Corporate Finance Research Articles

Bibliometric Analysis Of Articles Published In Scopus Database In The Field Of Environmental, Social And Corporate Governance (ESG)

In this study, it is aimed to examine the literature on Environmental, Social and Governance (ESG) studies by bibliometric analysis method, to analyse the performance in this field and to reveal the conceptual structure of the field. For this purpose, 2,055 articles published in the Scopus database between 2006 and 2024 were analysed. As a result of the study, it was revealed that Khaled Hussainey is the most influential author in this field, the article titled ‘Firms and Social Responsibility: A Review of ESG and CSR Research in Corporate Finance’ published by ‘S.Gillan et al.’ in 2021 is the most influential document and the country where the most up-to-date studies in this field are conducted is China. In addition, as a result of the study, it was seen that the articles published in this field were grouped under 6 clusters and the most up-to-date keywords were ESG and ‘ESG performance’.

Buffer or substitute? Corporate financialization and leverage manipulation

This study examines the impact of financialization on leverage manipulation for nonfinancial companies in China from 2011 to 2021. Using the XLT-LEVM measurement method, we find that corporate financialization can inhibit leverage manipulation. Mechanism analysis suggests that corporate financialization deters leverage manipulation by crowding out debt financing in a substantive way. According to heterogeneity analysis, the inhibitory effect is less pronounced in firms with short-term solvency pressure and intensive external attention. Our findings extend the literature on corporate financialization and demonstrate its role in mitigating leverage manipulation, with implications for both financial practice and public policy.

Impact of corporate environmental uncertainty on environmental, social, and governance performance: The role of government, investors, and geopolitical risk.

Corporations face multifaceted environmental uncertainties (EU) in today's dynamic global economic environment. Such uncertainties profoundly affect corporate operations and pose significant challenges to their environmental, social, and governance (ESG) performance. Therefore, using data from Chinese A-share listed corporations from 2009 to 2021, we empirically analyze the impact of the EU on ESG performance. The results demonstrate that the EU significantly negatively impacts ESG performance, indicating that corporations frequently find it difficult to implement and maintain high-standard ESG policies and practices effectively. Additionally, they reveal that the EU inhibits the improvement of ESG performance by increasing corporate financing constraints (KZ). Lastly, this study explores the role of government subsidies (GOV), investor attention (IA), and geopolitical risks (GPR) as moderating variables. We discover that GOV can mitigate the negative impact of the EU on KZ because they provide additional resources that help corporations maintain their ESG in uncertain environments. Furthermore, IA can reduce the adverse impact of KZ on ESG. Positive moderating effects result from ESG issues; the capital they provide effectively reduces corporate KZ, thus enabling corporations to maintain good ESG performance despite operating in highly uncertain environments. However, due to the increased asymmetry of information in economic markets caused by geopolitical tensions, GPR exacerbates the negative impact of the EU on ESG performance, thus leading to an increase in KZ. These findings offer new perspectives on understanding how these moderating effects affect corporate ESG strategies.

The Impact of Digital RMB Promotion on China's Corporate Financial System and Policy Recommendations

With the deep development of the digital economy era, digital RMB, as an important form of central bank digital currency, plays an increasingly crucial role in China's financial system. It not only has all the functions of traditional currencies, but also shows unique advantages in enhancing payment efficiency, reducing transaction costs, and improving financial regulatory capabilities. This study conducted an in-depth analysis of the impact of the promotion of the digital RMB on China's corporate financial system by visiting and researching a number of enterprises and collecting financial data over a five-year period. The study finds that the promotion of digital RMB has facilitated the convenience of inter-company payments and settlements, enhanced the traceability of financial data, and positively impacted the enhancement of corporate credit availability and financial service innovation. However, there are also challenges such as increased costs for enterprises to adapt to the new system and risks of digital currency custody. Based on this, this paper constructs a multi-level analytical framework to systematically sort out the mechanisms of the impact of digital RMB on the corporate financial system, and puts forward a series of policy recommendations accordingly. These recommendations involve strengthening the construction of corporate digital infrastructure, coordinating the interface between digital RMB and existing financial regulatory policies, and enhancing corporate digital currency knowledge training. This study aims to provide theoretical support and empirical references for policy formulation and financial decision-making by government departments, financial regulators, and enterprises in the digital currency era.

