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Does the history of the bureaucratic system, along with the establishment of the Great Wall during the Ming and Qing dynasties (1368–1911), affect firm behavior across the borderlands of the Great Wall?

The Ming and Qing dynasties built a centralized administrative system in the borderlands on the south side of the Great Wall, in contrast to the “feudal lordship” system on the north side. Employing a regression discontinuity analysis framework with the Great Wall as a geographical discontinuity, we examine the long-run effects of the Great Wall on firms’ earnings management.

Using a large sample of nonlisted firms in the central core frontier region, we show that the earnings management of firms in the region south of the Great Wall is significantly curtailed compared with firms in the north of it, and this effect is more pronounced for non-SOEs. Our findings are robust to a battery of tests to account for alternative explanations.

Overall, by emphasizing the role of institutions, like legal system, shaped in history on firms’ earnings management, this study sheds new light on institutional determinants of firms’ behaviors in earnings information disclosure.

First, we enrich our understanding of the institutional determinants of firms’ financial reporting outcomes. Second, our findings shed new light on the long-term effects of historical ruling styles on modern corporate behavior.

With the continuous deepening of China's mixed-ownership reform, the participants in the reform have gradually expanded from state-owned enterprises to private enterprises. Whether state-owned equity participation in private enterprises can facilitate the development of environmental, social and governance (ESG) performance in private enterprises is a question that needs urgent examination. This study aims to investigate the impact of state-owned equity participation on the ESG performance of private enterprises.

Using Chinese listed companies as the research sample, this study uses econometric methods such as multiple regression to analyze the relationship between state-owned equity and the ESG performance of private enterprises. Additionally, it explores the underlying mechanisms and influencing factors of this relationship.

There is a significant inverted U-shaped relationship between state-owned equity and the ESG performance of private enterprises. Mechanism analysis reveals that resource effects and governance effects play a mediating role in this nonlinear relationship. Furthermore, the authors find that environmental regulation and managers' attention to the environment positively moderate the relationship between state-owned equity participation and ESG performance.

A reasonable equity structure is crucial for enhancing corporate ESG performance. Moderate state-owned equity participation helps to leverage resource integration and governance advantages, which will assist private enterprises in maximizing ESG performance and achieving sustainable development.

In advancing the process of mixed-ownership reform, the government should maintain an appropriate proportion of state-owned equity to avoid excessive intervention in enterprise decision-making. At the same time, it should ensure that enterprises can genuinely undertake their social and environmental responsibilities while pursuing economic benefits. This is of great significance for promoting sustainable economic and social development.

This study integrates state-owned equity, ESG and nonlinear relationships into a single research framework. It explores the internal mechanisms and influencing factors of their relationship, overcoming the limitations of previous studies and provides a new perspective for understanding the impact of state-owned equity on corporate ESG performance.

A fundamental problem for intelligent manufacturing is to equip the agents with the ability to automatically make judgments and decisions. This paper aims to introduce the basic principle for intelligent crowds in an attempt to show that crowd wisdom could help in making accurate judgments and proper decisions. This further shows the positive effects that crowd wisdom could bring to the entire manufacturing process.

Efforts to support the critical role of crowd wisdom in intelligent manufacturing involve theoretical explanation, including a discussion of several prevailing concepts, such as consumer-to-business (C2B), crowdfunding and an interpretation of the contemporary Big Data mania. In addition, an empirical study with three business cases was conducted to prove the conclusion that our ideas could well explain the current business phenomena and guide the future of manufacturing.

This paper shows that crowd wisdom could help make accurate judgments and proper decisions. It further shows the positive effects that crowd wisdom could bring to the entire manufacturing process.

The paper highlights the importance of crowd wisdom in manufacturing with sufficient theoretical and empirical analysis, potentially providing a guideline for future industry.

The ideational connections between social democracy and basic income is the theme of this article. Social democracy is not a fixed doctrine, but as a movement it shares some key ideas with the policy of basic income, like solidarity, equal opportunity, freedom and social security. Due to current challenges emerging from waves of digitalisation, globalisation, etc., the support for a universal basic income has taken off, but not among social democratic politicians. The article argues that the social democratic policy of full employment implies an increasingly tough work orientation that is challenging to reconcile with de-commodifying social rights, which has characterized social democratic welfare states. It is further argued that a strict reciprocity-based policy has not proven effective in getting people into work on a permanent basis, and that the current challenges require new policy ideas. Two alternatives are discussed: guaranteed jobs and a basic income. The article argues that the lack of enthusiasm for the last option among social democrats is based on the misconception that a basic income will harm people's motivation to work, their self-respect, the social economy and the principle of justice. The article sheds light on this misconception. In the closing remarks, the proposal for an ‘emergency basic income’ is considered in view of the current global corona crisis.

Leadership.

The case is suitable for MBA, Executive level courses.

