Chinese Corporate Research Articles

The Value of Customers’ Geographic Information in Chinese Corporate Bond Issuance

ABSTRACT Based on a sample from the Chinese corporate bond market, this paper investigates how bond investors respond to customers’ geographic information, including customers’ geographic dispersion and distance. Using the detailed locations of issuing firms and their five main customers, we find a significantly positive relationship between customers’ geographic dispersion/distance and the costs of corporate bonds. This association is robust after both the endogeneity issues are controlled for and a series of robustness checks are conducted. The effects are less pronounced when issuers are audited by Big10 accounting firms and when issuers have high-quality customers. In sum, we apply cluster theory, transaction cost economics and information transfer in risk-asset pricing and find that bondholders demand different risk premiums after gaining access to customers’ geographic information.

Corporate Environmental Responsibility: Another Road to Achieve Ecological Civilization and Green BRI

Abstract Launched in 2013, the Belt and Road Initiative (BRI) was promoted by the Chinese leadership as an open platform to boost global trade, economic growth and transnational cooperation. It has achieved impressive progress in economic terms. However, a concern that has been voiced by international society is that China is using the BRI host countries as a new ‘pollution haven’. As a response, the Chinese government launched a variety of policies and guidelines with the aim of integrating the concept of ecological civilization and green development into the implementation of the BRI. In general, China’s position is to require all Chinese companies to observe the local environmental laws and standards wherever they invest and operate. However, the minimum standards set by various environmental regulations of the host countries may not be effective in improving corporate environmental performance, particularly when the environmental standards in those counties are lower and more lenient than those that are in effect in China. The aim of this article is to explore whether the concept of Corporate Environmental Responsibility (CER) could motivate Chinese corporations to strengthen environmental risk management when they are operating and investing in these host countries. It is concluded that CER, as a form of private environmental governance, could provide added value for the implementation of ecological civilization and green development in the BRI but the success of this self-regulatory approach nevertheless calls for governmental intervention under certain circumstances.

Chinese Engagement Abroad in the Scrap Business

This paper explores the changing nature of Chinese engagement abroad in the scrap business. Based on primary sources and interviews conducted by the author, it identifies the factors that, at different times, led Chinese scrap dealers and recyclers to extend the scope of their professional activity beyond the borders of their home country. Drawing on recent scholarship in discard studies, the author argues that it is necessary to move beyond the environmental dumping narrative in order to better understand Chinese national policy and its implications. This narrative serves as the main official justification for the bans on imports of recyclable waste that the central government adopted in recent years. However, there is good reason to believe that, by adopting a highly restrictive stance on the international waste trade, the central government sought first and foremost to bolster the municipal solid waste management sector within China. In turn, official support for domestic industrial players makes it possible for some Chinese corporations to emerge as providers of waste collection and recycling services at the international level. The trend, described in the paper, has already begun. It marks a shift from globalisation from below to globalisation from above.

The Benefits of Voting Trust System in the Current Corporate Governance of China

The inclusion of a shareholder voting trust system in China is an important, yet absent, feature of modern corporate sector. Despite its necessity, it seems that no proper notice of its nonexistence has been taken in the past nor has any attention been paid to this particular area in previous decades. Since China lies among the top corporate players of the world, there is a need for increased trust from the general public to invest in the current corporate sector. It is the position of this paper that the most practicable way of achieving this goal is to introduce a shareholder voting trust system. Therefore, this paper shall focus on all the advantages that voting trust systems have provided in the corporate world and how similar systems could potentially be introduced into the Chinese corporate system. Keywords: Voting Trust, Minority Shareholders Protection, Corporate Governance, DOI: 10.7176/JLPG/104-07 Publication date: December 31 st 2020

A meta-analysis of top management team compositional characteristics and corporate innovation in China

ABSTRACT Although a large number of empirical studies have explored the relationship between top management team (TMT) compositional characteristics and corporate innovation in China, there is much controversy regarding which kind of TMT compositional characteristic can better promote corporate innovation during the economic transition period. To reconcile these theoretical contradictions and explain why the empirical research results are inconsistent, we meta-analysed the effects of TMT compositional characteristics (i.e. variety, disparity and faultlines) on corporate innovation in China and explored the potential moderators between TMT compositional characteristics and corporate innovation. Based on 234 effect sizes reported in 89 studies (35,515 TMTs), we found that TMT composition types (i.e. task- and relation-oriented dimensions) could significantly moderate the relationship between TMT compositional characteristics and corporate innovation. Compared to TMT relation-oriented variety and disparity, TMT task-oriented variety and disparity were more positively related to Chinese corporate innovation. Further, TMT task-oriented faultline strength was positively related to Chinese corporate innovation, whereas TMT relation-oriented faultline strength was negatively related to it. Our findings not only help researchers understand why the relationship between TMT compositional characteristics and corporate innovation is inconsistent, but also help corporations in the backdrop to the economic transition to promote innovation by improving their TMT composition.

