With China's monetary policy regime shifting gradually from a quantitative-based framework to a price-based one, short-term interest rates in the inter-bank market play an increasingly critical role in monetary policy transmission. As the most sensitive measure of the inter-bank market liquidity,short-term interest rate in the inter-bank market not only reflects the monetary policy orientation of the central bank, but also measures the inter-bank financing cost of financial institutions. The transmission of short-term interest rate along the treasury yield curve is an important part of the entire interest rate transmission mechanism in the price-based monetary policy framework.
At the same time, the volatility of short-term interest rates in China's inter-bank market is relatively high compared with that of most developed and developing countries. The high volatility of short-term interest rates has had an adverse impact on the operation of financial institutions and the transmission of monetary policy. In recent years, the People's Bank of China (PBoC) has focused on optimizing the liquidity provision mechanism, and gradually improved the interest rate corridor mechanism through the introduction of standing lending facilities and other arrangements, and decreased the volatility of short-term interest rates. Naturally, the question is, how does short-term interest rate volatility in the inter-bank market affect the transmission efficiency of monetary policy shocks along the yield curve and how are financial market participants involved in this process？ This is exactly what this article is concentrates on.
Traditional empirical research on the transmission of monetary policy has the following difficulties. First, the use of interest rates or money growth rate as proxy variables for monetary policy has a strong endogenous problem. Second, the conventional single-equation estimation method can only explore the current impact of policy shocks, but cannot capture the complex dynamic effects. Third, China's current quantitative and price-based monetary policy tools are being used at the same time, and it is difficult for traditional methods to uniformly measure the amplitude of various different policy instruments.
This paper uses high-frequency identification and instrumental variable local projection methods (LP-IV) to explore the impact of short-term interest rate volatility on the transmission efficiency of monetary policy. Based on the data of interest rate swap transactions, this paper first uses the high-frequency identification method to identify unexpected monetary policy changes, which avoids the endogeneity problems that may be caused by traditional identification methods. On this basis, this paper uses the LP_IV to estimate the dynamic transmission efficiency of short-term interest rate changes caused by monetary policy shocks to the yield of treasury bonds of various maturities, as well as the impact of short-end interest rate fluctuations on the transmission efficiency. The results show that: first, monetary policy shocks have a significant and lasting impact on the transmission of short-term interest rates to treasury bond yields; Second, the fluctuation of short-term interest rates will weaken the transmission efficiency of monetary policy. Third, there is asymmetry in the efficiency weakening caused by short-term interest rate fluctuations, which has a strong weakening effect on loose monetary policy, but a weak effect on tight monetary policy, and there is maturity heterogeneity.
Although the existing studies have paid attention to the phenomenon of excessive fluctuations in short-term interest rates in China's inter-bank market, there have been no in-depth empirical studies on how excessive fluctuations affect the transmission efficiency of monetary policy shocks. At the same time, it does not consider whether there is heterogeneity in the impact of excessive volatility on policy transmission efficiency under different monetary policy stances (easing or tightening). The research in this paper fills this gap and further enriches the research on the transmission of monetary policy shocks to the financial market.
The conclusions of this paper provide support for the central bank to dredge the constraints faced by the price transmission of monetary policy and further cultivate the key role of short-term interest rates in monetary policy. The environment of moderate fluctuations in short-term interest rates is conducive to improving the transmission efficiency of monetary policy under the new framework and stabilizing market participants' expectations for short-term interest rates.

In recent years, facing new situations and challenges, Chinese firms have paid particular attention to the internationalization strategy of “venturing overseas and going global”. Against this backdrop, there has been a significant increase in cross-border M&A by Chinese firms, with China surpassing the United States to become the world's largest cross-border acquirer. China has long advocated the establishment of a new type of international relations centered on win-win cooperation, and provided opportunities for Chinese firms to accelerate their overseas development through the Belt and Road Initiative and other cooperation mechanisms. But at the same time, China's OFDI still faces various risks, with political risk being a major risk category encountered by Chinese firms' investment. specifically, political risks related to international relations, such as government opposition, public blacklash and government default risk, are all important factors affecting cross-border M&A. In fact, although China's economic and trade exchanges with other countries continue to deepen, the host government may still refuse China's investment on the guise of economic or military security due to various factors such as ideological differences and competition of national interests. Cross-border M&A are related to how firms can utilize their resource endowments, improve production efficiency, expand market share, strengthen technological innovation, and thereby promote China's industrial transformation and develioment, and climb up the global value chain. Therefore, it is of great practical significance to study cross-border M&A.
