Sustainability

Research

18 pages, 812 KiB

Open AccessArticle

Determinants of Financial Sustainability in Chinese Firms: A Quantile Regression Approach

by Li Zhao, Zhengqiao Liu, Thi Huong Giang Vuong, Huu Manh Nguyen, Florin Radu, Alina Iuliana Tăbîrcă and Yang-Che Wu

Sustainability 2022, 14(3), 1555; https://doi.org/10.3390/su14031555 - 28 Jan 2022

Cited by 10 | Viewed by 3521

Abstract

Our research investigates the connection between firm characteristics and leverage based on a sample of firms listed in the Chinese Stock Index 300. We aim to examine the sustainability of the financial structure of Chinese enterprises covering the period 2010–2019. We employ a [...] Read more.

Our research investigates the connection between firm characteristics and leverage based on a sample of firms listed in the Chinese Stock Index 300. We aim to examine the sustainability of the financial structure of Chinese enterprises covering the period 2010–2019. We employ a conditional quantile regression that discloses the behavior of regressions across the leverage distribution and compares its results for different leverage levels with those achieved by the linear regression model. The results confirm the effects of the determinants of capital structure change since the quantile of leverage varies. We find that both the trade-off theory (TOT) and the pecking order theory (POT) confirm the validity of Chinese firms’ financing decisions at different quantiles of leverage. Specifically, the empirical results support the POT more over the TOT at higher levels of the quantile. Furthermore, the relationship between firm size and leverage strongly switches to support the POT at the highest quantile. All empirical results are obtained from quantile regression, consistent with the prediction for an increase in asymmetric information of the POT when Chinese firms employ more debt in their capital structure. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

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16 pages, 283 KiB

Open AccessArticle

Corporate Social Responsibility and Bond Price at Issuances: U.S. Evidence

by Hong Zhao, Wei Du, Hao Shen and Xinting Zhen

Sustainability 2021, 13(23), 13123; https://doi.org/10.3390/su132313123 - 26 Nov 2021

Cited by 4 | Viewed by 2331

Abstract

Bondholders are arm’s-length lenders with limited insider information. In this paper, we explore whether corporate social responsibility (CSR) activities could work as an information channel for bondholders to better understand the riskiness of bond-issuing firms. We find a significant negative relation between CSR [...] Read more.

Bondholders are arm’s-length lenders with limited insider information. In this paper, we explore whether corporate social responsibility (CSR) activities could work as an information channel for bondholders to better understand the riskiness of bond-issuing firms. We find a significant negative relation between CSR scores and corporate bond yield spread, especially for firms which invest heavily in diversity and community relations, suggesting that CSR firms are less risky. The result is robust to different model specifications and endogeneity issues. In addition, the negative relation between the CSR score and bond yield spread is significant only if a firm has a strong internal governance mechanism. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

16 pages, 301 KiB

Open AccessArticle

Corporate Social Responsibility and Firm Liquidity Risk: U.S. Evidence

by Hong Zhao, Zixuan Jiao, Jianrong Wang and Amina Kamar

Sustainability 2021, 13(22), 12894; https://doi.org/10.3390/su132212894 - 22 Nov 2021

Cited by 2 | Viewed by 2978

Abstract

In this study, we empirically investigate whether and to what extent corporate social responsibility (CSR) may affect firm liquidity risk. We define liquidity risk as the covariance between market-wide liquidity shocks and individual firms’ stock returns and employ two methods to estimate firm [...] Read more.

In this study, we empirically investigate whether and to what extent corporate social responsibility (CSR) may affect firm liquidity risk. We define liquidity risk as the covariance between market-wide liquidity shocks and individual firms’ stock returns and employ two methods to estimate firm liquidity risk. We find a negative association between CSR and firm liquidity risk after controlling for various firm characteristics, i.e., year and industry fixed effects. Our results are robust to possible endogeneity issues when we adopt two-stage lease square estimator and dynamic GMM estimator. In addition, we document that the negative relation between CSR and firm liquidity risk is more pronounced when firms have higher reliance on external financing. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

20 pages, 483 KiB

Open AccessArticle

How Does Digital Finance Affect Carbon Emissions? Evidence from an Emerging Market

by Hui Zhao, Yaru Yang, Ning Li, Desheng Liu and Hui Li

Sustainability 2021, 13(21), 12303; https://doi.org/10.3390/su132112303 - 8 Nov 2021

Cited by 72 | Viewed by 5394

Abstract

The existing literature finds that finance has a significant impact on carbon emissions, but there is a lack of theoretical explanation on whether and how digital finance, an important new financial form, affects carbon emissions. This paper uses balanced panel data at the [...] Read more.

