Financial Performance In China Research Articles

The Effect of Environmental, Social, and Governance (ESG) Performance on Corporate Financial Performance in China: Based on the Perspective of Innovation and Financial Constraints

This paper analyzes the effects of Environmental, Social, and Governance (ESG) performance on corporate financial performance (CFP), enriching the research on the intrinsic mechanism between ESG and financial performance in developing countries. This study uses a data sample of A-share listed companies in Shanghai and Shenzhen, China from 2009 to 2021, and adopts a two-way fixed effects model research methodology with fixed time and industries to explore the relationship and intrinsic mechanism between the two in conjunction with relevant basic theories. The study findings indicate that ESG performance exerts a positive influence on CFP by fostering corporate innovation. Corporations with good ESG performance in the long term may be more conducive to good CFP. When corporations face financial constraints, the role of ESG performance in enhancing CFP weakens. Heterogeneity analyses indicate that ESG performance contributes more to the CFP of non-state-owned enterprises (non-SOEs). The negative moderating influence of financial constraints is more pronounced in non-SOEs. Additionally, ESG performance promotes the improvement of CFP in non-heavy polluting corporates. This research study extends a scientific foundation for how corporates can improve CFP and increase market competitiveness.

Does working capital management improve financial performance in China's agri-food sector during COVID-19? A comparison with the 2008 financial crisis.

The objective of this study is to explore the impact of working capital management on firms' financial performance in China's agri-food sector from 2006 to 2021. In addition, we analyze whether this impact is the same during the 2008 financial crisis and the 2020 COVID-19 crisis. Working capital management is measured by working capital investment policy (measured by current assets to total assets ratio), working capital financing policy (measured by current liabilities to total assets ratio), cash conversion cycle, and net working capital ratio. The results reveal that current assets to total assets ratio and net working capital ratio positively influence financial performance measured through return on assets (ROA), while current liabilities to total assets ratio and cash conversion cycle negatively influence ROA. We also find that the relationship between working capital management and financial performance is more affected during COVID-19 than in the 2008 financial crisis. The findings might provide important implications for company managers to make optimal working capital management practices, depending on the economic environment.

Examining the Effect of CSR on Financial Performance in China: Agency Cost as Mediator

Purpose: The aim of this study is to examinethe relationship between CSR and corporate financial performance, mainly discussing the relationship between CSR and ROA, also use the agency cost as the mediating variable, using a sample of listed companies in China to conduct the study and provide relevant suggestions for the subsequent development of the company Theoretical framework: As for external social responsibility, the government, the media, the public and corporate governance should strengthen the reporting and monitoring of external social responsibility and establish a multi-governance monitoring system. Design/methodology/approach: Theresearcher used quantitative analysis to explore the relationship between the independent variable and the dependent variable, to reflect how the independent variable affect the dependent variable, and in turn, how to improve the financial performance of firms in China. Findings: The results showed that ccompanies should be restrained from fulfilling external social responsibility as a way of giving back to society without compensation, and should not aim to win the market through speculation or malicious collusion, otherwise it will hinder their long-term development and become a double-edged sword Research, Practical & Social implications: The study is based on heterogeneity and finds that internal social responsibility is conducive to enhancing employee motivation, maintaining the interests of shareholders and internal stakeholders such as suppliers and customers, thus providing a favourable internal environment for green technology innovation. In contrast, an excessive level of external social responsibility fulfilment can lead to companies making the maintenance of external social relations a corporate priority and viewing external social responsibility fulfilment as a tool for speculation to gain access to the market, so that in this way companies may neglect their development. Originality/value: The value of the study highlighted the economic agents, enterprises should actively fulfil their internal social responsibility and strengthen the maintenance of relationships with internal stakeholders such as employees, shareholders, suppliers and customers.

Gender diversity as a CSR tool and financial performance in China

We utilize stakeholder, critical mass, and upper-echelon theories to investigate the effect of female representation on boards as corporate social responsibility (CSR) practices and firm performance of A-share listed companies in China. The indicators used were the proportion of female board members, the average age of female board members, the educational background of female directors, TOBIN Q, asset size, and leverage. We used fixed effects estimates and stationarity, stability, cointegration, and Hausman tests to analyze the data. We find that the proportion of female directors, the average age of female directors, and average educational level of female directors have a significant impact on CSR performance and financial performance, while CSR performance has a significant impact on financial performance. Given that emerging societies and their environments are usually the most susceptible to unethical corporate practices, our findings that female directors have a strategic role in enabling firms to manage their social responsibilities ethically and sustainable practices have important policy implications for regulators and stakeholders.

Does corporate governance moderate the effect of corporate social responsibility on a firm’s financial performance?