Research on the Impact of Equity Pledge on Company Value

This article aims to provide a literature review on the impact of equity pledges on corporate value, and to explore in depth the application of equity pledges as a financial tool in corporate governance and capital operation, as well as its multidimensional impact on corporate value. By reviewing and analyzing relevant literature both domestically and internationally, this article first defines the basic concept of equity pledges and then elaborates on the impact mechanism of equity pledges on company value from both positive and negative perspectives. In terms of positive impact, this article explores how equity pledges can promote corporate financing, optimize capital structure, and enhance the control of major shareholders over the company. In terms of negative impacts, the possible control risk, market risk, and potential damage to the interests of small and medium-sized shareholders brought about by equity pledges were analyzed. Furthermore, this article also discusses the differences in the impact of equity pledges on company value in different scenarios and proposes corresponding policy recommendations and research prospects.

Impact of climate policy uncertainty on corporate green investment: examining the moderating role of financing constraints

Corporate green investment is the key driver for achieving low-carbon transition and sustainable marine economy. Existing literature has identified several influencing factors of corporate green investment, but there is still limited research on the relationship between climate policy uncertainty and corporate green investment. To fill this gap, this paper innovatively explores the nonlinear impact of climate policy uncertainty on corporate green investment, simultaneously focuses on the moderating role of corporate financing constraints and analyzes the coastal characteristic heterogeneity. Using the sample of listed companies in China from 2014-2020, we find that climate policy uncertainty has an inverted U-shaped impact on corporate green investment. From the perspective of heterogeneity, the inverted U-shaped effect is more significant in coastal areas. Moderating effect test indicates that corporate financing constraints strengthen the inverted U-shaped relationship and shift the turning point of curve to the left. Additionally, we further find that climate policy uncertainty has an inverted U-shaped impact on environmental performance of companies in coastal areas through green investment. Our research will provide some potential insights for China’s climate policy making and corporate green transformation, so as to contribute to sustainable marine development.

Research on the Impact of BYD Group’s Green Innovation on Corporate Financial Performance under the Background of “Dual Carbon”

With the increasingly severe global climate change problem, the “dual carbon” goals (peak carbon emissions and carbon neutrality) have become a common focus of international attention. The report of the 20th National Congress of the Communist Party of China clearly emphasizes the need to accelerate the green transformation of development models, implement comprehensive strategies for frugal development, support the growth of green and low-carbon industries, and promote the concept of green consumption. At the same time, “Made in China 2025” also elaborates on the strategic concept of innovation-driven and green development centered, and strives for breakthroughs in key industries such as new energy vehicles. In such a macro environment, adopting green innovation measures by enterprises not only contributes to ecological protection but also has an undeniable impact on their economic performance and overall value. This article takes BYD Group as a case study to explore in detail the positive effects of green innovation on its economic performance. We first systematically organized and analyzed BYD’s specific practices in green innovation; Then, by examining three key financial indicators, BYD’s current financial situation was analyzed in depth; On this basis, combined with research data, the positive impact of green innovation on BYD’s financial performance was revealed; Finally, based on the analysis results, relevant suggestions are proposed to provide reference for the sustainable development of enterprises in the context of “dual carbon.”

Joint credit system and corporate green innovation: Evidence from a quasi-natural experiment on implementing the Administration of Joint Credit

Banking institutions are crucial in providing capital to firms, making credit resources a vital requirement for enterprises' operations. How to ensure credit capital resources is imperative to consistently and proficiently facilitate firms' green innovation. Based on a sample of A-share listed companies from 2013 to 2022, this study reveals a significant enhancement of joint credit systems in corporate green innovation. The finding indicates that a joint credit system, represented by the Administration of Joint Credit, can stimulate corporate green innovation activities. This impact operates mainly through alleviating corporate financing constraints, improving management levels, and promoting real estate investment.