The existing literature finds that finance has a significant impact on carbon emissions, but there is a lack of theoretical explanation on whether and how digital finance, an important new financial form, affects carbon emissions. This paper uses balanced panel data at the provincial level in China from 2011 to 2018 as a sample to empirically test the relationship between digital finance and carbon emissions and introduces three exogenous events to test the impact of policy shocks. The results show that digital finance has a significant inhibitory effect on carbon emissions; the implementation of the policies of ‘G20 High-Level Principles for Digital Financial Inclusion’, ‘Environmental Protection Tax Law of the People’s Republic of China’, and ‘Interim measures for the management of greenhouse gas voluntary emission reduction’ strengthens the suppression of carbon emissions by digital finance, and the robustness test also supports the protection of digital finance. The research conclusions of this article provide theoretical evidence for understanding the relationship between digital finance and other new financial formats and carbon emissions and provide an empirical basis for policy-makers to promote the development of digital finance to reduce carbon emissions. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

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20 pages, 1940 KiB

Open AccessArticle

Corporate Social Responsibility Development and Climate Change: Regional Evidence of China

by Shouhao Li, Weiquan Cheng, Jingjing Li and Hao Shen

Sustainability 2021, 13(21), 11859; https://doi.org/10.3390/su132111859 - 27 Oct 2021

Cited by 5 | Viewed by 6535

Abstract

This study analyzed Chinese companies’ behavior regarding corporate social responsibility (CSR) disclosure, and its impact on national and regional climate change measured by carbon emissions. CSR disclosure, supported by existing theories, is considered a powerful tool to curb climate change issues. We combined [...] Read more.

This study analyzed Chinese companies’ behavior regarding corporate social responsibility (CSR) disclosure, and its impact on national and regional climate change measured by carbon emissions. CSR disclosure, supported by existing theories, is considered a powerful tool to curb climate change issues. We combined data of companies’ publicly traded annual financial reports and CSR reports from the China Stock Market and Accounting Research (CSMAR) database and provincial macroeconomic statistics from the Chinese National Bureau of Statistics to run panel regressions. The results verify the following: (a) China is in a relatively early stage of CSR development, and Chinese firms’ internal incentives to adopt CSR projects are low since none of the internal factors researched contribute to CSR disclosure. (b) External factors work slightly better for CSR practices, but at the same time, the CSR regulations still need further improvement. (c) The current CSR disclosure practices do not have a clear impact on carbon emission reduction, contrary to some predictions that CSR could help reduce carbon emissions. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

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13 pages, 1965 KiB

Open AccessArticle

Inclusive Green Growth and Regional Disparities: Evidence from China

by Zhangsheng Liu, Ruixin Li, Xiaotian Tina Zhang, Yinjie Shen, Liuqingqing Yang and Xiaolu Zhang

Sustainability 2021, 13(21), 11651; https://doi.org/10.3390/su132111651 - 21 Oct 2021

Cited by 15 | Viewed by 2593

Abstract

It is determined that inclusive green growth comprises processes of economic development and inclusiveness as a system of inclusions, taking into account the anthropogenic burden on the ecosystem, as well as the relational nature of socio-economic transformations. This article is an evaluation of [...] Read more.

