Table of Content

15 May 2014, Volume 0 Issue 05

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Inflation in Agriculture and Industrialization: Contributions on Finance by Peikang Chang

ZHONG Chun-ping

2014, 0(05):  1636. 

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Focusing on the theory of industrialization in agricultural countries, Professor Peikang Chang analyzed the causes and effects of inflations and their solutions at different stages. The core lies in that finance has to keep the prices stable, so that it can better support the industrialization. During this process, the role of agriculture would be ignored now and then, therefore the inflation pressure could be raised; while agriculture may then be considered as the cause of inflation. Thus the financial theory of Professor Peikang Chang can be illustrated as: only if the improvement of agricultural productivity is stressed, can the pressure of inflation be released and the process of industrialization be quickened. This theory still applies to the current situations.

Can Spatial Agglomeration Expand Regional Income Gap？

QIN Yi-dong, ZHANG Xian-feng

2014, 0(05):  1637. 

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In the framework of the new economic geography，this paper constructs an economic model to analyze the functional mechanism between spatial agglomeration and regional income gap. The results indicate that the spatial agglomeration of economical activities can lead to the widening of regional income gap, and such influence will be weakened as the regional transportation cost reduces. The empirical analysis of China’s provincial panel data is basically consistent with the conclusion of the theoretical analysis. These results can provide policy implications for Chinese government to achieve balanced regional cooperation and development and narrow the regional income gap.

Path Selection in Deepening Fiscal Reform of “County Governed by Province”

YU Han-yao, WANG Qiao

2014, 0(05):  1638. 

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Since the starting of the financial reform of “county governed by province”, some problems have come into being, such as the marginalization of some counties (cities) are accelerating, the financial regulation of the prefecture-level cities on the counties remains the same, the trend of “changing counties into districts” is popular, the sense of service of the prefecture-level cities for the counties is seriously weakened, and so on. The occurance of the problems mentioned above is resulted from such factors as the one-way advance of the “county governed by province” financial reform, the limited management span of the provincial functional departments, and the long delayed reform. Currently, we should deepen the “county governed by province” financial reform from the following aspects, such as to limit the regulating powers of the cities over the counties, to expand the magnitude of the provincial financial management, to deepen the financial reform comprehensively, and to streamline administration and delegate power to the lower levels, etc..

Can Property Tax Lower Housing Price? An Assessment of China’s Pilot Property Tax Based on the DID Method

WANG Jia-ting, CAO Qing-feng

2014, 0(05):  1639. 

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Based on the 2006-2012 panel data of 35 cities nationwide, this paper makes use of the DID (difference-in-difference) method to examine the impact of the pilot property tax carried out in Shanghai and Chongqing on the real estate prices of commercial buildings, residential houses in the commercial buildings and luxury residential houses. The study finds that there exists no obvious expected policy effect at the pilot cities. The pilot property tax has significantly lowered housing prices, but the impact on the prices of commercial buildings and luxury residential houses is not significant. Therefore, the regulation on the real estate market will be greatly limited if it relies solely on the real estate tax policy; the regulation should be carried out comprehensively by integrating with other means.

An Analysis of Private Placement, Nature of Controlling Stake and Industrial Upgrading Effect

YAN Wu1, LI Jia1, LIU Bin-bin2

2014, 0(05):  1640. 

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This paper aims to discuss and analyze the distribution characteristics of the private placement among different regions and different industries by state-owned and private holding enterprises as well as the changed earning capacities of the capital before and after the placement. Taking the private placement financing data of the listed companies during the period of 2006-2011 in China’s A-share markets as the sample, this study adopts the panel data model to conduct a quantitative analysis of the industrial upgrading effect of the private placement by listed companies with different holding natures. The empirical results show that though the private placement by the state-owned and private holding enterprises has not significantly improved the Clark index in any region, the private placement by private holding companies has significantly improved the growth rate of the tertiary industry in the eastern region. While reducing the proporation of the tertiary industry in GDP in the central and western regions, it has also improved the growth rate of the secondary industry and its proporation in GDP in that region to a larger extent. Yet the private placement of state-owned enterprises has no significant effect on the industrial upgrading path in any region except that it helped to raise the proporation of the secondary industry in GDP a little in the eastern region.

A Study of Gold Pricing Problem Based on State Space Model

TAN Shui-mei

2014, 0(05):  1641. 

