding implies that firms are more likely to invest in R&D when SC is intermediate level. While it has a U-shape relationship between SC and innovation output, both lower SC and higher SC are more efficient in innovation because of their advantage in low switching cost and better coordinative adaptability, respectively.Originality/valueThe study complements the innovation ecosystem literature by using SC to represent the structure of the interdependence between firms and suppliers in an ecosystem, then examining the correlation between SC and firms’ innovation investment and output, respectively. Second, combining strategy and new institutional economic literature, the non-linear effects of SC on firms’ innovation are found.

Innovation Vouchers and the Sustainable Growth of High-Tech SMEs: Evidence from China

Innovation has become an essential source of sustainable growth for most firms, especially small- and medium-sized enterprises (SMEs). Governments around the world widely implement innovation vouchers to promote innovation in SMEs. This study empirically explores the effects of innovation vouchers in stimulating patentable innovation and ultimately enhancing firms’ financial performance. Using a panel of 1274 listed SMEs from the Small and Medium Enterprise Board (SMEB) and the Growth Enterprise Board (GEB), we find that innovation vouchers lead firms to utilize knowledge-intensive services and significantly increase their financial performance. We further document that patentable innovations mediate the relationship between innovation vouchers and firms’ financial performance. We report that the effects of innovation vouchers on financial performance are more prominent for SMEs with limited external informational resources. We believe that our study yields novel evidence and sheds further light on the important policy implications of innovation vouchers to facilitate the sustainable growth of SMEs.

CAN FOUNDERS’DUAL ROLESFACILITATE INNOVATION? – FROM THE PERSPECTIVE OF FOUNDERS’ R&D NETWORK CHARACTERISTICS

Founders are crucial for the start-ups, which in turn makes it very important to study how founders’ behaviour affects the development of the start-ups. Based on the data of the companies listed on Growth Enterprise Market (GEM) and Small & Medium Enterprise (SME) board from 2014 to 2017 in China, this paper explores the impact of founders’ dual roles of R&D and management on enterprises’ innovation performance from the perspective of founders’ R&D network characteristics. The empirical research reveals that the more an enterprise’s founders participate in the R&D activities and the more central they are in the R&D network, the better the enterprise’s technological innovation performance. It is because the high network centrality enables founders the stronger ability of innovation and opportunity identification and draws their attention to innovation. This research further discloses that the promotion effect is restrained when enterprises obtain more government subsidies and founders have more power. Italso finds that founders’ R&D role does not transform the innovation output into enterprises’ value effectively though the role increases the innovation output, instead, it even restrains the transformation.