Why is Huawei’s ownership so strange? A case study of the Chinese corporate and socio-political ecosystem

ABSTRACT One of China's best-known and most successful corporations is Huawei Technologies. Many view Huawei with suspicion, alleging that its opaque structure conceals ties with the Chinese government and Communist Party. However, Huawei claims to be a private corporation controlled by its employees and operating in a purely commercial way. This paper demonstrates how Huawei's strange ownership structure evolved via a series of adaptive survival mechanisms within a state-dominated political and corporate ecosystem. These included profit sharing joint ventures with state-owned enterprises and officials, co-opting a Communist Party branch within the firm, and doing an end run around the PRC Company Law with 'virtual' employee shares. Placing Huawei within this Chinese ecosystem challenges simplistic accounts of top-down government or Party control over the firm. Yet the compromises that ensured Huawei's growth and protection from predation have become maladaptive within the global political ecosystem, where China is increasingly viewed as a threat.

Using action learning for the development of senior leaders in China

ABSTRACT In partnership with both a local external consulting group (GENE100) working with UK based action learning specialist organisation (C-ALF), a state-owned large Chinese corporation transformed its leadership learning potential by integrating action learning methodologies into its core leadership development programme whilst addressing organisational problems. This account of practice documents the learning journey of the lead Chinese consultant throughout the development and delivery of the new programme. The programme’s design included action learning groups that tackled both individual and organisational problems in parallel. New to action learning facilitation, the author explains a range of considerations during the design process, and shares personal evaluations and learnings of his role as an action learning group facilitator.

Chinese Corporate Microblogging on Overseas SNS

AbstractContextualized in the “Going Global” strategy of Chinese corporations under the Belt and Road Initiative and drawing upon the attitudinal and engagement systems of appraisal, this study aims to provide semiotic and rhetorical insights into the discursive strategies of Chinese corporations in microblogging on overseas social networking sites (SNS). The posts, made over a 15-day period by the five giant Chinese companies on the US-based SNS Facebook, are analyzed both quantitatively and qualitatively. The results reveal that, in terms of attitudinal appeals, judgment resources are most preferred by Chinese corporations while affect resources are least deployed; in terms of engagement patterns, dialogic engagement patterns proliferate. It is explained that Chinese corporations strongly appeal to ethos and low power distance, demonstrating Western achievement-based cultural orientations, despite the existing discursive manifestations of the high-context, power-distanced, collectivistic characteristics of Chinese culture. This pragmatic and rhetorical shift elicits transculturality in a global cyber space informed by digital globalization and economic glocalization.

Adoption and Implementation of Sustainable Development Goals (SDGs) in China—Agenda 2030

The present research is conducted on the Chinese corporate sector and raises the basic questions associated with the adoption and implementation of corporate disclosure practices such as SDGs. The sample for this research consisted of 100 Chinese companies, which are listed in the Shanghai Stock Exchange from 2016 to 2018. For this purpose, content analysis is developed. More specifically, a quantitative approach is applied to quantify and identify certain contents or words in the given text. Our results show that Chinese companies seem to be more focused on certain aspects of the UN SDGs at the cost of others, but the overall situation is, at best, not encouraging. The focus of attention of Chinese companies seems to be infrastructure development, industrial innovation, and economic growth, along with the provision of a dignified and respectable working environment, affordable and clean energy, and peace, justice, and strong institutions. The results can be used as guidelines by Chinese companies to determine the actual presence or absence of SDGs implementation inside the process of value creation as an integral part of their practices about corporate disclosure. The main contribution of this research relates to the analysis of the adoption and implementation efforts to report SDGs and the contribution of such reporting towards the fulfillment of the UN Agenda 2030. This can be of interest to researchers working on the given topic. It is of utmost importance for government policymakers and corporate decision-makers, who want to support companies that are contributing towards the achievement and adaptation of SDGs as part of their overall objectives.

Liquidity risk and corporate bond yield spread: Evidence from China

AbstractThis paper investigates the contribution of liquidity risk to Chinese corporate bond spreads. We calculate corporate bond spreads based on the full treasury yield curve and establish a set of liquidity measures of the Chinese corporate bonds. Our empirical study shows that liquidity premium accounts for a relatively smaller portion of corporate bond spread in China, although the market liquidity is low and corporate bond issuers are strictly pre‐screened. These findings are interesting, as the developed markets have better liquidity and less pre‐issuance restriction, and liquidity premium still explains a relatively larger portion of corporate bond spread. Besides, we also explore the determinants of Chinese corporate bond liquidity and default premiums.