The contributions of this paper are as follows. Firstly, in recent years, many new phenomena and changes related to the global economy and polity have emerged, which means that the existing trend, objective laws and world order are at risk of being broken down and rebuilt, and also challenge the existing empirical laws and empirical conclusions are also being challenged. Secondly, the measurement of bilateral relations has always been a difficult problem in academia. This paper uses the GDELT news database to construct a monthly index that includes government and non-government entities to comprehensively measure bilateral relations, integrating government interaction and non-governmental exchanges into a unified framework,This clarifies the two action mechanisms of the government and the private sector, so as to reveal the “black box” of how international relations affect firms' outbound M&A. Finally, this paper emphasizes the perspective of bilateral interaction in the field of cross-border M&A research, and further examine the impact of active and passive international relations,the uncertainty of international relations on cross-border M&A, the moderating effect of public opinion and the helerogeneity effect of institutions, time periods and geographic locations, ennching research conclusions in related fields.
This paper constructs a monthly measurement index of international relations and uses panel data from 2015 to 2022 to examine the impact of international relations on cross-border M&A. The conclusions are as follows: Firstly, after controlling for factors such as macroeconomic, bilateral trade, and unobservable exogenous shocks, the deterioration of bilateral relations between China and host countries will have a significantly negative impact on the amount, number, and completion of cross-border M&A by Chinese firms. After replacing the core explanatory variables, changing the sample country group, considering sample selection bias and endogeneity issues, this basic conclusion remains robust. Meanwhile, event data includes both the active and passive parties involved in the event. Through analysis, it was found that compared to events actively facilitated by China, events facilitated by domestic entities in the host country have a more significant impact on cross-border M&A by Chinese firms. Secondly, the uncertainty of international relations will significantly affect cross-border M&A activities, evidenced by the decrease in the amount, transaction frequency, and completion rates of Chinese firms' cross-border M&A as the uncertainty of international relations increases. Thirdly, the increase in news media coverage of conflict will amplifu investors' perception of international relations, thereby strengthening the inhibitory effect of deteriorating bilateral relations on cross-border M&A activities. Fourthly,international conflicts can increase the likelihood of investment being opposed by the government and the public respectively by suppressing high-level interactions at the government level and reducing public goodwill at the civilian level, thereby restraining cross-border M&A. Fifthly, from the perspective of institutional, temporal and geographic heterogeneity, the inhibitory effect of the intensification of international conflicts on cross-border M&A activities is more pronounced in countries with lower economic freedom, before the COVID-19 pandemic and in non-Belt and Road countries.
On this basis, this paper puts forward the following suggestions. First,as government actions occvpu major part of bilateral relations and play an important role in guiding non-governmental exchanges, we should actively bvild global partnerships and create new opportunities for joint development. Second, non-governmental exchanges are an effective complement to government exchanges and will also affect bilateral relations independently. We should seize the initiative of international public opinion and enhance non-governmental exchanges and cooperation. Third, a stable economic cooperation regime will make cross-border M&A less sensitive to fluctuations in bilateral relations. We should deepen the Belt and Road cooperation and establish investment frameworks. Fourth, the heterogeneity of economic institutions will affect the effect of bilateral relations on cross-border M&A. We should strengthen national political risk prevention and safeguard Chinese firms' overseas investment.

Due to the broader market scope of bank credit, from both the perspective of Arrow-Debreu economic Pareto efficiency and the financial accelerator effect, the substitution of bank credit for trade credit plays a significant role in promoting high-quality development at both the micro and macro levels. In recent years, the rapid development of digital technology has fundamentally transformed China's financial structure and operations. Existing research generally holds that fintech can effectively reduce information asymmetry, thereby mitigating financial friction. Theoretically, this should increase firms' reliance on bank credit and reduce trade credit usage. However, this view overlooks the heterogeneity of information in the bank-enterprise credit market: some information, such as credit scores, is digitizable, while other aspects, like leader ship quality, are not digitizable. While digital transformation enhances the ability to process digitizable information, it fails to address non-digitizable information asymmetry. Additionally, as digitalization progresses, banks are reducing front-line operations that handle non-digitizable information. As a result, the impact of digital transformation on the relationship between banks and trade credit becomes uncertain.
To explore this issue, we categorize credit market information into digitizable and non-digitizable types and examine how bank digital transformation influences the substitutability between trade credit and bank credit. Using an extended bank-enterprise relationship framework, this paper analyzes how digital transformation alters credit market friction and affects firms' credit choices. Based on the model analysis, we propose two hypotheses and test them using data from non-financial listed companies in China (2010-2021) with a functional-coefficient regression model. The results show that the effect of bank digital transformation on credit substitutability is nonlinear. Its impact increases as the proportion of digitizable information grows, with stronger substitution observed when downstream firms are larger and have more digitizable information. This suggests that, although bank digitalization has opposing effects on agency costs, the cost-reducing is dominant. Further analysis reveals that bank digital transformation affects credit substitutability by influencing the marginal cost of bank credit through information processing. The substitution relationship is also sensitive to economic cycles and industry types, being more pronounced during economic expansions. Significant industry differences are noticeable, with high-tech industries relying more on digitizable information, while manufacturing industries depend more on non-digitizable information, making digitalization's impact weaker in the latter.
