Participation in Poverty Governance and Corporate Risk Level

Abstract

Abstract: Government and market are the essential entities in constructing the national governance system and achieving the modernization of governance capacity. To straighten out the relationship between the two can better play the role of governance, which has become a research topic attracting the scholars' attention. Taking the implementation of the targeted poverty alleviation policy as the research background, this paper conducts an empirical test of the impact of the listed companies' participation in the targeted poverty alleviation on their corporate risk levels. The findings show that the listed companies as market governance units participating in targeted poverty alleviation led by the government can significantly reduce their risk levels and that enhancing their corporate reputation is an important channel leading to the above-mentioned effects. The results of further study suggest that this role of risk restraining is more significant in the enterprises of state-owned, with less financing constraints or with poor internal quality control. The above results provide empirical evidences for the effectiveness of the cooperative governance mode that the government encourages companies to participate in, suggesting that in the implementation of targeted poverty alleviation, the interconnected governance between the successful government and the efficient market not only conforms to the self-interests of enterprises, but also improves the efficiency of resource allocation for poverty alleviation. Therefore, this study has important enlightenment for the listed companies to summarize their experience of participating in targeted poverty alleviation and for the social powers to participate in the rural revitalization and other national strategies.

Key words: targeted poverty alleviation, governance capacity, corporate risks

YUE Jiabin, YE Yingzi, SUN Yiwen. Participation in Poverty Governance and Corporate Risk Level[J]. JOURNAL OF CONTEMPORARY FINANCE AND ECONOMICS, 2022, 0(1): 95-109.

