Chinese A-share Research Articles

The Dynamic Role of Intellectual Capital in Moderating ESG Practices and Financial Performance in the Chinese A-Share Manufacturing Sector

The Dynamic Role of Intellectual Capital in Moderating ESG Practices and Financial Performance in the Chinese A-Share Manufacturing Sector

The Impact of Financialization on Innovation in Enterprises--An Empirical Study Based on Chinese A-share Listed Companies

This paper examines the impact of corporate financialization on the innovation activities of Chinese A-share listed companies. The study finds that a higher degree of corporate financialization is associated with lower levels of innovation, indicating that financialization suppresses corporate innovation. This phenomenon primarily arises because the objective of allocating financial assets is to substitute financial asset income for main business income, leading firms to focus excessively on short-term financial returns rather than long-term physical investments. The study recommends that policymakers focus on the coordinated development of finance and the real economy, while being vigilant against the negative impacts of excessive financialization on high-quality economic growth. Additionally, corporate managers should devise prudent asset allocation strategies to ensure that financial investments support innovative development in the real sector.

Does the Imbalance of ESG Activities Affect Company Performance? -- Evidence from Chinese A-share Listed Companies from 2018-2022

In recent years, the concept of sustainable development has progressively gained traction among the populace, with the performance of enterprises in environmental, social, and corporate governance (ESG) aspects attracting widespread attention from various sectors of society. The weighting of E, S, and G components varies across domestic and international ESG rating agencies, often resulting in significantly divergent weighted ESG scores. Leveraging the theory of organizational ambidexterity, this paper empirically investigates the impact of discrepancies between institutional ESG scores and equally weighted ESG scores on company performance, utilizing a sample of Chinese A-share listed companies spanning the years 2018 to 2022. Our findings reveal that equally weighted ESG scores exhibit a correlation with company performance, and a higher positive percentage difference between a company's rating agency ESG scores and its equally weighted ESG scores is associated with lower performance. This suggests that the rating agency weighting method may inadvertently encourage companies to engage in "greenwashing." This conclusion remains consistent after conducting robustness tests. Heterogeneity analysis further indicates that the negative impact of this difference on company performance is more pronounced among non-state-owned companies, manufacturing companies, and small companies. The mechanism of action test reveals that this difference negatively affects company performance by exacerbating financing constraints and reducing operating efficiency.

An Empirical Study on Asset Pricing Models Based on The Chinese A-Share Market

Based on the analysis of the A-share markets in Shanghai and Shenzhen Stock Exchange from 2000 to 2023, this paper systematically evaluates the applicability and explanatory power of the Capital Asset Pricing Model (CAPM), the Fama-French Three-Factor Model (FF3) and the Fama-French Five-Factor Model (FF5) in the Chinese market. The study finds that although CAPM has some explanatory power in the early stage, the three-factor and five-factor models can better explain the cross-sectional changes in stock returns as the market develops. In the descriptive statistics, each factor's volatility and correlation reveal the Chinese market's unique characteristics, such as the relative strength of small-cap and growth stocks. In the regression analysis, the results of the Fama-MacBeth regression showed that the significance and explanatory power of the market factor, size factor and value factor were different in different models. Further robustness analysis reveals the COVID-19's impact on the model's performance through the sub-period analysis. This paper provides a new perspective on understanding the asset pricing of China's A-share market and a theoretical basis for investors' investment decisions. It also points out the limitations of existing models in explaining emerging market equity returns. It suggests that future research can deeply explore the performance of more factors in different market environments.

Digital Transformation, Executive Incentives, and Bachelor's Education in Chinese A-share Listed Companies

This research investigates the interplay between digital transformation, executive incentives, and executive education in Chinese A-share listed corporations. Using a comprehensive dataset, this study examines how executives' educational backgrounds, specifically those with bachelor's degrees, influence their adoption of digital transformation initiatives. The findings highlight that CEOs with bachelor's degrees demonstrate higher adaptability to digital transformation, leveraging their exposure to contemporary educational curricula and technological advancements. Furthermore, the study explores various incentive systems, such as bonuses and stock options, which effectively motivate executives to implement digital strategies successfully.This research contributes by emphasizing the critical alignment of executive incentives with digital transformation goals. It underscores the importance of educational preparedness in equipping leaders with the requisite skills to navigate and lead in the digital era. These insights are crucial for policymakers and corporate boards aiming to enhance organizational performance through targeted executive development and robust incentive structures.

