Since the 20th National Congress of the Communist Party, China's financial system reform has generally centered on the idea of enhancing the role of finance in serving the real economy, emphasizing the importance of the role of financial markets in improving resource allocation efficiency. In this context, the China Securities Regulatory Commission introduced the concept of a “CST Valuation” (China-specific valuation system) in November 2022, with a key goal of promoting reasonable valuations for state-owned listed enterprises (SOEs), thereby guiding financial resources to better serve national strategic objectives. Following the introduction of the CST Valuation concept, domestic media attention has increasingly focused on the valuation of SOEs, with a general perception that SOEs are undervalued. Meanwhile, existing foreign literature often posits that SOEs command higher valuations than private firms due to advantages in policy support and financing (Beuselinck et al., 2017; Boubakri et al., 2018), which contrasts with media viewpoints. This divergence between theory and practice highlights the theoretical and practical significance of studying SOE valuations.
Based on the Edwards-Bell-Ohlson (EBO) valuation model, this paper analyzes two prominent corporate valuation metrics, Price-to-Book (PB) and Price-to-Earnings (PE) ratios. According to the EBO model, the PB ratio is positively correlated with a firm's future profitability, while the PE ratio reflects the growth potential of future earnings relative to current earnings. Both metrics are negatively correlated with a firm's cost of equity. In theory, SOEs—functioning as government macro-control tools—might exhibit lower future profitability and earning growth compated to private firms due to their political roles, leading to lower valuations. At the same time, SOEs may have certain advantages, such as higher earnings quality driven by stricter supervisions, which could result in higher valuations than private firms. Thus, the valuation differences between SOEs and private firms warrant empirical investigation.
Using a sample of China's A-share listed companies from 2007 to 2021, this study conducts an empirical analysis of the valuation differences between SOEs and private firms, offering theoretical explanations. The findings reveal that SOEs consistently exhibit significantly lower PB ratios but higher PE ratios than private firms. The study explains this interesting phenomenon through the EBO model and mechanism testing: the low PB ratio for SOEs is mainly driven by market expectations of lower future excess returns, while their high PE ratio is primarily attributed to their lower cost of equity. Further analysis uncovers deeper reasons for these findings: (1) insufficient R&D investment, heavier social responsibility burden, and lower dividend levels shape the market's low expectations for SOEs' future profitability; conversely, high earnings quality explains SOEs' reduced cost of equity. (2) SOEs' broader contributions to the government, supply chain, and society are not adequately reflected in the current valuation system. Heterogeneity analysis shows that (1) local SOEs exhibit more pronounced low PB ratios, while central SOEs exhibit more prominent high PE ratios; (2) partial state ownership has a more positive impact on company valuations than full state control.
This paper offers the following key contributions and innovations: First, it sheds light on the valuation characteristics of Chinese SOEs, addressing both academic and practical concerns. In particular, the study reveals a unique “low PB and high PE” profile of Chinese SOEs, offering theoretical insights that bridging the gap between theoretical predictions and real-world observations. Second, it uncovers the underlying theoretical logic and deeper causes of valuation differences between SOEs and private firms, providing valuable insights for the sustainable development of SOEs and the CST Valuation framework. Specifically, by applying the EBO model to explain SOE valuations in the Chinese context, this paper deepens the understanding of SOE valuation dynamics while extending the EBO model's application. Third, from the perspectives of government, supply chain, and social responsibility, it explores additional factors influencing SOE valuations. This broader stakeholder perspective contributes to the theoretical development of CST Valuation by emphasizing the importance of considering SOEs' contributions to various stakeholders, thus calling for greater government and market recognition of these contributions.

Migrant populations constitute a crucial component of China's economy and represent both a key focus and challenge in achieving common prosperity. Compared to local residents, migrants face cultural and resource barriers, as well as labor market discrimination due to the hukou system, placing them at a natural disadvantage in securing local employment and entrepreneurship opportunities. A significant proportion of migrants engage in survival-oriented entrepreneurship, which impedes overall income growth and hinders the optimization of income distribution structures. In recent years, China's digital economy has experienced rapid growth, emerging as one of the most dynamic sectors in the country's economic development. This digital transformation has catalyzed transformative changes in production processes, consumption patterns, and business models. Concurrently, it presents both opportunities and challenges for the labor market. While existing literature has examined the impact of the digital economy on residents' income and employment, few studies have explored the intrinsic mechanisms through which the digital economy contributes to common prosperity, particularly from the perspective of migrant populations. This paper aims to investigate the mechanisms and pathways through which the digital economy facilitates common prosperity, focusing on the employment behaviors of migrant populations.
Theoretically, the digital economy alters the employment patterns of migrant populations by facilitating information circulation and enhancing the business environment, thereby impacting the labor supply and demand sides and ultimately elevating the income levels of migrant workers. Further research reveals that the digital economy also exhibits a distributional effect. By reducing the level of information asymmetry between migrant and local populations, it creates job opportunities that are more aligned with the skills and needs of migrant workers, thereby narrowing the gap in employment patterns between these two groups and mitigating income inequality.
Based on the exogenous shock of the “Broadband China” initiative, this paper employs a difference-in-differences model using data from the China Migrants Dynamic Survey from 2011 to 2018. This paper investigates the mechanisms and pathways through which the digital economy contributes to common prosperity, from the perspective of migrant populations. Our findings indicate that the development of the digital economy has significantly boosts migrant incomes. The underlying mechanism appears to be that digital economic development facilitates information flow and creates an improved business environment, enabling migrant populations to access a broader range of employment opportunities. This, in turn, allows them to shift from low-quality, survival-oriented entrepreneurship, leading to income growth. Further analysis reveals significant distributional effects of digital economic development. Not only does it reduce income inequality within the migrant population, but it also narrows the income gap between migrants and residents. Moreover, we find that digital economic development significantly increases migrants' willingness to settle long-term in their host cities.
