Hua Feng, Ahsan Habib and Gao liang Tian
The purpose of this paper is to investigate the association between aggressive tax planning and stock price synchronicity.
Abstract
Purpose
The purpose of this paper is to investigate the association between aggressive tax planning and stock price synchronicity.
Design/methodology/approach
Employing the special institutional background of China, this study constructs tax aggressiveness and stock price synchronicity measures for a large sample of Chinese stocks spanning the period 2003–2015. The authors employ OLS regression as the baseline methodology, and a fixed effect model, the Fama–Macbeth method and GMM as sensitivity checks. Matched samples and difference-in-difference analyses are used to control for endogeneity.
Findings
The authors find a significant and positive association between aggressive tax planning and stock price synchronicity. Because material information about risky tax transactions tends to be hidden in various tax accruals accounts, aggressive tax strategies make financial statements less transparent, thereby, increasing information asymmetry and decreasing stock price informativeness. The authors also find that the firms engaging in aggressive tax planning exhibit relatively high corporate opacity. In addition, the authors find that improvements in the tax enforcement regime, ownership status and high-quality auditors all constrain the adverse effects of tax aggressiveness.
Practical implications
This study has important practical implications for China’s regulators, who are striving to reduce the tax burden of enterprises. It also helps investors to consider investment decisions more appropriately from a taxation perspective.
Originality/value
First, this paper contributes to the stock price efficiency literature by identifying the effect of a hitherto unexamined factor, namely, firm-level aggressive tax planning, on the efficiency of stock prices. Second, this study provides further empirical evidence to support the agency view of tax aggressiveness, and the informational interpretation of stock price synchronicity. Third, this study helps us better understand the effects of firm-level tax policy on firm-specific information capitalization in an environment where overall country-level investor protection is relatively weak.
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Radwan Hussien Alkebsee, Gao-Liang Tian, Muhammad Usman, Muhammad Abubakkar Siddique and Adeeb A. Alhebry
This study aims to investigate whether the presence of female directors on audit committees affects audit fees in Chinese listed companies. This study also investigates whether…
Abstract
Purpose
This study aims to investigate whether the presence of female directors on audit committees affects audit fees in Chinese listed companies. This study also investigates whether the audit committee’s gender diversity moderates the relationship between the firm’s inherent situational factors (e.g. audit complexity and firm risk) and audit fees. Finally, this study investigates whether the effect of the audit committee’s gender diversity on audit fees varies with within-country institutional contingencies (e.g. state-owned enterprises [SOEs] vs non-SOEs and firms that are located in more developed regions vs firms that are located in less developed regions)
Design/methodology/approach
This study used the data of all A-share listed companies on the Shanghai and Shenzhen stock exchanges for the period from 2009 to 2015. The authors use ordinary least squares regression as a baseline methodology, along with firm fixed effect, Deference in Deference method, two-stage least squares regression, two-stage Heckman model and generalized method of moments models to control for the possible issue of endogeneity.
Findings
The study’s findings suggest that the presence of female directors on the audit committee improves internal monitoring and communication, which reduce the perceived audit risk and the need for assurances from external auditors. The results also suggest that female directors demand high-quality audits and further assurance from external auditors when the firm is more complex and riskier. In addition, the results suggest that within-country, institutional factors play significant role in shaping the governance role of gender-diverse audit committee.
Practical implications
The study contributes to the agency theory by providing evidence that the interaction between agency theory and corporate governance “board composition” generates an effective monitoring mechanism and contributing to the institutional theory by finding that role of female directors on audit committee varies from context to another. In addition, this study contributes to literature review of gender diversity in the boardroom by finding the economic benefit of having female directors on audit committee. Finally, this study has implications for policy-makers in promoting regulations to legalize women presence on the board, to external auditors in assessing control risk during planning the audit, to those who responsible for appointing audit committee members.
Originality/value
The authors extend earlier studies by providing novel evidence on the relationship between gender-diverse audit committees and audit fees in terms of both the supply- and demand-side perspectives; that female directors moderate the relationship between firm inherent situational factors (e.g. audit complexity and firm risk) and audit fees; and that the effect of audit committees’ gender diversity on audit fees varies with sub-national institutional contingencies.
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Liang Tian and Yu Luo
The purpose of this paper is to quantitatively investigate the effect of process parameters (including welding current, voltage and speed) and plate thickness on in-plane inherent…
Abstract
Purpose
The purpose of this paper is to quantitatively investigate the effect of process parameters (including welding current, voltage and speed) and plate thickness on in-plane inherent deformations in typical fillet welded joint; meanwhile, the plastic strains remaining in the weld zone are also analyzed under different influencing factors.
Design/methodology/approach
To achieve the purpose of this study, a thermal-elastic-plastic finite element (TEP FE) model is developed to analyze the thermal-mechanical behavior of the T-welded joint during the welding process. Experimental measurements have verified the validity of the established TEP FE model. Using the effective model, a series of numerical experiments are performed to obtain the inherent deformations under the conditions of different influencing factors, and then the calculation results are discussed based on the relevant data obtained.