Green fund investors and ESG performance: Evidence from China

Using the ESG scores from the Bloomberg Database and the manually filtered green fund investor data, we study the influence of green fund investors on the Chinese A-shares' ESG performance. As we have found, the holding of fund investors who pay attention to sustainable development can improve the firm's ESG performance, and this improvement is more pronounced in state-owned enterprises, heavily polluting industries, and after the green policy announcement. Our findings are robust after considering the reverse causality endogeneity concern and sample selection bias. In addition, the holdings of green fund investors favor the company's status as a green index constituent and its long-term financial performance. Further, the mechanism test reveals the influencing channel of this improvement and supports that it is long-term green fund investors themselves improving the firms' ESG performance and can improve a firm's ESG performance by attracting other long-term investors and new mutual fund investors, and increasing the level of media scrutiny pressure. Our paper contributes to figuring out the impact of institutional holding on ESG development and further points out the source of this influence.

Impact of Digital Transformation on Green Innovation in Manufacturing under Dual Carbon Targets

The development of green innovation in the manufacturing industry is crucial for sustainability, as it can lead to significant environmental and economic benefits. Meanwhile, the impact of digital transformation on green innovation in the manufacturing industry has been proven to be significant in a previous study. To further explore the impact of digital transformation on the development of green innovation in the manufacturing industry under the dual carbon goal, this article selects data from Chinese A-share manufacturing listed companies from 2013 to 2022 as the observation sample, proposes research hypotheses based on stakeholder theory, and conducts empirical analysis. The results indicate that digital transformation can significantly promote the development of green innovation in the manufacturing industry, which is transmitted through corporate environmental responsibility. Corporate environmental responsibility plays a partial mediating role in the impact of digital transformation on the development of green innovation. Meanwhile, media attention can strengthen the positive impact of digital transformation on green innovation. In heterogeneity analysis, it was found that the higher the institutional shareholding and analyst attention, the more likely a company’s digital transformation can promote green innovation. In addition, by comparing and analyzing the data of the two years before and after the proposal of the dual carbon target, it was found that the incentive effect of the dual carbon target did not achieve the expected effect in this article, which may be related to the short time of the proposal of the dual carbon target and the impact of the epidemic.

Digital transformation of enterprises: Job creation or job destruction?

In recent years, the technological advancements embodied by digital technology have received significant attention from policymakers and researchers because of their profound impacts on the economy and society. In particular, the relationship between digital technology and employment continues to be a subject of considerable debate. This article focuses on the microperspective, and the causal effects and mechanisms of corporate digital transformation on labour employment are examined. With the use of data on Chinese A-share manufacturing companies from 2008– to 2019, text analysis is employed in this study to construct a comprehensive index of corporate digital transformation. We utilise a combination of fixed effects models, difference-in-differences (DiD) models, and instrumental variable methods and demonstrate that digital transformation stimulates enterprise labour demand, a conclusion that remains valid after multiple endogeneity tests and robustness assessments. The heterogeneous results indicate that nonstate-owned enterprises (non-SOEs), nonhigh-tech enterprises, enterprises with low financing constraints, and small enterprises exhibit greater employment creation effects through digital transformation. Mechanistic analysis suggests that digital transformation increases enterprise employment by increasing operational and management efficiency, profitability, and labour productivity levels. Further exploration reveals that digital transformation increases the demand for labour with varying skills and human capital upgrading in enterprises. This article, through the lens of digital technology, enriches the body of research on the nexus between technological progress and employment, provides novel insights into employment fluctuations under the digital paradigm, and outlines significant implications for countries balancing digital economy development, employment growth, and social stability.

An Empirical Research on the Performance of Asset Pricing Models in the Chinese A-Share Market

Asset pricing remains a cornerstone of financial field, providing a framework to understand the anticipated returns of asset portfolios and individual assets. Its widespread application spans academic discourse and practical financial methodologies. This study conducts an empirical analysis of the Chinese A-share Market, utilizing transaction data from the A-share market spanning from 1994 to 2024. It examines the applicability of the traditional asset pricing models within the Chinese stock market. Through classic regression analyses of the CAPM, the Fama and French three-factor model (FF3), the Fama and French five-factor model (FF5), this study verifies that the FF5 provides a superior explanation of stock expectations for the A-share market during this period compared to other traditional asset pricing models. The conclusions of this study indicate that, among the CAPM, FF3, and FF5 models, the number of parameters taken into account by the model and its capacity to explain asset returns are positively correlated.