This study has several policy implications as follows: Firstly, developing digital infrastructure construction enhances information transmission efficiency. Governments should prioritize the development of digital infrastructure such as 5G networks and data centers, with a particular focus on improving network coverage and information transmission efficiency in areas with high concentrations of migrant populations. This will unlock the labor supply potential of migrant workers. Secondly, encouraging enterprises to improve the business environment through digital adoption boosts labor demand. Relevant authorities should increase support for digital transformation in industries, especially labor-intensive sectors, and utilize digital financial tools to reduce borrowing barriers for small and medium-sized enterprises. This will improve the business environment and stimulate labor demand. Thirdly, promoting the deep integration of the digital economy with employment services is essential. On the one hand, efforts should be intensified to provide digital skills training to migrant populations, helping them adapt to the demands of the digital economy. On the other hand, the construction of digital employment service platforms should be strengthened, utilizing financial technology to enhance employment information platforms for migrant workers. This will fully leverage the positive role of digital finance in facilitating the digital upgrade of employment services.
This paper makes three primary contributions to the existing literature: First, we provide novel empirical evidence on the impact of the digital economy on national economic outcomes from the perspective of common prosperity. While previous studies have primarily focused on the effects of the digital economy on residents' income and employment, we extend this analysis by examining the income distribution effects on migrant populations within the framework of common prosperity. Second, we elucidate the intrinsic mechanisms through which the digital economy contributes to common prosperity, specifically considering the characteristics of migrants. Our study explores how the digital economy influences migrants' income through both labor demand and supply channels, thus complementing existing research on the distributional effects of the digital economy on migrants. Third, we enrich the literature on the impact of the digital economy on the social integration of migrant populations. By incorporating settlement intentions into the framework of the digital economy's effects on common prosperity, and combining it with analysis of migrant's income and employment patterns, we provide interconnected empirical evidence on changes in employment modes, income growth, reduced income disparities, and increased settlement intentions. These mutually corroborating findings suggest that the digital economy contributes significantly to the realization of common prosperity.

Guiding the reasonable, orderly and smooth labour migration and promoting the optimal allocation of labour resources between regions are important driving forces for high-quality economic development. The inclusive nature of low-cost, low-threshold digital finance enables individuals and small and micro-enterprises, that were previously excluded from traditional financial services and traditional credit, to conveniently carry out financial services through digital finance platforms such as online banking and mobile payment, thus promoting investment, business, innovation, and entrepreneurial activities. This aspect of digital finance helps to attract labour migration, which can play a role in optimizing the allocation of labour resources between regions. Therefore, in the context of high-quality economic development, it is particularly important to explore in depth the influencing factors of labour migration, especially the financial factors in the decision-making process of labour migration, so as to obtain the policy paths to promote labour migration, which is particularly important for the rational and orderly guidance of the optimal allocation of labour resources. However, existing studies mainly discuss the impact of digital technology or digital economy on labour migration, and lack attention to the financial attributes in digital finance development. This paper is devoted to researching whether digital finance development can have an impact on labour migration decision-making by exerting inclusive characteristics. This is crucial for regions to enhance the attractiveness of talents, promote economic structural transformation and industry structural upgrade, and promote coordinated regional development.
This paper analyses the labour migration effect of digital finance from both theoretical and empirical perspectives, and further explores the potential mechanisms and economic impacts of its effect. First, from a theoretical perspective, this paper analyses the impact of digital finance on labour migration and focuses on its financial attributes to put forward a research hypothesis on how digital finance affects labour settlement decisions. Second, from an empirical perspective, this paper combines the China Digital Financial Inclusion Index with China Family Tracking Survey (CFPS) data to analyze the impact of digital finance on labour migration decisions. In order to enhance the robustness of the findings, this paper conducts a series of robustness tests and employs the instrumental variable method for endogeneity analysis. In addition, focusing on the financial attributes in the development of digital finance, this paper adopts a split-sample regression method and an interaction model to explore how digital finance can drive labour migration by alleviating individual liquidity constraints and improving the convenience of social security system. Finally, this paper further studies the direction of labour migration driven by the development of digital finance from the perspectives of employment structure transformation, industrial structure upgrading and regional coordinated development.
This paper finds that digital finance development can significantly attract labour migration. Further mechanism analysis shows that: On the one hand, digital finance development, by exerting inclusive features, can alleviate individual mobility constraints, attract labour inflow by promoting individual entrepreneurship, and further lead to an increase in employment opportunities; on the other hand, digital finance development, by exerting inclusive features, can help improve the social security system, and enhance residents' sense of security and well-being. The role of digital finance in these two aspects ultimately helps to promote labour migration. Further analysis shows that labour migration driven by digital finance promotes the transformation of the employment structure and the upgrade of the industry structure, enhances the optimal allocation of labour resources in the western regions, regions with a lower level of urbanization and a lower level of marketization, and promotes the economic development of these regions.
This paper has important policy implications: Firstly, digital finance development can promote labour migration by exerting inclusive characteristics, which provides a feasible solution to guide the rational and orderly allocation of labour resources, and therefore digital finance development should be vigorously promoted; Secondly, the important role of digital finance in alleviating individual mobility constraints should be strengthened, which is an digital finance promotion of entrepreneurship and employment, and an important mechanism for promoting labour migration; Finally, the important role of digital finance in improving the social security system should be strengthened, which is an important mechanism for digital finance to enhance residents' sense of security and well-being and promote labour migration.