Drawing on the agency and resource dependence theories, the paper assumes that the impact of corporate social responsibility on companies’ financial performance should be investigated not in a binary manner but against the backdrop of corporate governance. The analysis is based on testing the dataset retrieved from the Chinese Stock Market and Accounting Research database containing 28,200 company-year observations of 3,576 Chinese listed companies covering 2008–2019. The findings accentuate that corporate social responsibility, interacting with board size, equity concentration, and CEO duality, positively impacts a firm’s financial performance. In contrast, the study fails to substantiate the claim that board gender diversity and board independence moderate the bond between corporate social responsibility and financial performance. Thus, by exploring five elements of corporate governance, this study takes a step forward in understanding exactly which elements of corporate governance best suit corporate social responsibility to enhance financial performance in China’s institutional settings. This study assists in filling the gap in corporate social responsibility research by displaying and corroborating the moderating effects of corporate governance attributes on the nexus between corporate social responsibility and financial performance in China. Therefore, this paper presents valuable information and details for companies and regulators alike to improve the impact of corporate social responsibility on financial performance by focusing on corporate governance quality. AcknowledgmentThis paper is co-funded by European Union through the European Education and Culture Executive Agency (EACEA) within the project “EU Best Practice Of Life Cycle Assessment, Social, Environmental Accounting And Sustainability Reporting 101047667 – EULASTING – ERASMUS-JMO-2021-HEI-TCH-RSCH” (https://bit.ly/3Bbvquw).

Whether and How ESG Impacts on Corporate Financial Performance in the Yangtze River Delta of China

ESG (Environmental, Social and Governance) is not only a comprehensive manifestation of sustainable development but also an influencing factor of economic benefits. This research focuses on evaluating the impact of environment (E), society (S) and corporate governance (G) on the corporate financial performance in China. As China is currently in the exploration stage of ESG, a socially approved ESG evaluation system has not yet been formed. This paper deliberately selected variables and composite methods for E, S and G and integrated them into the ESG index through learning from the western experience and Chinese actuality. Then, whether E, S, G and ESG have a significant positive impact on financial performance is evaluated through panel regression analysis based on a sample of 191 listed companies in the Yangtze River Delta of China from 2015 to 2020. The results show that E has a significant negative impact on corporate financial performance, G has a significant positive impact, and S has no significant impact. ESG performance has a less significant impact on accounting-based financial performance and no significant impact on market-based financial performance. This research will help understand the performance of ESG and promote ESG practices in China.

Is Equity Crowdfunding the Leapfrog to Companies’ Success? Financial Performance in China

As the fastest-growing crowdfunding model, equity crowdfunding (ECF) brings high returns and uncertainty. In this context, it is crucial to understand these crowdfunding projects' actual performance. Since ECF is currently in the early stage of integration, there are still a lot of risk issues, such as the uncertainty of equity structure, capital supervision, or project management. Therefore, this paper develops a new profitability indicator, “return on registered capital,” to test its impact on the ECF project's actual return. This paper studies which factors affect the financial performance of ECF projects through the traditional statistical model and a deep neural network (DNN) model. There is evidence that return on registered capital affects the actual return of the project. At the same time, the company's operating time and the number of employees had an unexpected effect on project performance. In addition, the recognition accuracy of the DNN model in this study exceeds 97%, which affirms the applicability of the DNN model in the analysis of ECF success factors. This paper also uses tenfold cross-validation to prove that deep learning has certain advantages in this topic's accuracy and generalization error. This study explores whether company representatives' gender and knowledge level affect project performance. The results will be described in detail in the paper.

Does the carbon emission trading scheme boost corporate environmental and financial performance in China?

Carbon emission trading, a market-incentive environmental regulation, plays a critical role in leading China towards the carbon peaking and carbon neutrality. To improve the national carbon emission trading in China, we analyze the effects of the policy in pilot provinces and pilot A-share listed firms from 2008 to 2016. Particularly, to explore the pilot policy's environmental and financial impacts, this paper applies a difference-in-difference method. After the robustness check, the results confirm the carbon emission trading pilot's significantly positive impact at both firm- and province-level regarding carbon emission reduction. Meanwhile, corporate innovation seems to partially mediate the relationship between the policy and corporate carbon emission reduction. Plus, the policy promotes firms' market-based financial performance but such impact on accounting-based financial performance is insignificant. Ultimately, the operational mechanism of the policy is proved to be effective. In this paper, industry- and firm-level carbon emissions databases are established via environmental extended input-output table, which fill the research gap of China's firm-level carbon emissions. To ensure the reliability of results, the list of covered firms is sorted out manually in accordance with the disclosed data of seven carbon trading markets. Our results are meaningful for avoid productivity reduction and mechanism re-design in the context of the national carbon emission trading launched in 2021. Specifically, encouraging firms to further improve their productivity and competitiveness by innovation could eventually achieve a win-win situation between economic performance and environmental merits in the long run.