Rating shopping: evidence from the Chinese corporate debt security market

AbstractWe provide the first direct evidence on how issuers choose a credit rating agency (CRA). Using rating data from a leading CRA in China, we find that although in most cases the issuers publish more favourable ratings, in some cases issuers just select the ratings provided by CRAs they have business relationships with, especially when the more favourable ratings are above issuers’ prior ratings. Our further analysis suggests that this phenomenon is driven by the switching cost arising from the issuer being considered as a rating shopper when it obtains an upgrade from a CRA without a business relationship.

Impression management through hedging and boosting: A cross-cultural investigation of the messages of U.S. and Chinese corporate leaders

This study explores hedging and boosting as impression management strategies in the discourse of Chinese and U.S. corporations. The analysis has been conducted on the CEO's letter to shareholders of 100 Chinese and 100 U.S. corporations to reveal pronounced variations in the frequencies and pattern of use in the two resources. First, substantially more hedges and boosters are used in the U.S. discourse in comparison to the Chinese, thus, demonstrating a greater effort invested in persuasion in the U.S. texts. Second, the U.S. texts use significantly more boosters than hedges, whereas the Chinese texts show a roughly balanced use of the two resources. Lastly, the two sets of texts have authorial stances that project distinctly different impressions. While the U.S. discourse conveys conviction and certainty, the Chinese discourse imparts more caution and tentativeness. These findings are attributed to a number of dissimilarities in the belief systems of the Western and Chinese cultural models. The results point to possible implications on the effectiveness of the CEO's letters in cross-cultural business contexts.

An analysis of the correlation between profitability and liquidity of beverage companies in Chinese market

The relationship between profitability and liquidity is still controversial since many researchers obtain different conclusions from their studies. Besides, the Chinese market is getting more and more attention and profitability and liquidity are crucial for Chinese companies to keep operation management. Consequently, this thesis analyses the relationship between liquidity, company size, corporation growth and profitability of beverage companies in Chinese market between 2015 and 2017. Desk research can be used to getting the financial data published by the companies; the relationship was studied with the help of ratio analysis, horizontal analysis, description analysis, Pearson correlation coefficient and also a regression analysis. Surprisingly it was observed weak or insignificant positive correlation between liquidity, company size, corporation growth and profitability on the short run, contradicting the main literature. The conclusions are limited to the periods examined and the sample companies. Key words: Profitability, liquidity, Chinese beverage companies, Working capital, Current Ratio, Company Size and Corporation Growth DOI: 10.7176/RJFA/11-12-17 Publication date: June 30th 2020

Oil shocks, competition, and corporate investment: Evidence from China

Abstract This paper aims to investigate the impact of three classical oil shocks on the Chinese corporate investment by using firm-level data. Moreover, we assess the role of product market competition in the relationship between oil shocks and corporate investment. Our empirical results show that oil aggregate demand and specific demand shocks negatively affect corporate investment, while oil supply shocks show a positive effect. Notably, compared to the non-energy-related industry, the corporate investment of energy-related industry is more sensitive to these oil shocks. Furthermore, we find high competitive pressure can mitigate the impact of oil specific demand shocks on the corporate investment of energy-related industry, but competition presents a limited effect on the relationship between other oil shocks and corporate investment.

Sustainability Condition of Open Innovation: Dynamic Growth of Alibaba from SME to Large Enterprise

Research Question: Open innovation and the open business model exaggerate complexity (a transaction cost) in addition to the realization of emergence and its lock-in. Within a short period, Alibaba has become one of the global top e-commerce companies with several open innovation business models. Our research question was: “How could Alibaba become a global top e-commerce company in China in such a short time?” Research Method: We chose a deep interview method, participatory observation, and meta-analysis to answer this research question. Research Result: Alibaba has applied global, creative e-commerce business models through open innovation in a short time. In addition, it has overcome complexity—i.e., the cost of open innovation and the force that breaks down a company—through an open innovation-friendly culture. This is a “Jack-Ma style consumer confidence and new Guanxi culture”, a new and strong Chinese corporate culture. Alibaba has also undergone the expansion of its open business model feedback loop platform. This study investigated the expanded open business model feedback loop platform, the continuously strengthened open-innovation-friendly culture, and complexity, with the latter being the cost of open innovation, which was controlled by an open-innovation-friendly culture and open business model feedback loop.