The innovations of this paper are as follows: First, in terms of theoretical contribution, this paper exhaustively analyzes the mechanism behind the labour migration effect generated by digital finance, which exhibits through promoting financial inclusion from the perspectives of liquidity constraint alleviation and social security system improvement. This complements the theoretical discussions in related fields; Second, in terms of empirical innovation, this paper uses the CFPS data to measure labour migration for the first time from the perspectives of the change in permanent residence, and explores whether and how digital finance development can influence the labour migration decision by comparing different labour migration decisions. This helps to assess the role of digital finance in sustainably promoting economic structure transformation and industry structure upgrade; Third, in terms of policy innovation, the research in this paper can better serve the formulation of relevant policies, providing new ideas and perspectives for regions to enhance the attractiveness of talents, guide the rational and orderly allocation of labour resources, promote the transformation of economic structure and upgrade of industrial structure, and thus promote the coordinated development among regions.

Innovation is a core element in the development of new quality productivity. However, innovative projects themselves have a large capital demand. Moreover, the high confidentiality of innovation projects leads to high information asymmetry. All these make enterprises' innovation endeavors to intense external finance pressure. In China, bank loans remain the main source of external financing for most companies. Therefore, innovative enterprises face a dual-pronged dilemma in debt financing. On one hand, due to the high information asymmetry of innovation projects and the lack of the right for banks to share the benefits of innovation projects, innovation-oriented enterprises face certain loan discrimination; On the other hand, the proportion of tangible assets of innovative enterprises is limited, and intangible assets such as patents are difficult to mortgage or quickly liquidate, making it difficult to obtain direct financing. Patent collateral loans are a novel bank financing method to meet the capital demand of enterprises with high proportion of digital assets in the digital economy era. However, there is still a lack of evidence on the effectiveness of patent collateral loans.
Theoretically patent collateral loans can alleviate financing constraints through three aspects and boost enterprise innovation output. First,enterprises can obtain bank loans by using patents as collateral, alleviating the pressure of external finance and providing support for their continuous innovation activities. Second, the strict requirements of banks for patents as collateral prior to lending, and the fact that the funds from patent collateral loans are mainly used for project loans can effectively enhance the operational capacity of enterprises, mitigate the risk of venture capital investment failure, thus guiding venture capital and attracting more venture capital to enter enterprises. Finally, by disclosing information related to patent collateral contracts, enterprises can send positive signals, such as having high-quality patents and innovative projects, which is conducive to enterprises obtaining various credit resources support from other banks.However, the innovation incentive effect of patent collateral loans depends on the a favorable external environment.Therefore, this paper focuses on whether patent collateral loans effectively stimulate innovation output.
This paper manually collects patent collateral loans of China A-share listed companies from 2008 to 2020, employs the PSM-DiD method to study the impact of patent collateral loans on innovation and its influencing mechanism. Patent collateral loans can bring direct financial support, exert guiding and signaling roles, attract venture capital and bring support of various credit resources provided by other banks, and ultimately alleviate financing constraints and promote enterprise innovation, that is, there exists an innovation-incentive effect. Heterogeneity analysis shows that the incentive effect of patent collateral loans is more obvious in private enterprises with financing bottlenecks, small enterprises, science and technology enterprises and competitive industries with high proprietary costs. From the perspective of banks, the incentive effect of patent collateral loans provided by systemically important banks is significantly better than that from non-systemically important banks. Finally, the innovation incentive effect of patent collateral loans can promote firm performance.
This study makes possible contributions to the following aspects: First,it theoretically explores how patents, as legal constructs, can be transformed into enterprises' financial resources. By examining the incentive effect of this innovative loan-patent collateral loans - on innovation output, it provides a new analytical perspective for understanding the integration mechanism of the digital economy and the financial economy. Second, it enriches the signaling theory and screening theory in existing financial economics, explores how patents, as an important signaling mechanism, affect the allocation of credit resources, and how the screening mechanism of banks for patents' valuation attracts venture capital, and analyzes the impact of patent collateral loans on innovation and the micro-mechanism from a micro- perspective. Third, this paper also supplements the economic growth theory by linking patent collateral loans with enterprises' innovation behavior, and emphasizes the role of financing in fostering innovation. Meanwhile, this paper conducts an analysis of patent collateral loans and explores the relationship between innovation incentives and financial returns. These results show that the incentive effect of patent collateral loans is more obvious in private enterprises, small - scale enterprises, technology-based enterprises with financing bottlenecks and in competitive industries with high proprietary costs; the incentive effect of patent collateral loans provided by systemically important banks is significantly better than that of non-systemically important banks. These findings can inspire enterprises to focus on developing high quality and economically valuable patents.

The county's economy serves as a bridge between urban and rural economic development. Innovation is crucial in accelerating the transformation and enhancement of the county's economy, injecting it with significant vitality for high-quality growth. However, compared to urban innovation ecosystems, financial support for innovation at the county level faces two significant challenges: insufficient funding and a lack of quality collateral. These hurdles often result in financial institutions' reluctance to provide support or lead to a proliferation of homogeneous financial products, creating obstacles to the high-quality advancement of county economies. These issues require urgent attention and resolution.