Yongye Group is a biotechnological enterprise in Inner Mongolia, China. In China, people lack trust in economic transactions due to the transitional state of the economy, especially regarding food safety. To respond to this situation, Wu Zishen, the chairman of the Board of Directors of Yongye Group, was determined to build trust among employees, distributors, farmers, and consumers towards the company. To this end, he started using a creative incentive system with employees and stakeholders: the pay-before-performance incentive system. According to this system, the reward is delivered in advance, contrary to be paid after the fulfillment of the task. This practice is meant to transform employees' work attitude from a passive “being told to work” to a more proactive “I want to work” mentality. When such an incentive system is practiced with customers and external distributors, it sends a message that the company is “treating customers as company employees”, which means that they are trusted as if they were part of the company itself. Wu Zishen also introduced a coherent series of leadership practices that generate a truly proactive culture in the organization.

From this case, students will learn how to create a proactive culture in business organizations and the effect of pay-before-performance on employees' work motivation.

Teaching notes and an exercise for class-based discussion are available.

The purpose of this study is to investigate the influence of geometric parameters of removable panels on the sealing characteristics of ceramic wafer seal structure subjected to high-temperature gas flow.

Based on the laminar flow Reynolds equation, the theoretical and numerical calculation models were constructed to investigate the influence of external convex deformation of removable panel on leakage rate. The theoretical formula for leakage rate after deformation of the removable panel was derived, and the flow field and leakage characteristics of ceramic wafer seal under different operating parameters were studied.

The leakage rate exhibits consistent trends between theoretical calculation, numerical simulation and experimental value, with a maximum discrepancy of 8.9%. This validates the accuracy of both the theoretical model and numerical simulation. As the deformation angle of the removable panel increases, the sealing gap gradually widens, resulting in a compromised sealing effect. Moreover, the leakage rate in the central region of the sealing area is lower compared to that at both ends.

The leakage of the ceramic wafer seal structure under the removable panel with different deformation angles can be monitored based on Reynolds equation. The pseudo-transient numerical calculation method can be used to determine the leakage value of the micro-state ceramic wafer seal structure. These research findings provide a theoretical foundation and numerical investigation approach for studying ceramic wafer seal structures.

This paper aims to extend the understanding of how real options reasoning (ROR) is associated with downside risk and how a firm’s portfolio (explore and exploit) of investment activities affects managers’ ability to effectively apply ROR in relation to downside risk.

The survey method is used. It is applied to a population of Danish firms, which in 2018 had more than 100 employees. The chief financial officer was the target respondent.

This study finds that a higher level of ROR is associated with lower levels of downside risk. ROR’s association with lower levels of the downside risk is also moderated by the level of relative exploration orientation in a negative direction.

The field of ROR research on downside risk and portfolio subadditivity has been dominated by research focused on multinationality. This paper extends extant literature on ROR by studying ROR as a multidimensional construct of firm action, which is associated with lower levels of downside risk, also when studied outside of a multinationality setting. This is the case when ROR is implemented as a complete system. This paper also applies a framework of exploitation and exploration to show that findings on subadditivity in options portfolios caused by asset correlations extend outside the scope of multinationality and into one of product/service innovation.

The purpose of this study is to investigate the influence of dimple radius, depth and density on the lubrication performance of the plunger.

A lubrication model was adopted to consider eccentricity and deformation during the working process of the plunger, and a rig test was performed to confirm the simulation results. The texture was fabricated using laser surface texturing.

The simulation results suggested that when dimple radius or depth increases, oil film thickness of the plunger increases before decreasing, and asperity friction displays an opposite trend. Therefore, appropriate microdimple texture could facilitate lubrication performance improvement and reduce the wear. Microdimples were then lased on the plunger surface, and a basic tribological test was conducted to validate the simulation results. The experimental results suggested that the average friction coefficient decreased from 0.18 to 0.13, a reduction of 27.8%.

The introduction of microdimple on a plunger couple to reduce friction and improve lubrication is expected to provide a new approach to developing high-performance plunger couple and improve the performance of the internal combustion engine. If applied, the surface texture could help reduce friction by around 27% and cap the cost relative to the plugger friction.

The microdimple texture was introduced into the plunger couple of a vehicle to reduce the friction and improve the performance. Findings suggested that surface texture could be used in the automotive industry to improve oil efficiency and lubrication performance.

The peer review history for this article is available at: http://dx.doi.org/10.1108/ILT-07-2020-0259.

Social ties may either help chief executive officers (CEOs) supervise chief financial officers' (CFOs) behaviors effectively and improve financial reporting quality or lead to collusion and undermine financial reporting quality. Therefore, this paper examines the impact of social ties between CEOs and CFOs on financial reporting quality.

This paper constructs the CEO–CFO social ties through their mutual alma mater or birthplace. Based on 6,787 Chinese non-financial firm-year observations from 2003 to 2020, the paper conducts an empirical test using the multiple regression method.

The main finding is that firms with CEO–CFO social ties are more likely to exhibit higher financial reporting quality. CEOs with social ties to CFOs can obtain a high level of information and exert a better supervisory and monitoring role. Further, CEO–CFO social ties are more effective when the CEO does not have a financial background and when the institutional environment is weak.

This paper mainly contributes to the literature exploring the impact of executive characteristics on financial reporting quality and the literature examining the relation between social ties and corporate behaviors. Meanwhile, the paper emphasizes the important role of social ties as an informal monitoring mechanism in practice.