It is determined that inclusive green growth comprises processes of economic development and inclusiveness as a system of inclusions, taking into account the anthropogenic burden on the ecosystem, as well as the relational nature of socio-economic transformations. This article is an evaluation of this issue in the context of a contemporary Chinese society beset by regional inequalities that uses the Yangtze River basin as a case study. An index system has been constructed for inclusive green growth measurement, and kernel density and the Dagum Gini coefficient are used to analyze and describe characteristics regarding the distribution and spatial disparities within and between city clusters. The article then concludes that all city clusters are developing towards an inclusive green economy. There are still significant inequalities in inclusive growth among city clusters. Most city clusters are converging so slow that it will take a long time for weaker cites to catch up with stronger cites. City clusters also suffer major inner imbalances and gaps are widening. This paper argues that the profession needs to be more proactive in promoting strategic and targeted policies within such an unequal growth context. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

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17 pages, 296 KiB

Open AccessArticle

Innovation Vouchers and the Sustainable Growth of High-Tech SMEs: Evidence from China

by Di Tian, Xiaohan Guo and Peng Wang

Sustainability 2021, 13(20), 11176; https://doi.org/10.3390/su132011176 - 10 Oct 2021

Cited by 5 | Viewed by 2853

Abstract

Innovation has become an essential source of sustainable growth for most firms, especially small- and medium-sized enterprises (SMEs). Governments around the world widely implement innovation vouchers to promote innovation in SMEs. This study empirically explores the effects of innovation vouchers in stimulating patentable [...] Read more.

Innovation has become an essential source of sustainable growth for most firms, especially small- and medium-sized enterprises (SMEs). Governments around the world widely implement innovation vouchers to promote innovation in SMEs. This study empirically explores the effects of innovation vouchers in stimulating patentable innovation and ultimately enhancing firms’ financial performance. Using a panel of 1274 listed SMEs from the Small and Medium Enterprise Board (SMEB) and the Growth Enterprise Board (GEB), we find that innovation vouchers lead firms to utilize knowledge-intensive services and significantly increase their financial performance. We further document that patentable innovations mediate the relationship between innovation vouchers and firms’ financial performance. We report that the effects of innovation vouchers on financial performance are more prominent for SMEs with limited external informational resources. We believe that our study yields novel evidence and sheds further light on the important policy implications of innovation vouchers to facilitate the sustainable growth of SMEs. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

14 pages, 292 KiB

Open AccessArticle

Access to Digital Financial Services and Green Technology Advances: Regional Evidence from China

by Zhangsheng Liu, Xiaolu Zhang, Liuqingqing Yang and Yinjie Shen

Sustainability 2021, 13(9), 4927; https://doi.org/10.3390/su13094927 - 28 Apr 2021

Cited by 15 | Viewed by 2215

Abstract

Using data of 265 Chinese cities from 2010 to 2017, we studied the impact of access to digital financial services on green technology advances in the context of regional competition. We found that access to digital financial services significantly promotes green technology advances [...] Read more.

Using data of 265 Chinese cities from 2010 to 2017, we studied the impact of access to digital financial services on green technology advances in the context of regional competition. We found that access to digital financial services significantly promotes green technology advances within the region but inhibits those in other regions. We also found that modest regional competition can promote green technology advances, whereas excessive competition impairs the positive relationship between access to digital financial services and green technology advances. We identified a significantly positive spatial spillover effect for green technology advances. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

18 pages, 299 KiB

Open AccessArticle

Social Trust and Green Technology Innovation: Evidence from Listed Firms in China

by Yaru Yang, Desheng Liu, Luxiu Zhang and Yingkai Yin

Sustainability 2021, 13(9), 4828; https://doi.org/10.3390/su13094828 - 25 Apr 2021

Cited by 13 | Viewed by 3109

Abstract

Green Technology innovation intends to enable the advancement of technologies toward the goals of human health, natural resource sustainability and social equity. Green technology innovation has become an important driving force for the sustainable growth of the global economy. In this study, building [...] Read more.

Green Technology innovation intends to enable the advancement of technologies toward the goals of human health, natural resource sustainability and social equity. Green technology innovation has become an important driving force for the sustainable growth of the global economy. In this study, building upon the theories on informal institutions, we empirically investigate the effects of social trust on green technology innovation. Using a sample of companies listed in A-share markets in China from 2012 to 2017, we find that social trust has a significant positive impact on the performance of green technology innovation. We employ an instrumental variable approach through two-stage-least square estimator, and report consistent results. Further heterogeneity analysis finds that with higher levels of policy uncertainty and lower levels of intellectual property rights protection, the effect of social trust on firms’ green technology innovation is more significant. Further, the effect of social trust on firms’ green technology of non-SOEs innovation is larger than SOEs. In addition, the positive effect of social trust on green technology innovation in firms is an effective supplement for formal systems to promote green technology innovation in said firms, which provides a new theoretical reference for promoting firms’ green technology innovation and achieving high-quality development. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