This paper addresses whether the competitive dynamics within county-level financial markets can positively affect county innovation. Furthermore, it investigates whether ongoing financial reforms and the implementation of relevant collateral policies moderate financial support for county-level innovation. To explore these inquiries, this paper empirically assesses the innovative effects of financial competition within county contexts, utilizing banking outlets at the county and sub-country level as the focal point. It further examines the moderating roles of government policy implementation on financial support for county innovation from both supply-side and demand-side perspectives, alongside the economic implications of county financial support for innovation. The findings of this research provide a robust foundation for decision-making regarding structural reforms in county-level financial supply and the enhancement of financial backing for innovation through policy interventions.
We find that an enhancement in the degree of financial competition within county areas significantly stimulates the output of innovative activities. This effect is primarily attributable to improved financial efficiency and the mitigation of capital outflows resulting from heightened financial competition, effectively transforming financial institutions from “extractive entities” to “supportive agents.” Nonetheless, compared to the “quantity” of county-level innovative activities, the impact of increased financial competition on the “quality” of these innovations remains relatively insufficient. Further analysis reveals that, apart from the insignificant moderating effect of digital financial development, advancements in county financial reforms—such as the establishment of rural banks and the restructuring of rural commercial banks—alongside pilot policies for mortgage loans based on contracted rural land operating rights and patent financing, significantly enhance the innovative output effects of county financial competition. The resultant innovation activities promote self-employment and income growth within county regions.
This paper contributes to the existing literature from the following three dimensions: First, diverging from existing research at macro or enterprise levels, this paper investigates the innovative effects of financial competition from the perspective of relatively underdeveloped counties. Previous studies have largely focused on provincial or municipal levels, analyzing the economic growth and income effects of financial competition or examining the influence of bank competition on innovation among listed enterprises, with insufficient attention devoted to underdeveloped counties. This county-level analysis enriches the current literature concerning the interplay between county finance and innovation. Second, rather than relying solely on traditional channels such as resource allocation and financing constraints to elucidate how finance supports innovation, this paper validates the mechanism of county financial efficiency while considering the unique characteristics of county financial markets. It explores differentiated capital flow channels to elucidate the pathways through which financial competition influences county innovation, providing a novel perspective on the ongoing trend of financial institutions engaging with county innovation development. Third, acknowledging the government's active role in county economies and financial markets, this paper investigates the moderating effects of government policy implementation on the innovative outcomes of county financial competition and its underlying transmission mechanisms. This inquiry supplements the existing body of research on the relationship between government and financial markets, particularly regarding rural financial contexts.
In light of these empirical findings, this paper proposes several strategic approaches to enhance the positive role of county finance in supporting innovative activities. First, it recommends strengthening the innovative effects of competition among county financial institutions. This involves cultivating a complementary and healthy competitive environment, improving operational efficiency of financial institutions, reducing capital outflow, and ensuring robust financial support for innovative activities. Second, the paper advocates for gradually establishing a long-term mechanism to support county innovation activities financially. This should include the comprehensive implementation of pilot programs for mortgage loans based on contracted rural land operating rights and the expansion of patent financing initiatives to encourage financial institutions' involvement in supporting county innovation. Third, it emphasizes the importance of leveraging the economic effects of county financial competition to drive innovation and sustain income growth among rural residents. To address potential imbalances and inadequacies resulting from county innovation, promoting financial competition and innovative activities and enhancing the financial landscape in underdeveloped regions within counties is crucial. This would involve guiding financial resources toward these areas and increasing support for innovative endeavors among rural residents.

Establishing a system for the paid use of natural resources and market-driven mechanisms for energy conservation and carbon reduction is a critical institutional safeguard for achieving the goals of carbon peaking and carbon neutrality. Cultivating the sustainable development capabilities of the economy is inseparable from the effective combination of a well-functioning market and a capable government. Carbon emissions trading scheme with government guidance serves as a core policy instrument for fostering the coordinated balance between the economic growth and sustainable development. The ESG initiatives require firms to address the externalities of their production activities while pursuing profit maximization. ESG performance is a comprehensive indicator of a firm's sustainable development capabilities. This paper examines whether and how the carbon emission trading schemes could motivate firms to actively participate in ESG engagement and cultivate sustainable development capabilities.
Based on China's carbon emissions trading pilot programs gradually initiated since 2013, we adopt the propensity score matching (PSM) and the staggered difference-in-difference (DID) method to estimate the impact of implementing carbon emissions trading scheme on corporate ESG performance, using the data set of listed firms in China's carbon trading pilot regions from 2009 to 2020. We find that after the implementation of the carbon emissions trading scheme, regulated firms experienced a significant improvement of ESG scores relative to non-regulated firms, accounting for an approximately 15.96% standard deviation in ESG scores. This finding indicates that the market-based incentives provided by the carbon trading scheme significantly enhance the ESG engagement of regulated firms. Mechanism analyses indicate that carbon emissions trading scheme strengthens the economic value of low-carbon production, promotes corporate green innovation practices, and improves external information supervision of corporate environmental performance, thereby incentivizing firms to enhance their sustainable development capabilities actively. Heterogeneous analyses find that the role of carbon emissions trading scheme on corporate ESG performance is more pronounced in regions with higher carbon market effectiveness and stronger environmental regulation intensity of local governments, suggesting a synergy between an efficient market and a well-functioning government. Further analyses show that the carbon emissions trading scheme facilitates the synergy between reduction in carbon emissions and increases in low carbon development efficiency, and thus guides sustainable development. Our main results remain robust under alternative variable definitions, different propensity score matching methods, the inclusion of higher-order fixed effects, and placebo tests.