This paper makes three potential contributions. First, it classifies bank-enterprise credit market information into digitizable and non-digitizable types, proposing a theoretical framework that reveals the dual role of bank digitalization in addressing information asymmetry caused by heterogeneous information in credit markets. Second, based on the characteristics and acquisition paths of digitizable and non-digitizable information, this paper develops an information structure index, demonstrating that bank digital transformation, rather than other mechanisms, affects the substitutability between trade credit and bank credit. Third, consistent with the theoretical model's logic, we employ a functional-coefficient regression model to empirically test the nonlinear relationship, revealing that the impact of bank digital transformation on firms' credit choices is nonlinearly related to the information structure, and confirming that the key mechanism through which digital transformation affects the relationship between trade credit and bank credit is the marginal cost of firms choosing bank credit.
In the context of rapid fintech development, this study has important policy implications for optimizing financial regulation and macroeconomic management. First, as banks' digital transformation strengthens the substitution of bank credit for commercial credit, policymakers can further support digitalization while maintaining traditional credit services to ensure more efficient resource allocation. Second, although enhanced bank credit substitution improves financial stability and mitigates risks within the banking system, it may also introduce new risks, requiring innovative regulatory approaches. Finally, considering that enterprises with different information advantages have different risk premiums when obtaining bank credit, policymakers should innovate structural monetary policy tools to encourage banks to provide differentiated credit products according to the information structure of different enterprises.

In recent years, default events in China's bond market have occurred frequently. According to Wind statistics, from 2014 to 2023, a total of 1,116 bonds defaulted in the bond market. The market interprets these bond market default events as the government breaking rigid payment guarantees for bonds. In this context, the issue of creditor interest protection has attracted widespread attention. This paper takes the cash dividend policy of bond-issuing companies as a research perspective, exploring the conflicts of interest between shareholders and creditors and further discussing effective ways to protect creditor interests from the perspective of corporate governance.
Theoretically, the issuance of cash dividends can either exacerbate the conflict of interest between creditors and shareholders or signal the company's stable profitability in the future. In the context of breaking rigid payment guarantees, does the cash dividend policy of bond-issuing companies exacerbate the conflict of interest between creditors and shareholders, or convey information about the company's stable future profitability to creditors？ To answer this question, we use A-share listed companies with undue corporate bonds during the period when cash dividend announcements were made from 2010 to 2022 as samples and employ the event study method to investigate the reaction of the bond secondary market price to corporate cash dividend policies. The empirical results show that the larger the scale and increase in the announced cash dividends, and the poorer the continuity of the dividend policy, the lower the cumulative excess returns in the bond secondary market after the announcement. Furthermore, the negative reaction of the bond market to dividend payments becomes significant only after breaking rigid payment guarantees and is more prominent in financially distressed enterprises and private enterprises, indicating that creditors pay more attention to corporate operating information after rigid payment guarantees break. The heterogeneity analysis based on corporate governance characteristics shows that better equity checks and balances, as well as the supervision of independent directors and intermediaries, can effectively alleviate creditors' concerns about potential conflicts of interest.
The academic contributions of this paper are mainly reflected in the following aspects: First, it reveals the conflicts of interest between shareholders and creditors regarding dividend policies in emerging markets. The results of this paper show that Chinese bond investors will “vote with their feet” against enterprises with higher or increasing cash dividends, confirming creditors' concerns that shareholder-dominated corporate financial policies may harm their interests in emerging markets with underdeveloped bond contract clauses. Second, from the perspective of creditors, this paper discusses the economic consequences of dividend policies and provides new insights for formulating dividend policies. Previous studies have paid less attention to creditors' interests in dividend decisions. By examining the reaction of bond secondary market investors to corporate cash dividend policies, this paper provides direct evidence of the conflict of interest between shareholders and creditors regarding dividend policies. Third, the results of this paper show that when rigid payment guarantee have been brolen, bond prices in the secondary market will decline significantly after announcements of dividend policies that may harm creditors' interests. Moreover, the negative reactions in the secondary market are greater for bonds issued by financially weaker enterprises, those with high equity concentration, and those lacking effective supervision, providing new evidence for the validity of bond pricing in China's secondary bond market and revealing the internal logic through which corporate financial policies affect bond prices in the secondary market after breaking rigid payment guarantees.
The policy implications of this paper are mainly reflected in the fact that future guidance on dividend policies for listed companies should emphasize balancing the interests of both shareholders and creditors while simulrareovsly “rewarding shareholders.” Strengthening checks and balances on the powers of major shareholders, better leveraging the role of independent directors, and fully exerting the supervisory role of market intermediaries can help alleviate conflicts of interest between creditors and shareholders regarding dividend policies.