Findings
Through numerical simulation analysis, it is found that the longitudinal and transverse inherent deformations decrease with the increase of welding speed and plate thickness, whereas as the nominal heat input increases, the inherent deformations increase significantly. The longitudinal shrinkage presents a quasi-linear and nonlinear distribution in the middle and end of the weld, respectively. The plastic strains in the cross section of the T-joint also vary greatly because of the process parameters and plate thickness, but the maximum value always appears near the location of the welding toe, which means that this point faces a relatively large risk of fatigue cracking. The inherent deformations are closely related to the plastic strains remaining in the weld zone and are also affected by many influencing factors such as process parameters and plate thickness.
Research limitations/implications
In this study, relatively few influencing factors such as welding current, voltage, speed and plate thickness are considered to analyze the inherent deformations in the T-welded joint. Also, these influencing factors are all within a certain range of parameters, which shows that only limited applicability can be provided. In addition, only in-plane inherent deformations are considered in this study, without considering the other two out-of-plane components of inherent deformations.
Originality/value
This study can help to expand the understanding of the relationship between the inherent deformations and its influencing factors for a specific form of the welded joint, and can also provide basic data to supplement the inherent deformation database, thereby facilitating further researches on welding deformations for stiffened-panel structures in shipbuilding or steel bridges.
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This study is designed to identify the policy shift on migrant children's11There are various definitions of migrant children in urban China. In this research, migrant children…
Abstract
This study is designed to identify the policy shift on migrant children's11There are various definitions of migrant children in urban China. In this research, migrant children refer to the children from rural areas who have resided with their parents at the urban areas for at least six months without local household registration status. education at national level in urban China22With the rapid socioeconomic development and urbanization in China, the definition of urban China is changing. In this research, urban China refers to the major cities in China, such as Beijing, Shanghai, Guangzhou, Tianjin, Chongqing, and so forth. during the past decades. Meanwhile, it is expected to explore the policy limitations reflected by the practice at school level regarding accommodating migrant children's education.
This study is conducted through policy review regarding education for migrant children and analysis of data collected through questionnaires and interviews at one public junior high school in Beijing.
This study identifies a positive change of involving migrant children in urban public schools. However, there is a need for flexible mechanism that can fully accommodate various needs regarding migrant children's education in urban public schools.
The study argues the necessity of a multipartnership for establishing a sustainable public education system for accommodating migrant children education in urban public schools.
Being different from other research on the same issue in urban China, this study leads a new round of discussion on the quality education for migrant children.
Tian Wang, Yunan Duan and Yangyang Liang
The authors address a two-dimensional (both customer acquisition and retention) incentive in a decentralized service chain consisting of a risk-neutral brand and agent (or…
Abstract
Purpose
The authors address a two-dimensional (both customer acquisition and retention) incentive in a decentralized service chain consisting of a risk-neutral brand and agent (or averse).
Design/methodology/approach
The authors focus on the relationship between acquisition and retention, that is, retained customers (repeated purchases) are based on and come from the acquired (new) customers in the former period. The authors also design a two-period separate incentive on both dimensions.
Findings
The authors found that a targeted incentive strategy should be applied for achieving more revenue when the incentive intensities are relatively small. Otherwise, the brand needs to adjust the targeted incentive strategy into incentivizing the opposite dimension, particularly on acquisition. Under the optimal contract, the brand needs to be very careful with deciding the fixed part of the incentive salary and the incentive intensities on both dimensions. For example, the fixed salary initially decreases and then increases in the incentive intensities. For the optimal incentive policies, the brand should incentivize acquisition but outsource retention if the agent is risk-neutral. When the agent is becoming risk-averse, the brand should lower its incentive intensity as the risk degree and variances become larger. Interestingly, the brand may benefit from introducing risks.
Originality/value
The study contributes to the literature by considering the following points. First, the authors extend the principal-agent incentive model by considering two-period decisions of customer acquisition and retention. Second, based on the two-period principal-agent problem, the authors design separate incentive intensities on acquisition and retention, respectively. While, most of the literature focused on acquisition incentives. Third, different from other works focusing on either risk-neutral or risk-averse environments, the authors consider both and compare the cases of risk-neutral and risk-averse to analyze the impact of risk on the optimal decisions and the brand's expected profit.
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There are several permutations of destructive leadership types. Most involve active leadership actions, but some involve passive actions (or lack of leadership). A review of the…
Abstract
There are several permutations of destructive leadership types. Most involve active leadership actions, but some involve passive actions (or lack of leadership). A review of the literature reveals a relative dearth of root causes of destructive leadership type, but a reasonable sampling of causal factors and predictors of destructive leadership results. The author focuses on three relevant and representative destructive leadership types: Pseudotransformational, Laissez-Faire, and Unethical, and scoured the literature for root causes, causal factors, and predictors related to each. He further compared and contrasted these leadership types to differentiate their similarities and differences and discussed the causal factors and predictors associated with the operationalization of these leadership styles.