Do Green Bonds Help to Improve Enterprises’ Financing Efficiency? Empirical Evidence Based on Chinese A-Share Listed Enterprises

Do Green Bonds Help to Improve Enterprises’ Financing Efficiency? Empirical Evidence Based on Chinese A-Share Listed Enterprises

Artificial Intelligence and Technological Innovation: Evidence from China’s Strategic Emerging Industries

Artificial intelligence (AI) is the driving force for the leapfrog development of science and technology, the optimization and upgrading of industry, as well as the overall leap in productivity. Using panel data of strategic emerging firms in Chinese A-Share Listed companies from 2012 to 2022, this study empirically examines the impact of AI on technological innovation through a two-way fixed-effects model. The study discovered that technological innovation capability can be greatly enhanced by the degree of AI present in strategic emerging industry businesses. This conclusion remains valid following a series of robustness tests. The mechanism study demonstrates how the degree of AI increases businesses’ capacity for technological innovation by lowering funding constraints and boosting R&D investment. According to heterogeneity analysis, AI has varying empowering effects on different industries within strategic emerging industries. Its strongest empowering effect is observed in the western region, with the central and eastern regions seeing the weakest effects. Additionally, the promotion effect of AI is greater for state-owned enterprises than for non-state-owned enterprises. To better play the role of AI in encouraging the technical innovation of firms in strategic emerging industries, it is required to establish dedicated funds, create an AI technology innovation platform, and develop differentiated regulations.

Research on the Impact of Digital Transformation on Total Factor Productivity of Manufacturing Enterprises

Using a dataset of Chinese A-share manufacturing listed companies from 2007 to 2022, this study constructs an enterprise digitalization index based on annual report text data and empirically investigates the impact of digital transformation on the Total Factor Productivity (TFP) of manufacturing enterprises in China. The findings reveal that digital transformation significantly enhances the TFP of manufacturing enterprises through various mechanisms, including stimulating innovative product research and development, fostering innovation capabilities, optimizing resource allocation, and upgrading human capital. Moreover, the study explores the heterogeneity of this impact across different regions and enterprise levels. It is observed that the positive effect of digital transformation is more pronounced for enterprises in the eastern region compared to those in the central and western regions. High-tech enterprises experience a more significant impact than low-tech enterprises, and the effect is more substantial for non-state-owned enterprises compared to state-owned enterprises. Additionally, the impact is more pronounced for enterprises in the growth and maturity stages than for those in the decline stage. This paper also integrates theory with practical reality, offering policy recommendations relevant to manufacturing industry.

Analysis on the Problems and Suggestions in the Chinese A-Share Market

Analysis on the Problems and Suggestions in the Chinese A-Share Market

Digital transformation driving green innovation: Evidence from Chinese A-Share firms

With its “dual carbon” goals, Chinese firms are being challenged to improve both their environmental and economic performance. Previous research has found that digital transformation can foster the development of firms in various ways. Using a fixed-effects Poisson model, we examine China's A-share listed firms from 2009 to 2022 to elucidate the relationship between digital transformations and green innovation. The results show that digital transformation significantly promotes firms' green transformations. Moreover, digital transformation affects green innovations by attracting media attention, increasing analyst coverage, and reducing firms' rent-seeking behavior. The study further demonstrates that institutional investors and comprehensive green information disclosure can augment digital transformations' positive effects on green innovation.

The impact of ESG ratings on corporate value during COVID-19 pandemic: evidence from China and South Korea

The COVID-19 pandemic has significantly disrupted global economies, posing unprecedented business challenges worldwide. This study examines the influence of Environmental, Social, and Governance (ESG) factors on corporate value in the context of the pandemic, focusing on China and South Korea. Using empirical analysis and data from Chinese A-share and South Korean KOSPI-listed companies, our research reveals complex dynamics. ESG had a negative impact on corporate value during the pandemic. However, firms with higher ESG scores demonstrated an insurance effect, mitigating risk. This effect held in both China and South Korea, highlighting the importance of ESG principles for resilience and sustainable growth in contemporary business practices. This research provides implications for ESG-focused businesses during crises.

Do state-owned institutional investors care more about ESG? Evidence from China

This article examines the question of whether state-owned institutional investors are more likely to incorporate ESG in their investment or voting decisions compared with other types of institutional investors. Using Chinese A-shares data, this article reveals that the ESG scores of listed corporations positively correlate with the shareholdings of state-owned and foreign institutional investors, after controlling for the aggregate shareholdings of all institutional investors. These findings suggest that in China, state-owned institutional investors play a leading role in promoting ESG performance, which deepens our understanding of ESG practice in China and generates important policy implications.

