Deepening China's Investment System Reform——The State Development Investment Corporation

The Chinese government set up the State Development Bank against the background of the Chinese economic system being transformed from planned to market. In May 1995, the State Development Investment Corporation was established. Does this mean that China’s investment system reform is advancing at a much

Alternative measure of financial development and investment-cash flow sensitivity:evidence from an emerging economy

This study examines the impact of financial development on corporate investment in terms of their influence on financing constraints.This study also tries to find the effect of financial development on the investment-cash flow sensitivity across the size,degree of financial constraints and group affiliation of the firm.This study employs dynamic panel data model or more specifically system generalized method of moments(GMM)estimation technique.The estimation results reveal that cash flow affects the investment decision of the company positively,which implies that Indian firms are financially constrained.Also,we observe that financial development reduces the investment-cash flow sensitivity and the effect of financial development is more prominent for small size and standalone firms.The results are robust across the period and,for both financially constrained and unconstrained firms.This study contributes to the existing literature by analyzing the impact of financial development on the role of cash flow in determining investments undertaken by the Indian firms,which is an unexplored issue from an emerging market perspective.

Corporate managers,price noise and the investment factor

This study investigates the impact of flows between bond and equity funds on investment factors over the period 1984–2015.It determines contemporaneous mispricing effects and a statistical reversal relation between these flows and both legs of the investment factor.The statistical reversal relationship between previous flows and the investment factor is economically significant.A one-standard-deviation shock to flows causes a 0.29%decrease in investment factor returns,which are reversed within 5 months.A trading strategy based on signals from past flows and the investment factor outperforms the market by 0.68%in the months following positive flows and produces significant alphas after accounting for well-known equity risk factors.The findings are interpreted as evidence in favor of a behavioral explanation,in which sentiment influences actual managerial decisions.When retail investors and managers are swept up in market euphoria,retail investors shift their holdings from bond to equity mutual funds,and high-investment firms invest more aggressively.Market-level euphoria has a different impact on high-and low-investment firms,and thus the investment factor can be influenced.Hence,the mispricing occurs during these periods,and the reversal relationship is especially pronounced for a high-investment portfolio versus a low-investment portfolio.As a result,during the months following periods of positive flows,the investment factor outperforms the market factor.Interestingly,this study’s measure of flows,which serves as a proxy for market-level euphoria,outperforms other measures of investor sentiment.

Financing constraints and corporate investment:an empirical analysis of china’s manufacturing firms

With the measurement of dividend payout ratio, logistic regression index value and the firm size financing constraints, this paper investigated the investment behavior of China’s manufacturing firms over the period from 1998 to 2003, and the relationship between financing constraints and corporate investment using the OLS regression method. The empirical evidence shows that there are certain extent financing constraints in China’s manufacturing firms, but the results are different with different variables to measure the financing constraints.

Research on the Influence of Debt Financing on Corporate Investment--Based on Political Relations Perspective

we have done the research on the influence of debt financing on corporate investment Based on political relations perspective. The results show that the impact of debt financing on corporate investment from the political perspective and confirmed debt financing is more easily lead to inefficient investment under the influence of political relations.

Coal price fluctuations and the impact on financial risk Evidence from China＇s coal listed companies

With the rise of coal price, the proportion of loss-making enterprises shows an upward trend in China＇s coal industry. This paper uses Altman Z-Score model to measure financial risk of 19 listed companies in the coal industry in A-share market from 1995 to 2007. Empirical results show that Year-Based price index of coal price has a negative correlation with the financial risk but has no significance, and coal chain price has a significant negative correlation with the financial risk. Further research indicates that enterprises increase bad investment, and a lot of debts caused by short-term rise in coal prices. The results also show that the financial risk in the coal industry declines with the rise of GDP growth rate and increases with the rise of inflation rate.

Capital Budgeting： Methods, Aspects, and Issues

This paper furthers the understanding of capital budgeting （CB） processes. It emphasizes the assumed disposition of the forecast cash benefits from projects. The two reasons for CB are discussed. First, which projects are and are not acceptable from a financial prospective？ Second, of financially acceptable projects, CB methods can rank or order projects relative to desirability. Under conditions of certainty, the paper describes and contrasts three primary methods： pay back （PB）, net present value （NPV）, and internal rate of return （IRR） and three secondary methods： profitability index （PI）, terminal value （TV）, and modified internal rate of return （MIRR）. The presentation lists the strengths and weaknesses of each method in order to direct attention to some of the many aspects of CB decisions that firm managers should consider. Next, approaches for taking risk into consideration are discussed. The discussion raises the important issues of what to do with the net cash benefits from various projects when and if they are received. Finally, the paper provides flexible tools and example problems for teaching CB in a variety of contexts, such as professional corporate training or academic coursework.