With the continuous release of credit risk in the bond market, the phenomenon of corporate debt defaults in China tends to be increasingly common with the number and amount of defaults increasing. The debt default risk is closely related to the supply chain. The supplier affects the procurement and cost of the enterprise, while the customer affects the demand and revenue of the enterprise. Once the supply chain is broken down, the enterprise will be unable to operate, which results in debt defaults. In practice, there are many cases of cascading debt defaults due to the bankruptcy of upstream suppliers or downstream customers, which lead to systemic financial risks. How to effectively reduce the debt default risk of Chinese enterprises in the supply chain, prevent and resolve systemic financial risks and maintain the security and stability in the industry chain has become a very important research topic on national governance.
Exising srudies on corporate debt default risk. existing studies mainly focus on the macro institutional environment and micro corporate characteristics, but have paid little attention to the spillover effect of accounting information on supply chain debt risk. In practice, suppliers and customers are closely connected, and customers' accounting information has spillover effects on the financing and operation of suppliers, which can subsequently affect the debt default risk. Therefore, we want to explore whether and how customers' high-quality accounting information can reduce the debt default risk of suppliers, and under which conditions the risk mitigation effect will be more obvious.
Based on the sample of Shanghai and Shenzhen A-share listed companies from 2008 to 2020, this paper explores the mitigation effect and internal mechanism on how customers' high-quality accounting information affects supplier's debt default risk. We find that: Customers' high-quality accounting information can effectively alleviate the debt default risk faced by suppliers. The mechanism tests show that customers' high-quality accounting information can optimize the operation and management activities of suppliers, enhance their assets value, improve the credit decisions of financial institutions, and reduce the scale of excessive debt of suppliers, thereby mitigating debt default risk. Finally, based on the heterogeneity analysis of macroeconomic uncertainty, supply chain characteristics, and corporate ownership structures, we find that when thesr is slower macroeconomic growth, stronger supply chain economic links or more specific assets, and privately controlled suppliers, customers' high-quality accounting information mitigates suppliers' debt default risk more. Our results remain robust across various tests.
The research contributions of this study are as follows: First, it enrich research on influencing factors of corporate debt default risk. Based on the supply chain context, this paper studies the impact of customers' high-quality accounting information on suppliers' corporate debt default risk for the first time. We explore the underlying mechanisms and enrich literature on factors affecting corporate debt default risk.
Second, it expands the spillover effect of accounting information within the supply chain. Information spillover effect is common in the supply chain, which has been widely explored in previous studies. This paper theoretically analyzes and empirically tests the spillover effect of customers' high-quality accounting information on suppliers' corporate debt default risk for the first time, and also considers the impacts of heterogeneous factors. It expands uoon the economic consequences of accounting information spillover effects in supply chain.
Third, it provides important theoretical guidance and policy recommendations for Chinese enterprises to better resolve debt default risks. Since 2020, macroeconomic growth has slowed down and corporate debt defaults have occurred more frequently making prevention and resolution of systemic financial risks increasingly important. We find that customers' high-quality accounting information can reduce the debt default risk of suppliers, which can effectively curb the contagion and accumulation of debt default risk in supply chain. Our findings provide policy references for maintaining supply chain security and stability and for comprehensively deepening the supply-side structural reform, as emphasized in the report of the 20th National Congress.

in recent years, The global climate and environment have been deteriorating continuously, bringing huge negative impacts on the economic development and financial stability of various countries and drawing the world's attention. This paper takes the most common environmental shock (air pollution) and the financial sub-market most closely related to air pollution (the real estate market) as its research objects, using samples of 150 cities within 8 major urban agglomerations in China from July 2010 to December 2021 to study the impact of air pollution on the risks of urban real estate markets. Specifically, this paper, referring to Silva-Buston (2019), constructs synchronism indicators that reflect the connectivity between the house price return of one city and that of the other cities within the same urban agglomeration for 8 major urban agglomerations respectively, and uses the indicators to measure house price spillovers. Then, this paper conducts an analysis of the validity of indicators, analyzing the evolution and distribution laws of core indicators from both time and spatial dimensions. Next, this paper adopts a panel regression model to examine the impact of the Air Quality Index(AQI) of a city on its own house price spillover, and replaces the independent variable and dependent variable respectively for robustness tests. This paper also uses instrumental variables to alleviate the possible endogeneity problem, and tests the existence of the two impact paths, physical diffusion and industrial synergy, by group-based regression. Finally, this paper empirically evaluates the effects of China's past environmental protection policies on air pollution control and financial stability.