Mixed ownership reform of state-owned enterprises and executive compensation stickiness: Evidence from China

Optimization of executive compensation incentives is an important part of the reform of state-owned enterprises, but the existence of executive compensation stickiness weakens the effect of compensation incentives. Based on data of state-owned enterprises listed on the Chinese A-shares market over the 2013–2019 period, this paper evaluates the ownership reform, or mixed ownership, of state-owned enterprises by the shareholder ratio of non-state shareholders and the appointed directors, and examines the relationship between the mixed ownership reform of state-owned enterprises and the executive compensation stickiness. The study concludes with the following findings. The shareholder ratio of non-state shareholders has no significant impact on the executive compensation stickiness, whereas directors appointed by non-state shareholders significantly reduce the executive compensation stickiness. Compared to pure central enterprises, the inhibiting effect of the mixed ownership reform on the executive compensation stickiness is more significant in local state-owned enterprises. The inhibiting effect of the mixed ownership reform on the executive compensation stickiness is more significant when managerial power is restricted or regional marketization degree is low. This paper enriches and extends extant studies on the impact of ownership reform on executive compensation incentives from the perspective of executive compensation stickiness, and provides important empirical evidence for the enhanced relationship between reforms of state-owned enterprises and executive compensation.

Navigating Growth: The Nexus of Supply Chain Finance, Digital Maturity, and Financial Health in Chinese A-Share Listed Corporations

As a derivative of traditional finance, supply chain finance plays a crucial role in facilitating the sound and stable operation of enterprises. This paper investigates the impact of supply chain finance on corporate sustainable growth. The findings reveal that supply chain finance not only fosters sustainable growth but also amplifies this effect through digital technology integration. Moreover, for firms and service-oriented businesses located in the central region, supply chain finance exerts a more pronounced positive influence on sustainable growth. In addition, the impact of supply chain finance on firm sustainable growth can be stage-specific depending on the financial situation.

Peer effects, environmental regulation and environmental financial integration—Empirical evidence from listed companies in heavily polluting industries

Amidst pressing global needs for environmental protection and sustainable development, the international community expects corporations to play a vital role, balancing profit pursuits with environmental responsibility. As the world's second-largest economy and a manufacturing giant, China's environmental governance and corporate models become a research centerpiece. Using the panel data of Chinese A-share heavy polluting industry listed companies from 2013 to 2020, and adopting the Linear-In-Means Model, this paper proposes for the first time that the corporate environmental financial integration is significantly influenced by the peer enterprises. Further research finds that: 1) Peer effect is more significant in private enterprises than state-owned enterprises. 2)The peer effect of environmental pollution integration of heavily polluting enterprises is sticky, mainly reflected in the effect of focus enterprises following peer enterprises to reduce their own environmental financial integration is stronger than the effect of following peer enterprises to upgrade synchronously. And this kind of stickiness is more significant in private enterprises. 3) The institutional pressure has a role in promoting the peer effect of enterprise environmental financial integration, and more significant in state-owned enterprises. Delving into the dynamics of Chinese enterprises in environmental management and financial strategies serves not only to excavate lessons from China's experience but also contributes to the global reservoir of wisdom on environmental protection and green development.

How does strategic deviation affect firm performance? The roles of financing constraints and institutional investors

PurposeThis study investigates the economic outcomes of the strategic deviation (SD), the fundamental and crucial question in institutional theory and strategic management. Previous studies have yielded contradictory findings. This study reconciles conflicting results by distinguishing the effects of the SD on financial and market performance, examining the mechanism of financing constraints and the boundary condition of institutional investor heterogeneity.Design/methodology/approachThis research collected data from Chinese A-shares listed manufacturing firms from 2009 to 2021 from the CSMAR and Wind databases. This study conducted empirical tests using OLS models with Stata 15.FindingsEmpirical results demonstrate that the SD has different impacts on different dimensions of performance. The SD negatively impacts financial performance while positively impacts market performance. Financing constraints mediate the main effects. Moreover, transactional institutional investors positively moderate the negative effect of the SD on financial performance, whereas stable institutional investors negatively moderate the positive effect of the SD on market performance.Originality/valueBy systematically revealing how the SD has different effects on financial and market performance, this study reconciles the debate on the SD between institutional theorists and strategy scholars. This research makes contributions to the research stream by providing reasonable explanations for conflicting conclusions. Furthermore, by introducing the overlooked perspective of financing constraints, this research identifies crucial mediating mechanisms and highlights the double-edged effect of financing constraints, enriching our understanding of financing constraints. Finally, this study investigates the moderating effects of institutional investor heterogeneity, thereby making valuable contributions to the comprehension of boundary conditions.