Capital structure and business failure: The collapse of Canada’s Dome Petroleum

In popular lore, the failure of Canada’s once-biggest company, Dome Petroleum, was caused by the interventionist policies of the federal government or its misadventures drilling for oil in the Arctic. But these factors acted in varied ways on the company. Rather, corporate finance theories offer more insight into the dynamics that led to Dome’s takeover by the American oil major Amoco in 1988. Dome was unique in its unwillingness to issue new share capital during its growth phase and instead relied on easy debt financing. This in turn was a result of both insider preferences as well as capital market imperfections. The transformation of capital structure from a background into a critical weakness, this paper argues, making use of newly available data and company archives, provides a more convincing explanation of Dome’s failure than other factors. The relevance of capital structure highlights the enduring analytic utility of the Modigliani-Miller theorem of capital structure irrelevance.

“Green Companies” and Financial Performance: The Green Premium

We examine the relationship between Corporate Environmental Responsibility and Corporate Financial Performance for the S&P500 firms over a period of fifteen years. We test the effect of Jensen's alpha, stock returns, return-on-asset, size, sales, and profit on Corporate Environmental Responsibility by building a CAPM model of risk-adjusted excess returns under efficient-market hypothesis and introduce the “Green Premium,” the cost in stock return stockholders have to incur for their company's “greenness”. Although, “green” practices are positively related to sales and profit, the results suggest that market value of the company is not increased and that a significant negative relationship exists between “greenness” and stock's performance.

Subjective Well-Being of Chief Executive Officers and Its Impact on Stock Market Volatility During the COVID-19 Pandemic in Poland: Agent-Based Model Perspective

This study aimed to connect the behavioral corporate finance perspective (micro level) with complexity theory via agent-based modeling to analyze the impact of selected psychological factors of chief executive officers (CEOs) on stock market volatility (macro level). Specifically, we wanted to explore whether Polish CEOs’ subjective well-being (SWB) influenced their managerial decisions during the COVID-19 pandemic and how it might be related to the volatility of stock prices during this critical period in Poland. Our study was based on a survey of Polish CEOs who managed companies listed on the Warsaw Stock Exchange. In particular, 255 CEOs completed the Satisfaction with Life Scale, the Positive and Negative Affect Scale, and a business survey on the impact of the COVID-19 pandemic on company management. Using the results of this survey, we built an agent-based model to investigate how CEOs’ decision-making, stemming from their SWB levels, influences the perception of prices by individual traders and, in turn, how it is translated into aggregate stock market volatility. The results indicate the pathways through which the microscopic-level SWB of CEOs influences market price formation at a macroscopic level. The findings obtained from our model may shed new light on the rational expectations theory applied to stock market volatility during the financial crisis.

Bond market access and corporate financing decisions: Evidence from a quasi-natural experiment

This study investigates how bond market access affects corporate financing decisions. Employing a difference-in-differences approach based on a reform in China and a sample of listed firms from 2010 to 2020, we find significant increases in bond issuance and bond financing for firms with high ex-ante equity costs. The effect is stronger for firms not audited by Big 4 auditors, having more negative news coverage, and exhibiting less conservative accounting practices. While increasing bond financing, firms decrease bank loans and leave debt ratios unchanged. Our findings indicate that firms hop among financing sources based on market accessibility and capital costs.

Corporate governance effects of digital finance: Evidence from corporate tax avoidance in China

This paper tries to uncover the corporate governance effects of digital finance based on the corporate tax avoidance perspective. We find strong evidence that digital finance is negatively associated with corporate tax avoidance. The governance role digital finance plays is primarily mediated through the mechanisms of resource allocation and information governance effects. Further analysis shows that the negative effects of digital finance are more pronounced among higher profitability and non-state-owned firms. Additionally, multiple major shareholders and stronger internal control quality(corporate internal governance) as well as higher institutional investor shareholding and more analyst attention(corporate external governance) can strengthen their negative connection, manifesting the complementarity between digital finance and modern corporate governance mechanisms. Overall, this paper reveals the spillover effects of changes in the financial development environment on corporate tax avoidance strategies. It also contributes to enriching the literature on the corporate governance value of digital finance and the factors influencing corporate tax avoidance.