The spillover indicators constructed in this paper perform in line with the real-world experience in both time and spatial dimensions, and the validity of the indicators has been largely verified. Time dimension analysis reveals that the constructed house price spillover indicators can provide additional information for measuring real estate market risks from the perspective of network node synchrony. Spatial dimension analysis finds that the overall housing price spillovers of urban agglomerations may be related to factors such as their own geographical area, spatial compactness, and the gap in the economic development level of internal cities, where most central and large cities are systemically important. The regression results indicate that the deterioration of urban air quality will lead to a decline in urban house prices and an increase in the urban house price spillover effect. On average, for every one standard deviation increase in the urban air pollution, the urban house price return will decrease by 12.29%, and the urban house price spillover will increase by 22.74%. This result might be because air pollutants emitted by a certain city will impose a common negative shock on the cities in the adjacent area, thereby increasing its own house price spillover. After conducting the robustness test and the endogeneity test, we find that the baseline results in this paper are very robust. Moreover, it has been empirically verified that physical diffusion and industrial synergy are two important paths through which air pollution affects the urban house price spillover. We also find that the implementation of environmental protection policies in China in the past has played a positive role in maintaining financial stability.
This paper has the following three contributions. Firstly, compared with many existing studies that investigate the impact of air pollution on house price or house price volatility from the perspective of a single city, this paper studies the impact of air pollution on house price spillover from the perspective of overall synchronicity, focusing on analyzing the network spillover mechanism of real estate market risk caused by air pollution. Thus, our study provides a supplement to the research in the field of real estate market risk. Secondly, this paper analyzes and verifies two mechanisms by which air pollution affects the spillover effect of urban house pncing, namely physical diffusion and industrial synergy. Specifically, the physical diffusion mechanism refers to the connectivity of real estate markets among cities caused by the diffusion of air pollutants avnong cities through meteorological factors. The industrial synergy mechanism refers to the phenomenon that under the industrial division of urban agglomeration, big cities are responsible for the production with high added value and low pollution, while small cities are responsible for the production with low added value and high pollution, which leads to the simultaneous change of urban air quality in the face of market demand and collaborative production. This paper has reference significance for alleviating the spatial negative externalities of air pollution through regional collaborative governance. Finally, this paper constructs urban house price spillover indicator that capture the characteristics of the house price network in urban agglomerations with low data frequency ceqvirements. Referring to Silva-Buston (2019), this paper uses the regression method to estimate the mean dependence of house prices among cities in the network. The indicator construction has almost no model risk and requires low data frequency, which enables this paper to include all 150 cities that meet the requirements of data availability in the 8 major urban agglomerations as research samples, and almost completely retain the internal hierarchical structure of each urban agglomeration.

At the 75th United Nations General Assembly, China solemnly committed to the international community to achieve carbon peaking by 2030 and carbon neutrality by 2060. Under this “dual carbon” target, a major challenge facing China is promoting a comprehensive green and low-carbon transition among enterprises and continuously advancing carbon emission control and reduction. The government typically adopts environmental regulatory policies to manage corporate carbon emissions, primarily employing two types of policy tools: The first is command-and-control policies, represented by the “dual control of energy consumption,” in which administrative authorities enforce emissions reduction based on laws, regulations, and standards. The second type is market-based policies centered on carbon emissions trading.
In practice, due to difficulties in accurately obtaining each firm's carbon emissions and abatement costs, as well as deficiencies in the Monitoring, Reporting, and Verification (MRV) system, regulated firms may manipulate carbon emission data to conceal their actual emissions—referred to here as “carbon emission fraud”—resulting in a discrepancy between the observed emissions data and the actual emissions.
Faced with the potential risks of carbon emission manipulation, how should the government set the policy parameters for command-and-control and market-based policies, including emissions caps and penalties for excess emissions？ Which policy tool is more effective in curbing firms' incentives for carbon data manipulation and achieving better emission reduction outcomes？ To address these questions, this paper constructs a principal-agent model involving the government and heterogeneous firms, under conditions of asymmetric information where the government cannot observe firms' low-carbon transition costs or actual emissions. The model endogenizes firms' decision-making on carbon emission fraud to facilitate the subsequent analysis.
The study finds that market-based policies achieve greater resilience to carbon data distortion and higher social welfare These have two additional comparative advantages. First, market-based policies exhibit greater tolerance for carbon data distortion. Under market-based policies, even if the government does not explicitly account for the potential for data manipulation or firms' fraudulent motives, social welfare is not significantly compromised. Second, market-based policies result in lower total hidden carbon emissions compared to command-and-control policies.
Furthermore, we find that carbon markets have heterogeneous impacts on firms' motivations for carbon data manipulation. For firms on the demand side of the carbon market—those at a comparative disadvantage in abatement costs—the “cost-saving effect” brought by purchasing carbon allowances effectively reduces their incentives for fraud. On the other hand, for firms on the supply side—those with a comparative advantage in abatement costs—the “revenue-generating effect” from selling allowances strengthens their incentive to falsify carbon data.