24 pages, 3502 KiB

Open AccessArticle

The Impact of Marketization on Sustainable Economic Growth—Evidence from West China

by Tingying Chen, Haitian Lu, Rong Chen and Lina Wu

Sustainability 2021, 13(7), 3745; https://doi.org/10.3390/su13073745 - 27 Mar 2021

Cited by 17 | Viewed by 3562

Abstract

In this paper, we aim to study the relation between the marketization level in the western region of China and its economic development, and to provide policy guidance for the economic development of underdeveloped regions. Mixed methods data analysis was conducted using panel [...] Read more.

In this paper, we aim to study the relation between the marketization level in the western region of China and its economic development, and to provide policy guidance for the economic development of underdeveloped regions. Mixed methods data analysis was conducted using panel data from 82 prefecture-level cities in west China from 2003 to 2017. The overall regression results show that the level of marketization has a significant role in promoting economic growth. At the same time, regional heterogeneity analyses show that the sub-indicators of marketization have different degrees of influence on economic growth in the southwest and northwest of China, whereas the overall level indicator plays a significant role in both regions. In addition, the threshold panel model was used to test whether the influence of marketization on economic growth in the western region had interval characteristics. Through the self-sampling method, it was found that there are double thresholds. In terms of the gradual progress of the marketization level range, it shows a trend of first increasing, then decreasing and then increasing again. The results show that the level of marketization in west China has significantly promoted the economic development of the western region. Additionally, the impact of marketization on economic development in relatively backward regions is gradually increasing and surpassing that of relatively developed regions. Underdeveloped areas in west China can stimulate their advantages by continuously promoting the construction of marketization and improving the level of economic organization, so as to gradually narrow the development gap between regions. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

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21 pages, 305 KiB

Open AccessArticle

The Value of CSR in Acquisitions: Evidence from China

by Kun Li, Chaohua He, Wassim Dbouk and Ke Zhao

Sustainability 2021, 13(7), 3721; https://doi.org/10.3390/su13073721 - 26 Mar 2021

Cited by 6 | Viewed by 3577

Abstract

In this paper, we aim to test whether and how corporate social responsibility (CSR) is valued in merger and acquisition (M&A) transactions. Employing multiple regression and logistic regression methods to examine the CSR in China’s domestic M&A market from 2007 to 2018, we [...] Read more.

In this paper, we aim to test whether and how corporate social responsibility (CSR) is valued in merger and acquisition (M&A) transactions. Employing multiple regression and logistic regression methods to examine the CSR in China’s domestic M&A market from 2007 to 2018, we reveal the following: (i) acquisition targets with higher social performance can attain higher acquisition valuation, especially when the acquirers are also socially responsible; (ii) high-CSR acquirers are inclined to choose equity payments, while high-CSR acquisition targets prefer to be paid in cash; (iii) high CSR performance boosts M&A success rate. The findings are robust, due to adopting two-stage least squares method to tackle endogeneity, substituting variable measures and data sources, and winsorizing variables at high levels to eliminate outliers. The value of CSR in M&As possibly results from the role of CSR in reducing information frictions, agency concerns, and corporate risks and is primarily associated with activities which are friendly to suppliers, customers, shareholders, public welfare, and natural environment, as well as being higher in developed regions and irrelevant to corporate ownership and nature. The study is of vital significance to the valuation and decision making in M&A deals. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

14 pages, 267 KiB

Open AccessArticle

Executive Gender and Firm Environmental Management: Evidence from CFO Transitions

by Bo Wang, Zehui Wang, Jun Wen and Xiaotian Tina Zhang

Sustainability 2021, 13(7), 3653; https://doi.org/10.3390/su13073653 - 25 Mar 2021

Cited by 9 | Viewed by 2866

Abstract

We investigate whether female executives influence corporate environmental management (green management). Based on a difference-in-difference approach, our study provides evidence that female CFOs conduct more environmentally responsible activities, and the effects are more prominent when firms are of high risks. Female CFOs are [...] Read more.