This paper contributes to several strands of literature. First, our study highlights the interaction between corporate behavior and environmental policies from the novel perspective of ESG performance. We reveal the unique role of carbon emission trading scheme in mitigating the negative externalities of economic activities at lower costs, enhancing the understanding of how market-based environmental regulations contribute to effective environmental governance by coordinating economic performance and sustainable development. Second, in the context of the widespread application of ESG investment principles and the recognition of value relevance of ESG, we extend the literature of the driving factors of corporate ESG practices from the perspective of institutional design. We broaden the understanding of how to incentivize enterprises to pursue sustainable development.
This study provides critical policy implications in guiding corporate sustainable development practices through market-based environmental mechanisms. First, to create a sustainability-oriented economic structure that balances economic growth with environmental protection, an efficient market and a proactive government intervention should work together to boost market dynamism and ensure the effective allocation of the carbon factor. Second, participants in capital markets should fully recognize the significant role of sustainable development in their investment evaluations and allocate capital towards industries and enterprises with high potential for emission reduction, leveraging the important functions of the capital market in serving the real economy and facilitating the transition toward sustainable economic development. Third, firms should strengthen carbon risk management and seize opportunities for green transformation. By enhancing environmental performance, firms could drive comprehensive improvements in social and governance performance, strive for the synergistic development of financial performance and ESG outcomes while building long-term sustainability.

To establish a new system for a higher-level open economy, China must also focus on optimizing the structure of the entire production supply and consumption demand chain, in addition to implementing more extensive and in-depth opening-up measures. Market opening will inevitably generate competitive effects, and how to effectively utilize open policies to promote the structural optimization of the supply and demand chain has become a crucial step in enhancing the effectiveness of opening up. To establish a new system for a higher-level open economy, greater emphasis should be placed on opening up the service sectors within the chain, particularly the access of foreign investment in service sectors such as transportation, wholesale, and retail. Among them, the opening up of the wholesale industry, as a necessary component of China's opening-up process, plays a pivotal role in connecting the production supply and consumption demand chain. The paper focuses on commodity wholesale, an important segment of the supply and demand chain, theoretically elucidating how the opening up of the wholesale industry to foreign investment ultimately exerts a significant impact on the consumer market by fostering competition within the chain. Based on actual data, the paper provides detailed empirical evidence for the theoretical analysis at the micro-level of cities and products.
Although there is already a wealth of empirical research on service opening up, most studies have focused on its impact on the exports, productivity, and performance of downstream enterprises. Research on how service opening up affects supply and demand chain integration and the consumer market remains inadequate, and theoretical discussions on service opening up are also relatively scarce. This is mainly because, at the theoretical level, although service opening up promotes competition, its mechanism of action still needs to be revealed through a novel theoretical validation process. Therefore, based on trade behavior within the supply and demand chain, namely the impact of foreign investment opening in the wholesale industry on the pricing behavior of heterogeneous retailers, the paper deeply analyzes its impact on consumer welfare.
The main innovations and contributions of the paper can be summarized as follows: Firstly, the paper theoretically elaborates on the role of foreign investment opening in the wholesale industry in enhancing the service functions of the supply and demand chain. Specifically, wholesalers do not directly produce goods, with the ability to transport various categories of goods, they only purchase goods from abroad and resell them to retailers. Importing goods incurs fixed costs, so wholesalers impose markup between producers and retailers, resulting in three ways for retailers to source goods. Retailers with the lowest marginal retail costs will choose to build their own import wholesale channels and expand import fixed costs due to the highest profits from directly selling imported goods; Retailers with higher marginal retail costs will choose to introduce domestic sources. Retailers with the highest marginal retail costs will indirectly import goods through wholesalers. Foreign investment opening in the wholesale industry will reduce the marginal costs of incumbent retailers, weaken the markup on indirectly imported goods, and increase the market share of direct import retailers, thereby lowering retail prices in the domestic market.
Secondly, in terms of empirical analysis, the paper refers to methods from classic literature and attempts to measure the degree of foreign investment opening in China's wholesale industry between 2000 and 2019. Using the "Price Monitoring Data of Major Cities in China" collected by the Price Monitoring Center of the National Development and Reform Commission, the paper matches data by commodity names to obtain price data for 77 commodities in 131 cities to test the impact of foreign investment opening in the wholesale industry on retail prices in domestic market. The benchmark regression results show that for every unit increase in foreign investment opening in the wholesale industry, the retail prices of corresponding commodities will decrease by 5.39%-17.59%. Moreover, the paper treats China's accession to the World Trade Organization as an exogenous shock to mitigate potential endogeneity. Additionally, mechanism analysis reveals that the lower the total factor productivity of the retail industry, the larger the markup, and the larger the proportion of wholesale imports in total wholesale sales, the greater the marginal effect of foreign investment opening in the wholesale industry on commodity retail prices.
Finally, based on the key parameters of the empirical analysis and using micro-level household information collected from the "Urban Household Survey", the paper finds that foreign investment opening in the wholesale industry ultimately enhances consumer welfare by affecting consumption prices, and this enhancement effect decreases as household income level increases.
Combining the research conclusions, the paper proposes three policy implications: Firstly, China should further liberalize foreign market access in the wholesale industry, reasonably reduce the negative list, and pay particular attention to eliminate hidden barriers to ensure equal access for domestic and foreign wholesale enterprises to various markets beyond the scope of the negative list. Secondly, to attract more foreign-invested wholesale enterprises into the Chinese market, promotional efforts should be intensified in the international market to build the "Invest in China" brand, showcasing the market potential and investment opportunities in China's wholesale industry. Thirdly, the government should adopt a series of policy measures to reduce transaction costs and promote in-depth cooperation between wholesale and retail enterprises, thereby expanding effective demand and improving consumer welfare.