Research on the Correlation between Environmental Performance and Financial Performance in China’s Heavy Pollution Industries Based on RAGA-PP Model

Research on the Correlation between Environmental Performance and Financial Performance in China’s Heavy Pollution Industries Based on RAGA-PP Model

The Impact of Dividend Policy on Financial Performance in China

This study focuses on the relationship between dividend policy and corporate financial performance, mainly discussing the relationship between cash dividends per share, earnings retention ratio and ROA, using a sample of listed companies in China to conduct the study and provide relevant suggestions for the subsequent development of the company.

Circular supply chain management: Performance outcomes and the role of eco-industrial parks in China

A circular economy (CE) is increasingly recognized as a more environmentally sustainable alternative to the dominant linear take-make-dispose economic model. We empirically investigate the effect of circular supply chain management (CSCM) on cost and financial performance in China, which has established the world’s largest system of eco-industrial parks (EIPs) to promote CE over the last decade. We combine the Natural Resource-Based View (NRBV), Contingent NRBV and the literature on CSCM to develop a conceptual model and test it using survey data collected from 255 Chinese manufacturing firms. The results show that CSCM, when exercised as a unified strategy, has a significant positive effect on cost and financial performance. Firms located within EIPs adopt CSCM at higher levels as compared to firms located outside EIPs. Nevertheless, the contextual factor of being located within an EIP does not moderate the CSCM practice-performance relationship, suggesting that performance is driven by practices rather than firms’ locations. These results were affirmed by post-survey participant validation in three focus group meetings and six face-to-face interviews. Our findings contribute to sustainability literature by offering a new construct and measurement items relevant to CSCM and provide practical insights to guide a transition to a CE.

Energy policy and financial performance in China: mediation effect of financial inclusion.

The issues of cleaner production and socioeconomic advancements have taken a central stage due to the dynamism of the correlation between energy use and ecology. Given this background, the research delves into how to construct a framework to unravel diverse understandings of energy policy vis-a-vis green economy by examining the mediating role of financial inclusion. The analysis applied a non-radial DEA and longitudinal dataset model for the scenarios of thirty regions in China, relying on their longitudinal dataset from 2010-2017. The findings indicate that the Chinese regions' total green economic performance indicator (EPI) has advanced by 9.88% between 2010 and 2017. In addition, the econometric analyses prove that regional renewable energy policies and pollution abatement programs explicitly influence the improvement of the environmental performance index. Again, the results show that the probability figures of the individual specific limit equation and the dual limit values crossed the 1% significance analysis level simultaneously, indicating a dual limit impact. 0.74 to 1 is the range that marks the green EPI for Jiangsu, Shandong, Guangdong, Hainan, Zhejiang, Shanghai and Fujian. Ultimately, the analysis serves as a policy inference tool for policy formulators and regulators on encouraging green economic performance in China.

Do enterprise ownership structures affect financial performance in China's power and gas industries?

Analyzing state-owned and private enterprise performance can inform enterprise reform, guide structural adjustments, and promote sustainable development. This study established an entropy-TOPSIS-GRA evaluation model to assess four financial performance indicators, including solvency, operational capability, profitability, and development capacity, of listed Chinese state-owned and private enterprises in the power and gas industry from 2008 to 2018. The results indicate no distinct financial performance differences between the two enterprise types, refuting the traditional view that state-owned enterprise performance is lower than private enterprises.

Does gender diversity matter to hotel financial performance?

This study examines the effects of executive gender diversity (EGD) and board gender diversity (BGD) on hotel financial performance in China based on the framework of the gender role, agency, and resource dependence theories. This research documents a negative effect of EGD and no significant effect of BGD on hotel financial performance. Moreover, the effect of EGD on hotel financial performance captured by return on equity (ROE) exhibits a U-shaped curve, with the profitability measure bottoming out at 21%. Our analysis also shows that a critical mass of 40% of EGD serves as a positive moderator for the EGD-ROE relationship. Beyond this point, gender-balanced executive groups evade negatives rooted in the gender role theory, enjoy positives drawn in the agency and resource dependence theories, and generate superior financial performance compared to all-male executive groups. This research offers important implications for human resource management and policy and regulation formulation.

The Effect of Strategic Corporate Social Responsibility on Financial Performance: Evidence from China

ABSTRACT This study uses the perspective of corporate strategy to examine the relationship between corporate social responsibility and corporate financial performance in China. Following the theoretical business strategy framework and resource-based theory, we adopt the ordinary least squares method to conduct a multiple regression analysis of the relationship between CSR and CFP under different strategy types. We find that for prospectors, CSR is positively correlated with CFP. However, for defenders, it is negatively correlated. Our results remain robust after a series of robustness tests and controlling endogeneity. Our findings help to explain the inconsistent results obtained in the literature, extend our understanding of CSR and the consequences of corporate strategy, and provide a reference for international investors and emerging markets.