Based on these findings, this paper makes three policy recommendations. First, accelerate the transition from command-and-control policies to market-based policies and expand the coverage of the carbon market. Second, optimize policy parameters and strengthen carbon data governance. During the transition from command-and-control to market-based policies, carbon reduction policy design should be adapted to the risk of carbon leakage. Moreover, given that carbon emission fraud risks cannot be eliminated by adjusting policy parameters, the government should prioritize carbon data quality, prevent carbon leakage arising from data falsification and production relocation, and continually improve the MRV system.
Third, enhance the intensity and scope of regulation regarding carbon data distortion in the carbon market. As the government promotes policy transition, it should simultaneously strengthen carbon data governance. In terms of regulatory targets, the government should not only oversee firms without a comparative advantage in green innovation but also focus on those with such an advantage, as the revenue-generating effect of the carbon market may increase the incentives for carbon emission manipulation among the latter group.

The concept of Environmental, Social, and Governance (ESG) was formally introduced by the United Nations Global Compact in 2004, reflecting a company's comprehensive performance across these three dimensions. ESG has become a critical criterion for investors to assess and evaluate a firm's capacity for sustainable development. Against the backdrop of high-quality development, ESG performance has not only garnered significant attention from investors but has also emerged as a key determinant of a company's long-term operational success. However, ESG practices in China have shown slow improvement, with companies often prioritizing compliance with disclosure requirements rather than proactively enhancing their ESG performance. Therefore, investigating the underlying factors behind the insufficient ESG investment of Chinese firms and designing effective incentive mechanisms to improve their ESG performance is of significant importance.
This study focuses on the issue that corporate management may lack a broad perspective when investing in ESG projects, making it difficult to achieve optimal investment decisions. Drawing on agency theory and behavioral economics, this paper develops a dynamic contract model incorporating ESG projects and conducts an empirical analysis using a sample of A-share listed firms from 2010 to 2022. First, the dynamic contract model reveals how managerial myopia negatively impacts a firm's ESG performance. Second, an indicator for managerial myopia is constructed based on the analysis of corporate annual reports, with the effects of linguistic sentiment accounted for using a Chinese financial sentiment dictionary and the BERT model. The results confirm the significant negative impact of managerial myopia on corporate ESG performance. Furthermore, the study examines how short-term and long-term incentives affect this negative impact and explores two specific economic mechanisms: information disclosure quality and the ability to attract long-term capital. Additionally, heterogeneity analysis is conducted to examine how firms under varying levels of survival pressure perform in the context of managerial myopia.
The key findings of the study are as follows. First, the higher the level of managerial myopia, the worse the firm's ESG performance. Second, equity incentive schemes mitigate the negative impact of myopia on ESG performance, whereas pay-performance sensitivity exacerbates the damage caused by managerial myopia. Third, the mechanism tests based on information manipulation and long-term capital attraction indicate that managers with limited foresight primarily worsen a firm's future ESG performance by lowering information disclosure quality and weakening long-term capital appeal through opportunistic behaviors. Fourth, heterogeneity analysis using financing constraints, industry competition, and economic policy uncertainty reveals that in high-pressure environments, long-term ESG goals are more likely to conflict with short-term survival objectives, leading managers with limited foresight to abandon long-term targets. The results suggest that corporate governance structures, particularly long-term incentive schemes, require further improvement.
This paper makes three key contributions. First, it innovatively integrates agency theory with behavioral economics by constructing a dynamic contract model that incorporates ESG projects. In doing so, it accounts for managerial decision-making, particularly the behavioral patterns associated with managerial myopia. This integration offers a novel theoretical tool for understanding managerial behavior in ESG-related decision-making. Second, this study addresses a gap in existing ESG research by introducing managerial myopia as an internal corporate perspective, providing practical recommendations for personnel appointments and operational management in the context of corporate sustainable transition. Third, both the theoretical analysis and empirical results demonstrate that equity incentives can mitigate the negative impact of managerial myopia on corporate ESG performance. Moreover, the study identifies two key economic mechanisms through which managerial myopia exerts a detrimental effect: deteriorating information disclosure quality and reducing the firm's ability to attract long-term capital. These findings offer insights into improving long-term incentive schemes and standardizing information disclosure in the process of advancing corporate ESG initiatives. Additionally, heterogeneity analysis reveals that when firms face significant survival pressures, the negative impact of managerial myopia on ESG performance intensifies. This suggests that firms should align ESG-related efforts with other strategic decisions and increase long-term incentives for management teams, to ensure steady improvement in ESG outcomes,especially in high-pressure environments.
Overall, this paper focuses on addressing the practical challenge of improving ESG performance among listed firms in China. By incorporating the long-term nature of ESG into the traditional agency problem through the lens of managerial myopia, the study enriches the literature on corporate sustainability from a behavioral finance perspective. It also provides decision-making guidance for firms navigating a smooth and stable transition under the “dual-carbon” strategy, helping to alleviate transitional pains.