A Pragmatic Study of Image Restoration via Corporate Apology in Chinese Internet Corporations

With the booming of Chinese internet corporations, various wrongdoings have been frequently exposed to the public, which damages their corporate image. To face the challenge, these companies usually resort to apologies for image restoration. This study investigates how apology strategies are employed by Chinese internet corporations to restore image in the event of wrongdoings. Based on a self-built corpus and by means of textual analysis, we identified different apology strategies characterized by various linguistic features. The results show that “Illocutionary Force Indicating Devices (IFIDs)” and “damage repair” are two of the most frequently used move types which are normally marked by such key linguistic features as personal pronouns, modal verbs, performative verbs and intensifiers. It is also found that IFIDs, “giving account” and “admitting mistakes”, “offering repair” and “inviting further interaction” are often incorporated together to show the company’s sincere apologetic stance which contributes to the ultimate goal --- rebuilding corporate image and regaining the public’s trust. However, direct expressions of “asking for forgiveness” are seldom found in apologies crafted by Chinese internet corporations. This study on apologies in the domain of internet corporations is believed to shed light on research on corporate apology in particular and corporate image restoration in general.

(Un)Naturality and Chinese queer masculinities on Ailaibulai

ABSTRACT This study analyzes the discourses of desire featured on the online queer reality TV program Ailaibulai. The show aired on LeTV in 2016 and was co-produced by a Chinese corporation—Blue City—that targets queer groups. This paper illuminates the hierarchized masculinities and widespread effeminophobia that are represented on the show. My analysis suggests that the show’s participants use the discourse of (bu)ziran—“(un)naturality” in English—to distinguish and hierarchize masculinities through physicality, performance, and gender identification. Naturality is deemed a necessity for desirable masculinity, while perceived unnatural features marginalize participants’ masculinities. It also complicates the case by defining two types of unnaturality as the results of being damaged/polluted and being polished/elevated, respectively. Unnaturality as a result of polishing natural materials can nevertheless increase sexual capital, which can be achieved through men’s personal features such as a muscular physique. Additionally, this paper demonstrates how Chinese queer people contest certain types of white masculinity in the transnational context, because Ailaibulai participants only value a particular white masculinity.

A Contrastive Study of Image Repair Strategies Between Chinese and English Corporate Apologies

In the era of globalization, social media have become important communication tools for enterprises in crisis. Corporate apologies are issued via social media to repair the tarnished corporate image, which might affect their survival. However, the way of apologizing varies from language/culture to language/culture. This study aims to investigate how Chinese and English corporate apologies are linguistically presented and to explore how damaged corporate image in different culture is repaired respectively. Under the framework of Benoit’s image repair strategies and CCSARP, and based on quantitative and qualitative analysis of the collected data, this paper makes a contrastive study of Chinese and English corporate apologies. The results show that Chinese and English corporate apologies share great similarities in using the strategies of mortification and corrective actions, while they are different in terms of other specific tactics such as bolstering, good intentions, defeasibility and minimization. It is also found that the denial is the least used strategy by both Chinese and English corporations to repair their tarnished image. Furthermore, they are quite t similar in using IFIDs, while intensifiers and hedges are more frequently employed in Chinese corporate apologies.

Corporate Bonds with Implicit Government Guarantees

We model an implicit government guarantee as a partial protection for corporate bonds issued by state-owned enterprises (SOEs) and present pervasive evidence of its existence in the Chinese corporate bond market. The protection effect is stronger among poorly rated SOE bonds than for highly rated SOE bonds -- for newly issued corporate bonds, the average guarantee premium is 72 basis points (bps) for AAA bonds while it is 166 bps for AA- (lowest issuance rating) bonds. We find the guarantee premiums are higher for bonds issued by central government sponsored SOEs and by issuers from strategically important sectors, raising concerns of the potential too-interconnected-to-fail problem.

A more efficient derivative action system in China: challenges and opportunities through corporate governance theory

The derivative action is an exception to the rule in Foss v Harbottle1 that was introduced with high expectations during a Chinese company law (CCL) reform that came into effect in 2006. It is vital to combat the abuse of derivative action in China, a country with an emerging corporate governance model, a weak legal system and inefficient enforcement measures. This article examines several deficiencies in derivative actions, with the purpose of arguing for a more effective and positive derivative action rule for the benefit of shareholders and their companies, and also for the development of CCL and the reconstruction of the Chinese corporate governance system. Corporate governance theories will be discussed as theoreticalsupports for a more efficient and enforceable derivative action system in China.