Peer effects in decision-making:Evidence from corporate investment

We show that peer effects influence corporate investment decisions. Using a sample of China's listed firms from 1999 to 2012, we show that a one standard deviation increase in peer firms' investments is associated with a 4% increase in firm i's investments. We further identify the mechanisms, conditions and economic consequences of peer effects in firms' investment decisions. We find that peer effects are more pronounced when firms have information advantages and the information disclosure quality of peer firms is higher, or if they face more fierce competition. When firms are industry followers, are young or have financial constraints, they are highly sensitive to their peers firms. We also quantify the economic consequences generated by peer effects, which can increase firm performance in future periods.

Does Over-credit Stimulate Corporate Investment？ Evidence from Listed Companies in China

We define and quantify for the first time over-credit at the firm level, which refers to the case in which the amount of bank credit that a firm obtains exceeds its expenditure on corporate investment for the year. Then, we explore how over-credit affects corporate investment to determine whether credit expansion in China is consistent with the principle of finance serving the real economy. The results show that over-credit promotes firm investment, and this effect was enhanced by the housing boom. However, the effect of the property market reversed after 2012, owing to China＇s economic transition from a quantitative to a structural mismatch between supply and demand. Finally, we explore how over-credit affects the capacity utilization ratio and whether it has aggravated the overcapacity problem in China. The results show that over-credit reduces firms＇ capacity utilization ratio. This finding indicates that excessive credit expansion has exacerbated the overcapacity problem in China.

Firm-level Strategic Competition and Peer Effects in Corporate Investment among Chinese Firms

This study investigates the influence of strategic competition on peer effects in corporate investment by using a sample of 28,522 observations of Chinese listed companies from 2008 to 2020.The study develops a linear-in means model and uses an instrumental variables approach,and uses the competitive strategy measure(CSM)and Lerner index as proxies of competitive strategies and competitive positions to capture the firm-level competition.The empirical results demonstrate that when firms compete as strategic substitutes and when firms are in higher competitive positions,the peer effects in corporate investment are significant and positive.In addition,in circumstances of high information asymmetry,firms competing as strategic substitutes and firms in high competitive positions rely more on information related to investment from peer firms.Moreover,industry policies and barriers do not significantly influence peer effects in investment.This study offers new empirical evidence regarding peer effects in corporate investment in China.

Climate policy uncertainty and corporate investment:evidence from the Chinese energy industry

In recent years,with the increasing attention paid to climate risks,the changes in climate policies are also more full of uncertainties,which have brought tremendous impact to economic entities,including companies.Using the dynamic threshold model,this study investigates the nonlinear and the asymmetric effect of climate policy uncertainty on Chinese firm investment decisions with panel data of 128 Chinese energy-related companies from 2007 to 2019.The empirical findings indicate that the influence of climate policy uncertainty on firm investment is significantly nonlinear.Overall,climate policy uncertainty is not apparently related to corporate investments in the high-level range,while it negatively affects the investments in the low-level range.In addition,to be more specific,the negative impact of climate policy uncertainty on the mining industry is tremendous,while the influence on the production and supply of electricity,heat,gas,and water sector is remarkably positive.The results of this study could help the company managers and policymakers to arrange appropriate related strategies under different climate policy conditions.

Earnings Management of Chinese Listed Multinational Corporations

This study evaluates the quality of accounting information provided by Chinese multinational corporations(MNCs)in relation to the issue of earnings management.Using a combined dataset of outward foreign direct investment and financial statements by Chinese firms publicly listed on A-share markets between 2012 and 2017,we investigate whether Chinese MNCs are more inclined to manage earnings.We discover that these firms exhibited significant earnings management behavior and typically adjusted their earnings downward.We demonstrate that these effects were more pronounced among private MNCs than state-owned firms,and in host countries with weaker institutional quality.Further research reveals that after delaying the confirmation of current earnings,Chinese MNCs received higher government subsidies,and this pattern was particularly prevalent among private MNCs.We find no evidence that Chinese MNCs manipulated earnings to avoid paying taxes.

Can blockchain technology be effectively integrated into the real economy?Evidence from corporate investment efficiency

As a highly disruptive digital technology,blockchain provides new solutions for reshaping corporate governance mechanisms and improving resource allocation.We empirically examine the relationship between blockchain and corporate investment inefficiency.We find that blockchain can help improve corporate investment efficiency,and this result is valid after a series of robustness tests.Blockchain can not only significantly restrain overinvestment but also alleviate underinvestment.Reducing financing costs and alleviating agency conflicts are the two channels through which blockchain is associated with corporate investment efficiency,and financial reporting quality is the condition on which the channels depend.When the CEO holds few shares or the trade credit environment in the region where the company is located is poor,the effect of blockchain is more prominent than it is otherwise.Investment efficiency cannot be improved by blockchain for companies providing blockchain products or services to customers,only for those promoting their own operations and management with blockchain.Ultimately,blockchain can enhance companies’value by alleviating inefficient investment.We reveal the role of blockchain in corporate investment efficiency,furnish microeconomic evidence for the integration of digital technology and the real economy and provide implications for China to promote digital technology to drive high-quality company development.