Since 2009, China has signed bilateral currency swap agreements (BCSAs) with more than 40 countries (regions) to promote global trade and international investments. Existing literature mainly focuses on the promotive effects of BCSAs on global trade, but pays little attention to its impact on cross-border investments.
As important investment entities, Chinese firms play a key role in China's “going global” process. Cross-border mergers and acquisitions (M&As) are important means for firms to integrate into the international markets, acquire global resources and cultivate international competitiveness. Despite the fact that the number and amount of cross-border M&A transactions by Chinese firms have grown rapidly, the completion rate is disappointingly low. Whether an announced transaction can be completed is the premise of subsequent integration and realization of M&A value. Termination of a transaction not only makes the value of the M&A vanish, but also causes the firm that initiated the deal to lose money, time, reputation, and other resources. Therefore, exploring feasible ways to improve completion rate of cross-border M&A transactions by Chinese firms is an important issue in the process of China's high-level opening-up. Compared with domestic M&As, cross-border M&As face additional transaction costs related to cross-border capital flows, especially given China's unique capital regulation and foreign exchange administration. From the perspective of transaction costs related to cross-border capital flow, this paper explores the impact of BCSAs on the completion rate of cross-border M&A transactions by Chinese firms. Specifically, we believe that BCSAs can lower costs associated with bilateral relations, foreign exchange supervision, and currency exchange, and therefore improve completion rate of cross-border M&As by Chinese firms.
Based on the sample of cross-border M&As initiated by Chinese firms between 2006 and 2020 in SDC database, this paper finds that: (1) BCSAs between China and the countries (regions) where the target companies locate significantly enhance the likelihood of deal completion. (2) The positive effect is more pronounced when China has not established close bilateral cooperation with the country (region) where the target company locates, when outflow of foreign exchange reserve is larger in China, and when the official currency of a target company is not international currency. Further, Chinese firms are more likely to settle transactions in Chinese Yuan (CNY) than other currencies during the swap period. These results support that the primary mechanisms include the reduction of costs associated with bilateral relations, foreign exchange supervision, and currency exchange. (3) BCSAs play a more significant role in transactions initiated by state-owned enterprises, in those involving cash payments, and in those targeting entities in Belt and Road countries (regions), whereas overseas-listed Chinese firms and transactions targeting industries that are sensitive to national security are less affected.
This paper makes contributions in the following three aspects. Firstly, this paper enriches the research on the consequences of BCSAs from the perspective of cross-border investments. While existing literature has focused on the role of BCSAs on trade and CNY internationalization, and a small body of literature has found that BCSAs affect the scale and density of China's outbound investments, this paper emphasizes the important role of BCSAs in the completion of cross-border M&A transactions and provides evidence on the benefits of expanding the scope of BCSAs. Secondly, this paper reveals the mechanisms of China's BCSAs affecting cross-border M&A transactions from micro-perspective of Chinese firms. Unlike bilateral investment treaties (BITs), BCSAs can not only promote sound bilateral investment cooperation, but also act as a buffer pool of foreign exchange reserves and facilitate convenient currency exchange between a signing country and China. Transaction-level data used in this paper mitigates the concerns of endogeneity issues and provides empirical evidence for the mechanisms. This paper also shows that BCSAs can promote the usage of CNY in cross-border M&A transactions as settlement currency and thus facilitate the internationalization of CNY. This paper helps evaluate the benefits of BCSA more comprehensively. Finally, this paper supplements key factors in completing cross-border M&A transactions by Chinese firms. Current literature emphasizes the impact of macro uncertainty on cross-border M&A transactions. In addition to bilateral relations, transaction costs related to foreign exchange regulation and currency exchange are important as well. Chinese firms should be alert to these costs before initiating a deal and during the M&A process. Our findings have strong implications for cross-border M&As by Chinese firms.
This paper also has important policy implications. On the one hand, China should further expand the scope of BCSAs, especially to the countries (regions) whose currencies aren't international currencies, and build international economic cooperation platform for Chinese firms. On the other hand, it is necessary to guide Chinese firms to fully participate and utilize the benefits of BCSAs to explore the global market and enhance international competitiveness. Further, China can encourage Chinese firms to use CNY through BCSAs for cross-border M&As and accelerate the speed of CNY internationalization.

There is a significant information asymmetry between controlling shareholders and minority shareholders, which may result in controlling shareholders exploiting their effective control to transfer the firm's assets and profits, thereby undermining the interests of minority shareholders. Due to unique historical reasons and institutional backgrounds, Chinese listed companies are characterized by a concentrated ownership structure, as opposed to the dispersed ownership structure prevalent in Western capital markets. As a result, controlling shareholders have effective control over the company, which provides convenience for tunneling activities. Therefore, how to effectively curb the tunneling of controlling shareholders and effectively protect the interests of minority shareholders has thus become a critical focus for promoting the high-quality development of listed companies in China.
Since China's accession to the WTO, the gradual opening up of the capital market has enabled a large number of foreign companies to enter the Chinese market through joint ventures, cooperation and equity participation, thereby injecting fresh impetus into the governance of listed companies. Given their strong financial resources and rich investment management expertise, foreign investors play a crucial role in improving the corporate governance of the companies, including improved information transparency, enhanced quality of accounting disclosure and reduced earnings management. However, the question remains: can foreign investors use their advantages to effectively monitor and constrain the tunneling of controlling shareholders？ The existing literature has not thoroughly and comprehensively explored this issue.