We investigate whether female executives influence corporate environmental management (green management). Based on a difference-in-difference approach, our study provides evidence that female CFOs conduct more environmentally responsible activities, and the effects are more prominent when firms are of high risks. Female CFOs are more likely to involve in environmental management voluntarily. Further, environmental management improves firm performance such as debt cost saving. This research advances the gender diversity literature and suggests that female executives play an important role in corporate decisions and firm performance. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

27 pages, 352 KiB

Open AccessArticle

Do Affiliated Bankers on Board Enhance Corporate Social Responsibility? US Evidence

by Iftekhar Hasan, Hui Li, Haizhi Wang and Yun Zhu

Sustainability 2021, 13(6), 3250; https://doi.org/10.3390/su13063250 - 16 Mar 2021

Cited by 7 | Viewed by 2453

Abstract

In this study, we examine whether and to what extent affiliated bankers on board may affect firms’ corporate social performance. Using a propensity score-matched sample from 2002 to 2016, we find that board directors from affiliated banks exert significantly positive influence on firms’ [...] Read more.

In this study, we examine whether and to what extent affiliated bankers on board may affect firms’ corporate social performance. Using a propensity score-matched sample from 2002 to 2016, we find that board directors from affiliated banks exert significantly positive influence on firms’ corporate social performance. Furthermore, board of directors from affiliated banks are negatively associated with firm investments in corporate social responsibility (CSR) activities when firms experience financial distress. Finally, we find that the effect of affiliated bankers on board on firms’ CSR performance depends on the affiliated banks’ CSR orientation, as affiliated banker directors from banks with higher CSR orientation have a stronger influence on firms’ investments in CSR activities. The results suggest that improving firm’s CSR performance is consistent with the affiliated banks’ interests. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

22 pages, 700 KiB

Open AccessArticle

Business Friendliness: A Double-Edged Sword

by Mengyin Li, Phillip H. Phan and Xian Sun

Sustainability 2021, 13(4), 1819; https://doi.org/10.3390/su13041819 - 8 Feb 2021

Cited by 1 | Viewed by 2769

Abstract

In this paper, we test the hypothesis that business-friendly local-government policies combined with weak legal institutions lead to lower economic welfare in the form of greater fraud activity. Using data of almost 3000 failed peer-to-peer (P2P) lending platforms in China, labeled as “runaways”, [...] Read more.

In this paper, we test the hypothesis that business-friendly local-government policies combined with weak legal institutions lead to lower economic welfare in the form of greater fraud activity. Using data of almost 3000 failed peer-to-peer (P2P) lending platforms in China, labeled as “runaways”, we find that they are more prevalent in provinces with business-friendly policies with weak law-enforcement regimes. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

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22 pages, 372 KiB

Open AccessArticle

Employment Protection and Banking Power: Evidence from Adoption of Wrongful Discharge Laws

by Desheng Yin and Xinting Zhen

Sustainability 2021, 13(4), 1635; https://doi.org/10.3390/su13041635 - 3 Feb 2021

Viewed by 2405

Abstract

Human capital and labor costs are crucial for the sustainable growth of organizations, and take a vital role in affecting bank efficiency and banking power. This research empirically investigates whether labor employment protection affects banking power. The analysis exploits the staggered adoption of [...] Read more.

Human capital and labor costs are crucial for the sustainable growth of organizations, and take a vital role in affecting bank efficiency and banking power. This research empirically investigates whether labor employment protection affects banking power. The analysis exploits the staggered adoption of Wrongful Discharge Laws (WDLs) as a quasi-exogenous shock to employment protection. A Difference-In-Difference research design is implemented to study the impacts of WDLs on banking power, and the main results show that there exists a decline of banking power for commercial banks headquartered in states that adopt employment protection. This study further tests the main mechanism through which WDLs affect banking power and finds that the impaired banking power is primarily due to cost inefficiency but not profit inefficiency. Moreover, the adoption of wrongful discharge laws increases commercial banks’ labor costs and induces bank risk-taking. Full article

(This article belongs to the Special Issue Harnessing Sustainability to Corporate Finance and Financial Institutions)

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