Academy of Management Journal

Zhang, Yanlong, Heli Wang, and Xiaoyu Zhou. “Dare to Be Different? Conformity vs. Differentiation in Corporate Social Activities of Chinese Firms and Market Responses”, 2020.

This study explores the effects of conformity versus differentiation in corporate social responsibility (CSR) practices on evaluations by security analysts and responses of the financial market in general. Using the case of corporate social activities of Chinese listed firms during the period from 2008 to 2014, we show that scope conformity has a stronger effect on analyst coverage for state-owned firms and firms with higher visibility.

American Economic Review

Chen, Yi, Ziying Fan, Xiaomin Gu, and Li-An Zhou, “Arrival of Young Talent: The Send-down Movement and Rural Education in China”, 2020.

This paper estimates the effects of the send-down movement during the Cultural Revolution---when about 16 million urban youth were mandated to resettle in the countryside---on rural education. Using a county-level dataset compiled from local gazetteers and population censuses, we show greater exposure to the sent-down youths significantly increased rural children’s educational achievement. This positive effect diminished after the urban youth left the countryside in the late 1970s but never disappeared.

Chen, Yuyu and David Y. Yang, “The Impact of Media Censorship: 1984 or Brave New World?”, 2019.

This paper conducts a field experiment in China to measure the effects of providing citizens with access to an uncensored internet by tracking subjects’ media consumption, beliefs regarding the media, economic beliefs, political attitudes, and behaviors over 18 months. We find four main results: (i) free access alone does not induce subjects to acquire politically sensitive information; (ii) temporary encouragement leads to a persistent increase in acquisition, indicating that demand is not permanently low; (iii) acquisition brings broad, substantial, and persistent changes to knowledge, beliefs, attitudes, and intended behaviors; and (iv) social transmission of information is statistically significant but small in magnitude.

The Economic Journal

Li, Xing, Chong Liu, Xi Weng, and Li-An Zhou, “Target Setting in Tournaments: Theory and Evidence from China”, 2019.

Motivated by the prevalence of economic targets at all levels of territory administration in China, this article proposes a Tullock contest model to study optimal target setting in a multi-layered tournament-based organization. Our model predicts a top-down amplification of economic growth 8 targets along the jurisdiction levels, which explains the observed pattern in China. Using both provincial and prefectural-level data, we test the model predictions and find consistent evidence.

Journal of Financial Economics

Liu, Laura Xiaolei, Haibing Shu, and K.C. John Wei, “The Impacts of Political Uncertainty on Asset Prices: Evidence from the Bo Scandal in China”, 2017.

We use the event of the Bo Xilai political scandal in 2012 in China as an exogenous shock to identify the impact of political uncertainty on asset prices. We document that the Bo scandal caused a significant drop in stock prices, especially for firms that are more politically sensitive. Further analysis shows that the stock price drop is mainly driven by a change in discount rate, providing strong support for the existence of priced political risk.

The Economic Journal

Zhong, Weiguo, Ya Lin, Danxue Gao, and Haibin Yang, “Does Politician Turnover Affect Foreign Subsidiary Performance? Evidence in China”, 2019.

We contend that policy uncertainty arising from politician turnover adversely affects the performance of foreign subsidiaries. We develop a framework identifying contingent factors at event (i.e., internal promotion), firm (i.e., international JVs), and environment (i.e., market intermediary development) levels that moderate the relationship between politician turnover and MNC performance. Analyses of foreign subsidiaries in 310 Chinese cities from 1998 to 2007 largely support our thesis.

The Economic Journal

Jia, Chunxin, Yaping Wang, and Wei Xiong, “Market Segmentation and Differential Reactions of Local and Foreign Investors to Analyst recommendations”, 2017.

This paper uses segmented dual-class shares of Chinese firms—A shares traded in mainland China by local investors and H shares traded in Hong Kong by foreign investors—to document a rich pattern in the differential reactions of local and foreign investors to analyst recommendations. This reveals that social connections between analysts and investors affect investor reactions to recommendations. Because of the investors’ differential reactions, analyst recommendations may exacerbate, rather than attenuate, the market segmentation between the two share classes.