Determinants of Financial Performance in China’s Intelligent Manufacturing Industry: Innovation and Liquidity

This study focuses on the mediation channels through which the financial performance of intelligent manufacturing industries closely related to the Fourth Industrial Revolution has been affected. Along with compiling a massive volume of datasets publicized by the Chinese government and other authoritative institutions, a survey of the 317 listed enterprises of the intelligent manufacturing industries in China has been established for statistical analysis. Using Structural Equation Modeling (SEM), this research tests six hypotheses and confirms the inter-factor impact relationship between exogenous and endogenous factors. We find that innovation efforts mainly led by increasing investment in Research & Development (R&D), along with high liquidity, surely lead to good financial performance, whereas innovation efforts alone do not. Government support policy has been found to be closely related not only to higher liquidity, but to good financial performance through the common channel of R&D investment. Regional innovation capability has been revealed to be related to R&D investments, and, furthermore, to liquidity, which shows that the regional innovation system in China has been functioning relatively well to induce enterprises to increase investments and secure higher liquidity, and finally contribute to achieving better business performance. However, regional economic development shows no relationship with R&D investments, and consequently neither with liquidity nor with performance.

Corporate social responsibility and bank financial performance in China: The moderating role of green credit

Most of the existing studies have ignored the moderating role of green credit in the relationship between corporate social responsibility (CSR) and bank financial performance. Using the data of listed banks in China from 2008 to 2018, this paper investigates the impact of CSR on bank financial performance. Moreover, we document the mediating effect of green credit on their relationship. The results show that CSR would make a negative impact on bank financial performance in the short term. However, this relationship turns out to be positive in the long run. Besides that, green credit does play an important role in this relationship. Furthermore, we do a series of heterogeneity tests. Our conclusion would be useful both to the following researchers and the establishment of environmental policies.

Does Board Composition Matter? The Relationship Between Board Characteristics and Financial Performance: Evidence From Chinese Listed Agricultural Companies

The paper aims to make new insight to some of the contradicting findings in prior studies of the board structure–firm performance relationship and to assess this connection in the specific context of Chinese listed agricultural companies practice. The study investigates the data of Chinese agricultural listed companies from 2008 to 2017, using multiple regression authors examine the relationship between board characteristic and financial performance. Conducted by authors empirical analysis shows that CEO duality and board size are significantly positively correlated with financial performance (proxies - ROA, ROE, and EPS). Although, contrary to the findings made in Western institutional settings the paper’s results testify that board independence has no significant impact on financial performance in China. The study’s findings enrich the understanding of linkage “board structure–firm performance”, especially in China – institutional settings that have proved to differ in many ways from other jurisdictions. Additionally, the paper provides an in-depth synthesis of research into this linkage to the date.

Social Capital at Venture Capital Firms and Their Financial Performance in China

By using social network analysis, this paper studies the extent to which social capital drives performance in the Chinese venture capital (VC) market and explores the trend toward VC syndication in China. First, this paper proposes a hybrid model based on syndicated social networks and the latent-variable model, which describes the social capital at VC firms and builds relationships between social capital and performance at VC firms. Then, this paper builds three hypotheses about the relationships and test the hypotheses using our proposed model. Some numerical simulations are given to support the test results. Finally, this paper shows the correlations between social capital and financial performance at VC firms which are weak in China due to the lack of mature social capital links.

Environmental Regulation and Financial Performance in China: An Integrated View of the Porter Hypothesis and Institutional Theory

The link between environmental regulations and financial performance has long been studied, but whether command and control environmental regulation or voluntary instruments induce better results is an unsettled question. By drawing on the Porter Hypothesis, this paper examines whether both approaches to environmental protection boost forms of environmental protection regulations that have positive impacts on financial performance. By integrating institutional theory, this study also examines whether ownership structures moderate the relationship between environmental regulation and financial performance. The results from data on 183 firms listed on the Shanghai and Shenzhen Stock Exchanges confirmed that both command and control environmental regulation and voluntary instruments positively affect financial performance. This paper also found that ownership structure strengthens the relationship between command and control environmental regulation and financial performance. The findings enrich the Porter Hypothesis and contribute to environmental research by revealing that properly designed environmental regulations have positive impacts on financial performance. By drawing on institutional theory, this study further contributes to business and management studies by confirming that the specific moderator, China’s state-owned enterprises, is a crucial contributor in achieving robust financial results.