Shiguang Ma

Ownership and ownership concentration: which is important in determining the performance of China's listed firms?

This article investigates the impact of ownership and ownership concentration on the performance of China’s listed firms. By recognizing the differences between ownership and ownership concentration and between total ownership concentration and tradable ownership concentration, we find that ownership concentration is more powerful than any category of ownership in determining firm performance; tradable ownership concentration has a more significant and positive influence on firm performance than total ownership concentration; the highest level of firm performance is approached when a firm is characterized by both total ownership concentration and tradable ownership concentration. Thus, we propose a conclusion that ownership concentration enhances firm performance regardless of who the concentrated owners are.

The Relationship between Stock Returns and the Foreign Exchange Rate: The ARDL Approach

This study employs the ARDL cointegration approach in order to examine the impact of financial liberalization on the relationships between the exchange rate and share market performance in China. We discovered that cointegration has existed between the Shanghai A Share Index and the exchange rate of the renminbi against the US dollar and Hong Kong dollar since 2005, when the Chinese exchange rate regime became a flexible, managed, floating system. We found that both the exchange rate and the money supply influenced stock price, with a positive correlation. We further show that the money supply increase was largely caused by a huge ‘hot money’ inflow from other countries in recent years. After local currency appreciation, hot money, followed by the money supply increase, pushed the market into a high level, based on expectations regarding the local currencys further appreciation.

Board composition, board activity and ownership concentration, the impact on firm performance

This paper provides a parallel investigation on the impact of board composition, board activity and ownership concentration on the performance of listed Chinese firms. We find that independent directors enhance firm performance effectively than other board factors. The frequency of shareholder meetings, rather than board meetings, is positively associated with firm value. Tradable share ownership concentration has a positive and linear relationship with firm value, while state and total share ownership concentration represent U(V) shapes. Importantly, companies with the highest levels of both total share and tradable share ownership concentration have a greater firm values than companies with the highest levels of only a single concentration.

Information asymmetry and valuation uncertainty, the determination of China's IPO allocation procedures

In the literature, information asymmetry and valuation uncertainity are always referred to the important concerns for a firm to choose an initial public offering (IPO) allocation procedure. The new emerging stock market of China is a unique trial place as it has possibly practiced three pairs of parallel IPO allocation procedures: private placements and local public offerings; local public offerings and national public offerings; and national public offerings and bookbuilding. Interestingly, the empirical analyses of this article provide the evidences that the IPO firms with more information asymmetry and valuation uncertainty are more likely to prefer private placements to local public offerings, or local public offerings to national public offerings, or national public offerings to bookbuilding.

Corporate Opacity and Cost of Debt for Family Firms

Abstract This paper uses a sample of Chinese firms to examine the impact of corporate opacity on the relationship between family control and firms’ cost of debt. We find that family control is associated with a lower cost of debt on average, and a negative impact exists mainly in firms with relatively low corporate opacity. We further provide evidence that the moderating effect of corporate opacity becomes more pronounced when investors’ perception of controlling families’ moral hazard of expropriation is higher. Our results are robust to alternative opacity proxies and controlling for endogeneity of family control using the instrumental variable method. Our study highlights that controlling families are heterogeneous in their impact on the shareholder–debtholder relationship in family firms, and debtholders view corporate opacity as an important reference in assessing the extent of potential agency conflicts in China.

Ownership Characteristics and Earnings Management in China

Chinese firms are characterized by multiple ownership and high ownership concentration. In this research, we conduct an intensive investigation into the determination of ownership characteristics in earnings management behaviors for Chinese domestic listed firms. Our results indicate that earnings management is determined by the motivations of different types of ownerships. In particular, when a state agency is the largest owner, firms are less likely to undertake earnings management, although the state ownership ratio is positively associated with earnings management. Tradable ownership and particularly concentrated tradable ownership reduce earnings management, while total ownership concentration fosters earnings management.