Based on the aforementioned ideas, we manually collect data on the top ten shareholders of Chinese A-share listed companies from 2003 to 2022, and comprehensively examine the impact and mechanism of foreign investor ownership on the tunneling behavior of controlling shareholders under the background of capital market liberalizationg. The main findings are as follows. First, foreign ownership can improve the quality of information disclosure in the firms they invest in and increase the attention of analysts and media, thereby effectively constraining the tunneling behavior of controlling shareholders. Second, foreign ownership from countries with high governance standards, as well as foreign direct investors and foreign institutional investors, have a stronger inhibitory effect on the tunneling behavior of controlling shareholders. Third, independent foreign institutional investors, stable foreign institutional investors, and foreign institutional investors who have signed the UN Principles for Responsible Investment (UN PRI) have a more pronounced impact. Finally, in non-state-owned firms, firms with poor governance, periods of high economic policy uncertainty, and in regions with poor legal regulation, the impact of foreign ownership is more significant.
Our paper makes the following three key contributions. First, we provide a novel approach to addressing the governance of controlling shareholders' tunneling. Previous studies qualitatively examined the changes in controlling shareholders' tunneling before and after the opening of the Shanghai-Hong Kong Stock and Shenzhen-Hong Kong Stock Connect programs, but were unable to distinguish between different types of foreign investors. We quantitatively assess the extent to which increases in foreign ownership can influence controlling shareholders' tunneling. In addition, we compare the effects of FDI and QFII, foreign institutional investors versus foreign individual investors, different ownership scales, different types of foreign institutional investors, and foreign investors from different countries on the tunneling of controlling shareholders. This enriches the literature on the governance of insider behavior. Second, we provide a new perspective for studying the impact of foreign ownership. Previous studies have not reached a consistent conclusion on the impact of foreign ownership. Some studies argue that foreign investors in emerging markets act like “locusts”, prioritizing short-term profits without regard for long-term corporate development. Conversely, other studies suggest that foreign investors export their advanced management experience to improve corporate governance of the firms. We confirm that foreign ownership can play a regulatory role, exerting a positive governance effect, which contribute to a deeper understanding of the economic implications of capital market openness policies. Third, existing literature on foreign investors in China has primarily focused on QFIIs, lacking a comprehensive examination of the influence of foreign capital on corporate governance. We manually collected data on the shareholding ratios and their origin countries of foreign investors in listed companies to provide a more accurate characterization of the impact of foreign capital on controlling shareholders' tunneling.

As a crucial component of the modern financial system, the capital market is intricately related to the operation of the real economy and plays a significant role in promoting economic growth. One of the core functions of the capital market is pricing; and mispricing can severely distort the capital market's resource allocation function, jeopardize its safety and stability, and interfere with corporate investment and financing decisions, ultimately causing a negative impact on the development of the real economy. Some studies have pointed out that the phenomenon of mispricing in China's capital market is relatively prominent. How to address mispricing and improve the price discovery function of the capital market is an essential part of China's current efforts to build a robust financial system and use finance to promote high-quality economic development. For capital market pricing, government regulation is an important factor in regulating the capital market. Among the various means of government regulation, government accounting supervision refers to all the supervisory activities carried out in accordance with laws and regulations of fiscal, financial, and accounting practices. It is a cornerstone of the supervision system of the Party and the state. Improving government accounting supervision is an important step in advancing the modernization of the national governance system and governance capabilities, and it holds significant importance for standardizing corporate financial behavior and improving the quality of information in the capital market.
This paper is based on the micro data of listed companies in China from 2018 to 2022, and uses the policy of the Ministry of Finance's strengthened government accounting supervision reform pilot in 2020 to test the impact of normalized government accounting supervision on corporate capital market pricing. The regression results show that normalized government accounting supervision significantly reduced corporate stock prices mispricing, making the pricing deviation of corporate stock prices significantly decreasing by about 3.31 percentage points. This result has passed the parallel trend test, and after a series of robustness tests, the empirical results are still robust. The mechanism test indicates that the core channel of normalized government accounting supervision to improve capital market pricing is to reduce information asymmetry, which is manifested on the one hand, enterprises significantly reduce financial fraud and tax avoidance, on the other hand, accounting firms significantly improve the quality of audits, and ultimately the level of information asymmetry is significantly reduced. This paper also examines the heterogeneous impact of capital market pricing correction in combination with the characteristics of the policy. This paper finds that the impact effect of normalized supervision is more obvious in enterprises with poor internal governance, poor external supervision, and good business environment in the region where they are located, which reinforces the logical chain of this paper from the side. Further discussion found that the correction effect of normalized government accounting supervision is mainly reflected in the improvement of stock price overvaluation.
Based on the analysis presented in this paper, the following policy recommendations are proposed. Firstly, the government needs to fully empower and expand the scope of the normalized government accounting supervision reform. The current pilot reforms aimed at strengthening government accounting supervision have achieved a series of positive outcomes. In light of the 2024 government work report's emphasis on “strengthening government accounting supervision,” it is essential to further summarize the experiences from these pilot programs, expand their scope, and empower local regulatory bureaus to enhance their autonomy and effectiveness in carrying out their duties. Secondly, the government needs to focus on key areas to enhance the effectiveness of government accounting supervision. Normalized government accounting supervision should prioritize key areas with a high likelihood of issues. By allocating supervisory resources effectively, the maximum regulatory impact can be achieved. The current pilot regions have already selected key enterprises based on industry-specific factors. According to the heterogeneous research results of this paper, the supervision process should also focus on enterprises with poor internal governance, insufficient external oversight,ensuring a balance between comprehensiveness and precision in government accounting supervision. Thirdly, the government needs to strengthen interdepartmental cooperation to ultimately enhance the level of corporate information disclosure. The finance department is the main responsible body for government accounting supervision, while other departments within the supervision system play complementary roles. Particularly for listed companies and capital market regulation, it is crucial for the finance department to collaborate with securities regulatory bodies to strengthen corporate information disclosure and governance oversight. This effort should focus on creating a “safe, standardized, transparent, open, vibrant, and resilient capital market” to promote high-quality development of the capital market.