The Simultaneity of Strategic Financial Decisions: Evidence from PSX listed Firms

This study investigates the interrelationships among financing, dividends, and the investment choices of non-financial firms listed on PSX. Unlike previous research, which primarily focused on developed nations with well-developed financial markets and investor protection laws, this study examines businesses in a developing economy characterized by fragile corporate governance, precarious investor protection laws, and political instability. The aim of this study is to shed light on the unique decision-making processes of managers operating in such contexts. This study employs a framework of simultaneous equations considering the flow of funds identity and utilizes the 3SLS estimation technique, which addresses the limitations of single-equation estimation methods. The findings reveal significant interdependencies among corporate financing, dividends, and investment decisions. Financing decisions positively influence dividend decisions and vice versa. Similarly, financing decisions positively impact investment decisions and vice versa. Moreover, dividends and corporate investments have been shown to be competing uses of funds. The results highlight the sensitivity of all three financial decisions to internal cash flows. Additionally, leverage and internally generated cash flows are identified as alternative sources of funds, while investment and dividend decisions are constrained by both internal funds and external debt. These findings align with the flow of funds approach and provide valuable insights for corporate managers and investors to understand the dynamics of financial choices in non-financial firms. This study contributes to the literature by filling a gap in knowledge regarding the interactions among financing, dividends, and investment decisions in emerging markets.

Regional digital finance and inefficient corporate investments: Empirical evidence from China

Regional digital finance and inefficient corporate investments: Empirical evidence from China

Corporate credit mismatch, financial leverage and corporate investment efficiency

We empirically test the relationship between credit mismatch and corporate investment efficiency. The study analyzes the heterogeneity of mismatch direction, corporate nature, and corporate life cycle. Results reveal that corporate credit mismatch has a significant negative impact on corporate investment efficiency; corporate financial leverage fully mediates this impact, indicating that corporations may increase their financial leverage to bridge financing gaps in cases of credit mismatch. This practice, however, may bring about greater financial risk and affect corporate investment efficiency. This study provides an important reference for enterprises and financial institutions for optimizing the financing environment, ensuring the effective allocation of financing resources, promoting the sustainable development of enterprises, thereby enhancing overall economic efficiency. This study also provides new ideas and future directions for studying corporate financing and investment behavior.

Methods of long-term planning of corporate financing

Methods of long-term planning of corporate financing

Shadow union in local labor markets and corporate financing policies

This paper identifies an externality of a firm’s unionization that affects the financing decisions of non-unionized firms within a local labor market. We find that non-unionized firms increase their leverage ratios and hold less cash reserves following a union victory at other firms. This “shadow union” effect manifests through the heightened threat of unionization following shadow union organizing. Specifically, the effect is more pronounced when the probability of unionization rises by a larger margin and non-union firms face higher union rents conditional on being unionized. The threat appears credible enough to shape corporate financing decisions: shadow unions raise employees’ wages and the likelihood of subsequent union victories in the local labor market. Additional results indicate that the shadow union effect is distinct from leverage-mimicking behavior. Overall, our findings suggest that shadow labor market institutions create a strategic incentive for non-unionized firms to adopt less conservative financial policies to combat the union threat.

Examining the Decision Matrix between Dividends and Share Repurchases in Corporate Finance

Examining the Decision Matrix between Dividends and Share Repurchases in Corporate Finance

Economic Policy Uncertainty, Financing Model and Financial Fragility

Based on the study of different financing models, this paper discusses that different financing models in China 's capital market have different regulatory effects on the relationship between economic policy uncertainty and financial vulnerability. The study found that economic policy uncertainty has a significant role in promoting corporate financial vulnerability, while bank loans and credit claims have a significant mitigation effect on the relationship between economic policy uncertainty and financial vulnerability, while the mitigation effect of bond claims is not obvious. This paper verifies the impact of different financing modes on economic policy uncertainty and financial vulnerability in China 's capital market, and puts forward policy suggestions for improving corporate financing channels and expanding financing scale.