The Effect of Financial Status on Earnings Quality of Chinese Listed Firms

This article investigates the relation between accounting-based earnings quality attributes and the financial status of Chinese companies listed in Shanghai and Shenzhen stock exchanges from 2005 to 2007 by classifying them as either “healthy” or “bankrupt” firms. The authors find that accruals quality, earnings predictability, and earnings smoothness are significantly different between healthy and bankrupt firms, but not earnings persistence. Additional analysis undertaken indicates that firm categories (healthy, financially distressed, and bankrupt) based on financial status does not indicate distinct differences in earnings quality attributes.

Ownership control and debt maturity structure: evidence from China

Purpose - – The authors examine the debt maturity structure of Chinese listed companies during the period when bond market was under-developed and the majority of commercial banks were owned by the state. The purpose of this paper is to answer why and how the different ownership control types impact the firms’ preference and accessibility to either long- or short-term debts. Design/methodology/approach - – The univariate analysis was used to test the differences of debt maturity choices for firms grouped by ownership control types, profitability and institutional development. Then, logit regression and ordinary least squares regression were applied to examine the determinants of ownership control types in debt maturity structures. Findings - – Compared to privately controlled firms, state-owned enterprises had greater access to long-term debt and used less short-term debt during the sample period. Evidences also indicate that the on-going financial reform has increased the motivation of banks to consider company profitability in their lending decisions. However, state-owned banks still discriminate private firms in allocation of financial resources, particular in less-developed regions. Research limitations/implications - – Due to the research scope and data limitations, the authors cannot take some factors into consideration, such as collateral, guarantee, credit ranking, financing agreement and leasing obligation. Originality/value - – This study extends the existing literature in three ways. First, the authors investigate the bank discrimination problem into the loan term structure. Second, the authors recognise the effect of financial reform on alleviation in bank discrimination problem. Finally, the authors take the consideration of institutional development of firms’ location areas in their analyses.

The Impact of Ownership and Ownership Concentration on the Performance of China’s Listed Firms

This paper investigates the impact of ownership and ownership concentration on the performance of China’s listed firms. By recognizing the differences between ownership and ownership concentration and between total ownership concentration and tradable ownership concentration, we conduct simplex, interactive and joint analyses. We find that ownership concentration is approximately associated with higher firm performance. Ownership concentration is more powerful than any category of ownership in determining firm performance. Firm performance is better when the state is the largest of the top shareholders and/or institutions dominate ownership among the top tradable shareholders. Our results support the theory that high ownership concentration mitigates the agency problem.

Sustainable development of the Chinese economy and capital market

Over the past 30 years, the Chinese economy has maintained remarkable growth at an average of nearly 9% per annum. China has become increasingly integrated into the world economy and has become a major player in world commodity production and global capital markets. However, despite its impressive achievements, China faces many serious challenges, such as environmental pollution, shortage of energy, severe income inequality, an ageing population, inefficient capital markets, global and domestic imbalances, and poor corporate governance. These problems have caused the growth of the Chinese economy to slow down. Because of its significant impact on the world economy, the sustainable development of the Chinese economy and capital markets has become a critical concern for scholars, policy-makers and entrepreneurs worldwide. The Chinese Economics Society Australia (CESA) was established in 1987, with the purpose of promoting research and exchange activities related to the Chinese economy and business. During the 27 years since its establishment until 2015, the CESA has held regular annual conferences. The 27th CESA annual conference, hosted by the School of Accounting, Economics and Finance, the University of Wollongong, gathered together about 65 scholars from the US, UK, China, Hong Kong, Singapore, New Zealand and Australia. This special issue brings together seven selected conference papers on the theme of the Sustainable Development of the Chinese Economy and Capital Market. These papers focus their research particularly on foreign direct investment (FDI), carbon dioxide emissions, political connections, financially distressed firms and income inequality. Each of the research papers has integrated comments and suggestions from discussants, conference participants and reviewers through a blind review process. FDI has been a powerful driver of the Chinese economy since China commenced its economic reform and the ‘open door’ policy in late 1978. The most apparent and driving force of FDI in China is the manufacturing industry, which has brought about a boom in the regional economy with increased sales and exports. Even though existing studies have examined the impact of the presence of FDI on the export behaviour of domestic firms, few of them have considered its impact on firm sales in the domestic market at the same time. Also, most existing studies that deal with FDI-related spillovers do not consider its regional dimension. Anwar and Sun (2016, in this issue) fill these two gaps by examining