References

[1] Boubakri N., Cosset J.C., Saffar W. The Role of State and Foreign Owners in Corporate Risk-Taking: Evidence from Privatization[J]. Journal of Financial Economics, 2013, 108(3): 641-658.
[2] Chen L, Zhang C.J., He J. F. Do Government Subsidies Play Signaling Roles in the Innovation Process of Technology-based Enterprises?[J]. Securities Market Herald, 2019, (8): 41-49.
[3] Chen Z.G., Bi J. Y., Wu G. B., He X. J., Wang Z. M. Y. The Current Situation and Evolution of Poverty Alleviation in China and the Vision and Strategic Focus of Poverty Alleviation after 2020[J]. Chinese Rural Economy, 2019, (1): 2-16.
[4] Deng B.F., Tao C. J., Ji L. Firms' Targeted Poverty Alleviation and the Ease of Financial Constraints[J]. Journal of Finance and Economics, 2020, (12): 138-151.
[5] Fang H.X., Chen Z. H. Can High Quality Internal Control Effectively Respond to Idiosyncratic Risk and Systematic Risk?[J]. Accounting Research, 2015, (4): 70-77.
[6] Feng L.Y., Xiao X., Cheng X. K. Effect of Corporate Social Responsibility on Firm Risk--Based on Economic Conditions of China[J]. Nankai Business Review, 2016, (6): 141-154.
[7] He W.F., Liu W., Huang K. L. Managerial Ability and Corporate Risk-taking[J]. China Soft Science, 2016, (5): 107-118.
[8] He Y.L. The Reordering of Relations and the Formation of a National Governance Structure[J]. Social Sciences in China, 2018, (2): 26-47.
[9] Huang W., Wang Y.Local Government Financial Pressure, Political Identity and Business Charitable Donations: Evidences Based on the Survey of Chinese Private Enterprises[J]. Contemporary Finance & Economics, 2020, (10): 39-50.
[10] Hu Y.Consolidating the Achievements of Poverty Alleviation and Bridging the Strategy of Rural Revitalization--Review of the Fourth“Agriculture, Rural Areas and Farmers”Essay Workshop of Chinese Rural Economy and China Rural Survey[J]. Chinese Rural Economy, 2020, (12): 130-138.
[11] Hu H.Z., Zhang X. P. The Impact of Participation in Targeted Poverty Alleviation on Corporate Performance[J]. Reform, 2020, (8): 117-131.
[12] Hu W.M., Kim H., Woo J. How CSR Leads to Corporate Brand Equity: Mediating Mechanisms of Corporate Brand Credibility and Reputation[J]. Journal of Business Ethics, 2014, 124(1): 75-86.
[13] Jensen M.C., Meckling W. H. Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure[J]. Journal of Financial Economics, 1976, 10(3): 305-360.
[14] Ji X.L., Ma N. Mixed Ownership Reform, Property Rights and Enterprise Risk Changes[J]. Journal of Beijing Institute of Technology (Social Sciences Edition), 2019, (2): 107-115.
[15] Jia J.X., Qin C., Liu Y. Z. Do Community-Based Development Projects Alleviate Poverty? Evidence from Rural China[J]. Social Sciences in China, 2017, (9): 68-89.
[16] Jia Y.J. Research on the Correlation Between the Level of Targeted Poverty Alleviation and Profit--Empirical Evidence Based on A-share Listed Companies[J]. Assets and Finances in Administration and Institution, 2018, (15): 36-38.
[17] Jiang J.Exploring the Development of Targeted Poverty Alleviation under the Framework of Social Governance[J]. Management World, 2018, (4): 178-179.
[18] John K., Litov L., Yeung B.Corporate Governance and Risk-Taking[J]. Journal of Finance, 2008, 63(4): 1679-1728.
[19] Klein B., Leffler K.B. The Role of Market Forces in Assuring Contractual Performance[J]. Journal of Political Economy, 2000, 89(4): 615-641.
[20] Li X.Y., Yu L. R., Tang L. X. The Process and Mechanism of China's Poverty Reduction in the Past Seventy Years[J]. Chinese Rural Economy, 2019, (10): 2-18.
[21] Li W.A., Wang P. C., Xu Y. K. Philanthropy, Political Connection and Debt Finance: Reciprocal Behavior of Governments and Private Enterprises[J]. Nankai Business Review, 2015, (1): 4-14.
[22] Liu B., Zhang A.L., Pan M. M. Research on the Impact of Institutional Heterogeneity Risk on Macroeconomic Stability - Based on the Perspective of the Stock Market[J]. Economist, 2019, (8): 90-101.
[23] Lys T., Naughton J.P., Wang C. Signaling through Corporate Accountability Reporting[J]. Journal of Accounting and Economics, 2015, 60(1): 56-72.
[24] Ma N., Wang L. Enterprise Life Cycle, Competitive Strategy and Risk Taking[J]. Contemporary Finance & Economics, 2018, (5): 70-80.
[25] Ren C.Q., Wang Z. Research on the Influencing Factors of Enterprises Intervening in Targeted Poverty Alleviation--An Empirical Analysis from Attention Perspective[J]. Soft Science, 2020, (6): 72-78.
[26] Shapira R.Corporate Philanthropy as Signaling and Co-optation[J]. Social Science Electronic Publishing, 2012, 80(5): 1889-1939.
[27] Wang F., Tao Y.T., Ni J. Research on Investment Efficiency and Performance of Listed Companies under the Background of Precision Poverty Alleviation--Based on Samples of Private Enterprises[J]. China Soft Science, 2020, (6): 122-135.
[28] Wang Y.L., Su Y. How to Achieve the Miracle of China's Poverty Alleviation: The Precise Administrative Mode of China's Poverty Alleviation and National Governance System Foundation[J]. Journal of Management World, 2020, (4): 195-209.
[29] Wang P.Q., Tang B. An Analysis of the Party-Government Structure and Functional Mechanism of Contemporary Chinese Governance[J]. Social Sciences in China, 2019, (9): 4-24.
[30] Wang S.G. China's Large-scale Poverty Reduction: Main Driving Forces and Institutional Foundation[J]. Journal of the Renmin University of China, 2018, (6): 1-11.
[31] Wang X., Ye X.X. National Governance Change and Enterprise Strategic Reform--The Moderating Effect of CEO Power and Openness Characteristics[J]. Science Research Management, 2019, (12): 234-242.
[32] Wen Z.L., Zhang L., Hou J. T., Liu H. Y. Testing and Application of the Mediating Effects[J]. Acta Psychologica Sinica, 2004, (5): 614-620.
[33] Wu J., Xu S., Shen Y.The Empirical Study of the Impact of Financial Constraint on the Risk of Firms and the Prices of Stock[J]. Nankai Economic Studies, 2014, (5): 54-71.
[34] Xing C.J. The Bridge between the Multivariate Logic of Government Poverty Governance and Precision Poverty Alleviation[J]. Issues in Agricultural Economy, 2020, (2): 31-39.
[35] Yan J.R. Anti-Poverty and National Governance: The Innovative Significance of China's“Fight against Poverty”[J]. Journal of Management World, 2020, (4): 209-220.
[36] Yang S.L., Xie X., Zhang W. The Research of Internal Control Quality and Corporate Value--Based on Listed Companies Held by Central Enterprises[J]. Economic Management Journal, 2014, (7): 90-99.
[37] Yin K.G., Liu X. Q., Chen H. D. Study on the Relationship between Corporate Social Responsibility and Financial Performance from the Endogenous Perspective--Evidence from Chinese Listed Companies[J]. China Soft Science, 2014, (6): 98-108.
[38] Yu M.G., Li W. G., Pan H. B. Managerial Overconfidence and Corporate Risk-taking[J]. Journal of Financial Research, 2013, (1): 149-163.
[39] Yu M.G., Pan H. B. The Relationship between Politics, Institutional Environments and Private Enterprises' Access to Bank Loans[J]. Management World, 2008, (8): 9-21.
[40] Zhai S.B., Zhang S., Xie L., Zheng J. Bank Linkage and Corporate Risk--Empirical Evidence Based on Listed Companies in China[J]. Journal of Management World, 2014, (4): 53-59.
[41] Zhang C.M., Zhao M. The Role Orientation and Participation Means of State-owned Enterprises in Targeted Poverty Alleviation[J]. Journal of Guangxi University for Nationalities (Philosophy and Social Science Edition), 2018, (1): 51-56.