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M.M. Fonseka, Gao-liang Tian and Liu-chuang Li
The purpose of this paper is to investigate the impact of different sources of external financing and internal financial capabilities on competitiveness and sustainability. This…
Abstract
Purpose
The purpose of this paper is to investigate the impact of different sources of external financing and internal financial capabilities on competitiveness and sustainability. This paper also studies the nature of their relationships related to regulations on external financing in Chinese capital market.
Design/methodology/approach
Resource- and industry-based views provide a theoretical background. Based on balanced panel of 4,530 firm-year observations, hierarchical regressions were used to examine the research model.
Findings
Results support the idea that the strict Chinese regulatory regime allows some firms to access capital and debt markets for financing more than others. It was found that firms’ internal financing abilities do not offer a significant advantage compared to external financing abilities; firms’ abilities to raise capital from existing shareholders, the public and easy access to bank financing are related positively for an advantage on firm’s competitiveness within a industry. Firms with the ability to offer shares to existing shareholders, issue non-convertible and convertible bonds and access to bank financing are sustainable in long-run.
Research limitations/implications
This study focuses on sources of financial capability of Chinese listed firm impact on competitiveness and sustainability. It is context specific to a regulated market. Hence, it is necessary to replicate this study in other contexts.
Practical implications
Implications include the need to mobilize external financial resources for small and privately-owned firms and to further reform security regulations to ensure fair competition and sustainability.
Originality/value
The authors originally investigate the effect of sources of financial capability impact on firms’ competitiveness and sustainability in a regulated market. The paper explains the relationships, and enhances the understanding of regulated capital market and existing literature.
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Wenbo Li, Bin Dan, Xumei Zhang, Yi Liu and Ronghua Sui
With the rapid development of the sharing economy in manufacturing industries, manufacturers and the equipment suppliers frequently share capacity through the third-party…
Abstract
Purpose
With the rapid development of the sharing economy in manufacturing industries, manufacturers and the equipment suppliers frequently share capacity through the third-party platform. This paper aims to study influences of manufacturers sharing capacity on the supplier and to analyze whether the supplier shares capacity as well as its influences.
Design/methodology/approach
This paper deals with conditions that the supplier and manufacturers share capacity through the third-party platform, and the third-party platform competes with the supplier in equipment sales. Considering the heterogeneity of the manufacturer's earning of unit capacity usage and the production efficiency of manufacturer's usage strategies, this paper constructs capacity sharing game models. Then, model equilibrium results under different sharing scenarios are compared.
Findings
The results show that when the production or maintenance cost is high, manufacturers sharing capacity simultaneously benefits the supplier, the third-party platform and manufacturers with high earnings of unit capacity usage. When both the rental efficiency and the production cost are low, or both the rental efficiency and the production cost are high, the supplier simultaneously sells equipment and shares capacity. The supplier only sells equipment in other cases. When both the rental efficiency and the production cost are low, the supplier’s sharing capacity realizes the win-win-win situation for the supplier, the third-party platform and manufacturers with moderate earnings of unit capacity usage.
Originality/value
This paper innovatively examines supplier's selling and sharing decisions considering manufacturers sharing capacity. It extends the research on capacity sharing and is important to supplier's operational decisions.
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The purpose of this paper is to examine the implications of overconfidence for information acquisition and market efficiency.
Abstract
Purpose
The purpose of this paper is to examine the implications of overconfidence for information acquisition and market efficiency.
Design/methodology/approach
The paper studies a model of a competitive market with both overconfident and rational traders endogenously acquiring costly differential information.
Findings
The paper shows that overconfident traders acquire more information than do rational traders, and improve market informational efficiency by making price more informative than in a fully rational market.
Originality/value
This result is in contrast with Odean where information acquisition is exogenous, and overconfidence worsens price quality. Therefore, it may be crucial to incorporate endogenous information acquisition into models of overconfidence.
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The purpose of this paper is to examine the implications of asymmetric information for price evolution and investor behavior under a rational expectations framework.
Abstract
Purpose
The purpose of this paper is to examine the implications of asymmetric information for price evolution and investor behavior under a rational expectations framework.
Design/methodology/approach
The author presents a simple asymmetric information‐based asset‐pricing model to show that private information and its revelation can generate price momentum. To empirically test this implication of the model, Easley et al.'s probability of information‐based trade (PIN) is used as a proxy for private information.
Findings
High PIN firms are found to have larger magnitudes of momentum effect even after controlling for size. The abnormal returns are both economically and statistically significant, and cannot be explained by the Fama‐French factors.
Originality/value
This study provides both an information‐based theory to explain the momentum anomaly and empirical support for the theory.