The price limit rule of A-shares was introduced in 1996, initially aimed at preventing drastic price fluctuations and controlling market risk, while avoiding panic selling by investors. However, numerous studies have shown that when stock prices hit the price limit, rather than reducing volatility or curbing speculative trading, the rule impairs the market's price discovery function, and even produces a “magnet effect”. Moreover, when stock prices approach the limit, they often trigger a series of irrational trading behaviors among investors, with the disposition effect being one such behavior.
According to the disposition effect, investors tend to sell stocks with higher unrealized gains more frequently than those with lower gains. The occurrence of a price ceiling event can capture investor attention, thereby potentially reinforcing the positive relation between the unrealized gains and investors' selling behavior, i.e. disposition effect. Despite price floor events also drawing investor attention, due to the disposition effect investors are more sensitive to gains than losses,and the impact of lower price limits on the relation between unrealized losses and investors' selling behavior is weaker.
However, related research mainly focvces on the direct impact of price limit events on investors' trading behavior, with less attention given to the effect of the price limit rule on the disposition effect. Therefore, this paper utilizes the stock data of the Chinese A-share Main Board and Growth Enterprise Board from January 2005 to November 2023 and systematically studies the effects of the price limit rule on the disposition effect.
First, we assess the disposition effect by analyzing the relation between unrealized gains or losses in stocks and investors' selling behavior, revealing that the price limit rule amplifies the disposition effect among investors. Additionally, we employ the relaxation of price limit on the Chinese A-share Growth Enterprise Board as a quasi-natural experiment, providing further evidence that the price limit rule strengthens investors' disposition effect. Second, we explore the mechanism by which the price limit rule influences investors' disposition effect. Specifically, we use the number of daily price limit events and the occurrence of stocks being listed on the Dragon-Tiger List to measure how much the rule captures investor attention. It was found that the rule strengthens the disposition effect by drawing investor attention to specific stocks. Third, we investigate differences in how the price limit rule impacts the disposition effect across rational and irrational investors. By analyzing the transaction volumes of individual sell orders, we categorize sellers into institutional and individual investors. The results indicate that the amplification of the disposition effect primarily occurs among individual investors rather than institutional ones. Finally, we examine the impact of the price limit rule on asset pricing by reinforcing the disposition effect. The findings suggest that during price ceiling events, investors are more inclined to sell stocks with high unrealized gains, leading to temporary undervaluation and thus higher future returns. In contrast, during price floor events, the impact on the relation between unrealized losses and future returns is weak.
Compared to existing research, this paper offers three potential contributions. First, from a theoretical perspective, we examine the impact of the price limit rule on the disposition effect and its underlying mechanism. While previous research has primarily focused on the direct effects of price limit events on investors' trading behavior, this paper extends the analysis by investigating the influence of the price limit rule on the disposition effect, thereby enriching our understanding of the rule's impact on investor behavior and asset pricing. Second, from an empirical perspective, we measure the disposition effect using the relation between unrealized gains or losses and the proportion of stocks sold by investors. Previous studies, both domestically and internationally, have commonly relied on account-level data to directly measure the disposition effect by examining the relation between specific investors' holding gains or losses and their selling behavior. Given the non-public nature of account-level data, this paper adopts an approach that measures the disposition effect by analyzing the relation between the average unrealized gains or losses of current holders in specific stocks and their selling behavior, providing broader applicability. Finally, from a practical perspective, the findings of this paper offer valuable insights for all participants in the Chinese A-share market. The results provide further evidence that the price limit rule amplifies irrational trading behaviors among investors, underscoring the need for reforms to the price limit rule. Moreover, the conclusions provide significant implications for investors' decision-making in the information-oriented financial market.

At the end of 2021, Chinese mutual funds managed 25 trillion yuan and had over 9,288 funds. While the asset under management (AUM) is only 1/10 of that of the US mutual fund industry (34 trillion USD), the number of funds has already surpassed that of the US (8,840). The rapid growth of the Chinese mutual fund industry is primarily driven by new issuances, resulting in the fact that on average, a manager oversees 2.7 funds.
One of the main factors contributing to this rapid fund issuance is the unreasonably high custodian fee that banks charge, which is 0.25% per year. Since banks are the primary sales channel for mutual funds in China, funds need to compete for the limited sales capacity of banks. Mutual fund companies can provide an extremely cost-effective incentive to issue a new fund that uses the bank as the custodian. This is cost-effective for the fund company because issuance costs are low and lucrative for banks. After all, once issued, the custodian bank cannot be changed, allowing the bank to receive all future custodian fees, which are high and almost cost-free. In exchange, the bank will give favorable allocation for the new fund.