Compared with previous studies, this paper mainly has the following four marginal contributions. First, it expands the research on government accounting supervision. Most of the existing literature takes the U.S. Public Company Accounting Oversight Board as the research object, and the research on Chinese government supervision mainly focuses on audit supervision and securities regulation. This paper focuses on the novel mode of normalized government accounting supervision, and the research conclusions help to improve the understanding of the effectiveness of government accounting supervision. Second, it enriches the literature on capital market mispricing. Regarding the formation mechanism of mispricing, existing literature concludes that mispricing is primarily due to information asymmetry and investor irrationality, proposing a series of governance measures to asddress theses issues. This paper adds a new dimension by exploring the governance mechanism of capital market pricing deviation from the perspective of government accounting supervision. Third, it enhances the understanding of the relationship between government and market. For a long time, the mainstream economic community believes that there is opposition between government and market, and government intervention is not conducive to the efficient allocation of resources of the market, and there are great limitations. In recent years, some scholars have pointed out that the government can effectively build the market and make up for the shortcomings in market operation. This paper provides new evidence for the market enhancement function of government intervention. Fourth, in practical implications for policy and governance, the research in this paper provides theoretical support for improving the government's government accounting supervision system and highlighting how normalized government accounting supervision can enhance governance effectiveness.

Amid the wave of “digital intelligence” transformation, enterprises are actively integrating cutting-edge technologies such as big data, machine learning, and multimedia into finance and accounting. This transformation has profoundly impacted the form of information disclosure. Traditionally, enterprise information disclosure has primarily relied on single structured data, but it is now gradually shifting to multimodal accounting information disclosure encompassing various forms such as text, images, audio, and video. This transition undoubtedly poses new challenges for financial accounting supervision. Against this background, this study aims to utilize Natural Language Processing (NLP) and Optical Character Recognition (OCR) technologies, relying on the social platform Sina Weibo, to construct multimodal accounting information disclosure indicators applicable to Chinese listed companies and delve into its impact mechanism on investor attention.
The marginal contributions of this paper are as follows: Firstly, from the perspective of investor attention, this paper examines the economic impact of multimodal accounting information disclosure. Existing research mainly focuses on the analysis of structured information and textual information, without fully exploring the value of non-textual information such as images and videos, resulting in omitted variable endogeneity. By employing NLP and OCR technologies, this paper identifies and captures texts, images, and videos containing accounting information posted on the official Weibo accounts of Chinese A-share listed companies on announcement days. Through dimensionality reduction and mechanism testing, it provides empirical evidence for the impact of multimodal accounting information disclosure on investors among Chinese listed companies, complements research on investor attention in the context of multimodal accounting information disclosure in China, and offers technical support and theoretical foundations for understanding the economic consequences of multimodal accounting information disclosure among Chinese listed companies. Secondly, by integrating information theory from a computer science perspective with accounting information theory, this paper explores the crucial role of information characteristics in accounting information transmission. Existing research emphasizes the link between management disclosure and investor attention, often neglecting the impact of the content and form of corporate accounting information disclosure on investor attention. This study improves this based on computer science's information theory. While focusing on information transmission, this paper also examines how information characteristics affect its dissemination effect in the accounting field, contributing to a comprehensive understanding of how investors interpret and respond to different forms of accounting information disclosure. Thirdly, this paper examines the heterogeneity and economic consequences of multimodal accounting information disclosure in enhancing investor attention, providing empirical evidence for governments to formulate relevant accounting information disclosure policies. This paper finds that although multimodal accounting information disclosure can increase investor attention, it also widens market bid-ask spreads and volatility, reducing market liquidity, which has practical significance for further improving information disclosure regulatory mechanisms.
The research results indicate that multimodal accounting information disclosure can attract investor attention through abundant incremental information and significant visual effects. Further analysis reveals that the effectiveness of multimodal accounting information disclosure is closely related to investors' basic characteristics. Specifically, when the institutional investor ownership ratio of a company is relatively low, multimodal accounting disclosure has a more significant effect on enhancing investor attention. However, despite the positive role of multimodal accounting information disclosure in increasing investor attention during the information acquisition stage, it may also lead to widened market bid-ask spreads and increased volatility, thereby reducing market liquidity.
Based on the research conclusions, this paper proposes to improve financial accounting supervision policies in the new era, standardize the supervision of Internet financial accounting information, establish guidelines for enterprise informal disclosure, ensure the authenticity, accuracy, and completeness of disclosed information, and prevent enterprises from misleading investors using multimodal disclosure. Penalties for corporate financial fraud should be increased, and market mechanisms should be further improved to leverage market competition, increase the cost of opportunistic manipulation of accounting information by enterprises, prompt enterprises to enhance the quality of accounting information disclosure, and avoid overuse or abuse of this disclosure method, which could distract investors' attention or cause overreactions. On the basis of improving the supervision mechanism, investor education should be strengthened, improve the professionalism of institutional investors and enhance their information acquisition and screening capabilities, thereby efficiently allocating their resources. Meanwhile, protection for retail investors should be strengthened, penalties for corporate violations should be increased, a transparent and fair market atmosphere should be created, and investor confidence should be bolstered.