Macroeconomic Uncertainty, Fund Demand and Corporate Investment

Using a unique set of data on fund use by China＇s listed companies, this paper examines how macroeconomic uncertainty works on corporate investment. The study shows that macroeconomic uncertainty affects corporate investment behavior through the three channels of external demand, liquidity demand and long-term fund demand, However, the result is influenced by expectations and can differ across firms depending on their economic cycle, shareholder character, industrial character and the financial constraints they are exposed to. Specifically, high macroeconomic uncertainty can weaken the positive roles of these channels, especially those of external demand and liquidity demand, in driving corporate investment. During economic upturns, the effect of these channels is the most evident among state-owned firms, manufacturing firms and low cash dividend firms. The lessons from this study are that macroeconomic policies should be leveraged taking account of the channels through which economic shocks find their way, and monetary policies have to be implemented by targeting microscopic fund demand.

China's Sovereign Wealth Fund:Weakness and Challenges

The establishment of sovereign wealth funds in large developing countries has generated hot debate among participants in the international financial market. When accumulated foreign exchange reserves surpass a sufficient and an appropriate level, the costs, risks and impacts of holding reserves on the macroeconomy of a country need to be considered. The Chinese Government established China Investment Corporation （ CIC） in 2007 to diversify its investment of foreign reserves and to raise investment income. However, because of certain conflicts of interest and institution-design caveats, CIC possesses some internal weakness, including a vague orientation, mixed investment strategies and an inefficient bureaucratic style. Although the subprime crisis has softened certain regulations and lessened rejection by the USA of ClC potential investments, the increased volatility and uncertainty of the market means that CIC is facing some new challenges in terms of its investment decisions. Moreover, CIC is competing with other Chinese investment institutions for injections of funds from the Chinese Government.

Would China's Sovereign Wealth Fund Be a Menace to the USA?

The sovereign wealth club acquired a new member with the official launch of the China Investment Corporation （CIC） on 29 September 2007. The arrival of CIC has further heated up debate regarding sovereign wealth funds （SWFs） and their potential implications for global financial markets. This is because, in carrying out its investments, CIC can tap into China＇s huge official foreign exchange reserves, which by April 2008 had surged to US$1.76tn. CIC＇s initial working capital of US$2OObn makes it the fifth largest SWFs in the world today. This article seeks to analyze CIC＇s investment strategies, as well as their potential economic and political implications for global as well as US financial markets.

Building State-owned Assets Supervision System and Conducting Mixed Ownership Reforms to Reinforce Each Other’s Collaboration

Improving the state-owned assets supervision system(SOASS)can effectively get over the defects of systems and mechanisms and further promote the reform of mixed ownership of state-owned enterprises(SOEs);and the deepening of the reform can advance the change of the SOASS to the supervision on capital.By analyzing the relationship between the SOASS and the reform of mixed ownership of state-owned enterprises,we have found that collaborative promotion of the change of the SOASS to the supervision on capital and promotion of the reform of mixed ownership can do good to ameliorating the corporate management mechanism,improving the market-oriented management mechanism of enterprises and completing the medium-and long-term incentive mechanisms,etc.to enhance business operation efficiency.Due to such prevailing problems as relative dispersion and vagueness of the policies relating to deepening the reform of SOEs,inconsistent progress of the reform of state-owned assets(SOAs)and SOEs,and corporate reform focusing on apprence,improving the SOASS and deepening collaborative development of the reform of mixed ownership of SOEs are hindered by some constraints.To construct and improve the SOASS and the reform of mixed ownership collaboratively,we should make efforts to promote the reform in the following five aspects,namely,placing importance to policy coordination,boosting synchronism of the reform of SOAs and SOEs at different levels and in different areas to coordinate the nationwide reform of SOAs and SOEs,facilitating reform of the mechanism of enterprises of mixed ownership through mixed capital,and promoting the SOASS and stimulating classified monitoring and reform of mixed ownership based on classified reform of SOEs.

Enhancing the Transparency of Sovereign Wealth Funds:From the Middle East to China

Sovereign wealth funds,as an active participant in the global capital market,have attracted increasingly more attention from both academicians and practitioners.The opacity of the funds is one of the hot issues.A greater transparency is needed for the Sovereign Wealth Funds(SWFs)in the Middle East when they play an increasingly important role in the global capital market.By reviewing the transparency standards and examining the performance of SWFs in the region on information disclosure,this article lists the political,economic and cultural causes of the opacity and justifies the varieties in transparency.It also finds that the legitimacy of these funds should not be challenged because the political motivation does not necessarily change their market attributes.Although effective management of the funds requires improvement of transparency,the transparency standards should be moderate in the context of economic integration and financial globalization,hence international governance is a must.In addition to the reflection on the role of IFSWF in international governance,some lessons and suggestions are given to China’s SWFs at the end of the paper.

Sovereign Wealth Diversifying State Coffers

The State Investment Corporation, China＇s soon-to-be open sovereign wealth fund, is the newest power player on the global market. Investors await anxiously signs of its investment strategy