This distorted incentive structure results in managers overseeing an excessive number of funds, and managers may show favoritism among funds. We find that managers tend to favor new funds, with new funds outperforming old funds by an average of 1.5%-2% per year. Using a staggered DID approach, we show that when a fund manager issues a new fund, the performance of old funds declines significantly.
Managers tend to favor new funds because investors' flow-return relationship exhibits a convex shape, and the flow-return relationship is more sensitive for new funds. Suppose a manager can generate a 10% return for the two funds under management or 15% for one and 5% for another. Convex flow-return relationship means that the latter can attract more flow, and new funds being more sensitive means that the 15% return will go to the new fund. We identify one possible channel that generates the gap between old and new funds: Managers allow new funds to front-run old funds. Using the holding data, we show that the position changes of new funds can predict the position changes of old funds in the next period, but not vice versa.
These findings provide valuable insights into the regulation of the Chinese mutual fund industry and investor protection. Excessive fund issuance can lead to unfair dealing among clients. Given that the high custodian fee is a root cause, we recommend that Chinese regulators marketize the custodian market and allow competition to drive the fee to a lower level. According to Cullinan and Blin (2005), the average custodian fee in the US was only 0.025% in 1997, which is 1/10 of that in China in 2021.

Inequality of opportunity and low social mobility are significant barriers to human capital accumulation and optimal allocation of human resources. With the stagnation of productivity and middle-income growth, coupled with the advancement of technological and climate transitions, enhancing social mobility has become a crucial lever for revitalizing the economic growth. Since China's economic transformation has entered a new normal, facing domestic and international challenges, mass entrepreneurship has become vital in supporting the real economy, stimulating market vitality, constructing new development patterns, and promoting high-quality economic growth. Given the importance of social mobility as a labor market incentive, how will enhanced social mobility affect regional entrepreneurial dynamism？ Can an open social structure stimulate greater entrepreneurial potential？ These are the core questions this paper investigates.
This paper constructs a theoretical model based on individual utility to elucidate the nonlinear relationship between social mobility and entrepreneurial choices. The model indicates that as social mobility increases, the opportunity cost of entrepreneurship rises while the associated risks decrease. This leads to a marginally diminishing upward trend or an inverted U-shaped trend in urban entrepreneurial dynamism. The decline in entrepreneurial dynamism is due to higher social mobility crowding out low-return entrepreneurship. By distinguishing between high-return and low-return entrepreneurship, the model shows that with enhanced social mobility, high-return entrepreneurship increases, while low-return entrepreneurship first rises and then falls, exhibiting an inverted U-shaped characteristic.
Using data from the China General Social Survey (CGSS) and business registration data from 2005-2018, this paper finds a significant inverted U-shaped relationship between social mobility and urban entrepreneurial dynamism, with the inflection point at the 52nd percentile. Half of the cities lie to the left of the inverted U-shaped inflection point, where enhancing social mobility boosts entrepreneurial dynamism. To address endogeneity issues, his paper uses instrumental variables such as the admission ratios of 985 universities in various provinces and the density of Ming and Qing dynasty scholars. The study finds that the inverted U-shaped relationship remains significant across robustness tests. Mechanism analysis reveals that enhanced social mobility promotes high-return opportunity-driven entrepreneurship but initially promotes and then crowds out low-return necessity-driven entrepreneurship. Heterogeneity analysis indicates that in cities with higher entrepreneurial opportunity costs, the crowding-out effect on necessity-driven entrepreneurship is more pronounced while reducing entrepreneurial risks enhances the positive effect on opportunity-driven entrepreneurship and mitigates the crowding-out effect on necessity-driven entrepreneurship.
The marginal contributions of this paper are twofold. First, through theoretical analysis, it elucidates the impact mechanism of social mobility on entrepreneurial choices, deriving a nonlinear relationship based on the maximization of expected entrepreneurial utility, enriching the literature on social mobility and entrepreneurship. Second, by using business registration and micro-survey data, it empirically verifies the inverted U-shaped impact of social mobility on urban entrepreneurial dynamism and explains the underlying reasons by examining the differential effects on different types of entrepreneurship.
The policy suggeshons of this paper are as follows. First, address institutional and policy barriers hindering labor mobility across social strata, activating social mobility through multiple channels, and reducing labor market friction. Second, the government should adopt proactive measures to lower barriers and risks of entrepreneurship by optimizing the business environment, relaxing financing constraints, and providing loan subsidies. Third, while accelerating social mobility to stimulate entrepreneurial dynamism, it is important to consider the positive impacts of necessity-driven entrepreneurship on individuals, families, and society, ensuring fairness in market competition, fostering an inclusive market atmosphere, and leveraging the labor force's inherent advantages. Fourth, tailored reforms to enhance social mobility should be implemented based on the different development stages of urban and rural areas, promoting overall employment quality through differentiated policy designs and mitigating structural employment contradictions.