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For a long time, “the basic value” and the pricing mechanism of gold have been a difficult problem in the financial market. This paper establishes a supply and demand model of “non clearing market” to discuss this issue. The results indicate that the supply mechanism of gold involves the supply side; the demand side involves not only the peoperty of gold as an ordinary commodity but also the property as a financial product. Under certain conditions the market can not be clearing, but both supply and demand can determinethe “the basic value” of gold. The real price of gold fluctuates around the “basic value”, while the “basic value” changes as the economic environment changes. The central bank of China should plan ahead to increase the gold reserve reasonably in good time. At the same time, the Chinese government should strenthen its discourse power in gold pricing; only in this way can it guarantee its active position in the international financial market, and finally realize RMB internationlization.

Information Technology Capability, Environment Uncertainty and Financial Performance: Empirical Evidence from China’s Listed Companies during the Period of Economic Downturn

WU Jin-nan1,2, HUANG Li-hua1

2014, 0(05):  1642. 

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Information technology capability is widely regarded by the academic circles and business circles as a vital means to reduce the operating cost and improve earning capacity. This paper applies the method of paired sample in the control group and collects the data of 248 listed companies during 2007-2012 to conduct an empirical test of the continuous influence of the information technology capability during the economic downturn period, as well as the impact of environment uncertainty on the relationship between information technology capability and financial performance. The results show that companies with superior information technology capability have better average profit rates in the current year and the subsequent two years, suggesting that information technology capability can make a sustainable improvement on the profitability even during the period of economic downturn. The findings also show that for those companies competing in the uncertain environment, information technology capability plays a greater role in lowering the business cost, and this impact is also sustainable. This study verifies that information technology capability has a sustainable impact on the corporate financial performance in the context of China’s economic transition and that the environmental uncertainty has a moderating effect on the relationship between information technology capability and financial performance, which provides Chinese companies with theoretical guidance for enhancing their ability to recover from losses during the period of economic downturn.

Self-Discipline and Establishment of Corporate Social Responsibility: Embedding of Informal Institutions

Xin Jie

2014, 0(05):  1643. 

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Informal institution is an often ignored management variable of corporate social responsibility. Based on a general interpretation of corporate social responsibility, formal and informal institutions, this paper emphasizes that informal institution should be embedded in the corporate social responsibility. It also makes an analysis of the action mechanism of informal institution embedded in the corporate social responsibility, covering such areas as the construction of a harmonious society, the improvement of the efficiency of the formal institution, saving transaction costs, the guidance of corporate social responsibility practice, the motivation of entrepreneurial behavior, the cohesion of stakeholders, and the study of informal institutions. In the context of China’s cultural traditions, corporate social responsibility has to have not only heteronomy, but also more self-discipline. From the perspective of the embedded informal institution, the self-discipline and establishment of corporate social responsibility includes the following five aspects: moulding of the moral self-discipline, formation of entrepreneurial group- shared values and beliefs of corporate social responsibility, giving full play to the heteronomy of the third party organization and public opinion, development of the low carbon operation model, and moulding of the culture of corporate social responsibility.

Measurement of Profit Efficiency Loss of China’s Export Enterprises and Analysis of Affecting Factors: Evidence from A-Share Listed Companies

ZHANG Xin

2014, 0(05):  1644. 

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This paper conducts a quantitative measurement of the loss of profit efficiency of China’s export enterprises by using the heteroscedastic stochastic frontier model and analyzes the factors affecting profit efficiency by using standardized regression and rolling regression methods. The results show that the overall profit rate of China’s export enterprises is lower than the optimal level by about 50% -60%, and this loss of efficiency has no significant changes due to the difference of importers. The ownership nature of state-owned enterprises has become the main factor leading to the loss of profit efficiency. To increase the added value of export products and to improve the corporate recognition can play an important role in reducing the loss of profit efficiency.

Nonlinear Effect of Foreign Capital Economy on China’s Resident Income Gap

FU Yuan-hai1, LI Wen-xing2

2014, 0(05):  1645. 

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Theoretically, there may be a nonlinear relationship between foreign capital economy and resident income gap. By applying the smooth transition regression model, this paper conducts a cointegration test of the threshold value over the relationship between foreign capital economy and resident income gap. The results show that there exits a cointegration relationship of threshold value between foreign capital economy and the national Gini coefficient. When the marketalization level is lower than 0.668, the positive role of foreign capital economy in enlarging the income gap reaches or is close to the maximum; when the marketlization level rises to 0.668, the effect of foreign capital economy on the income gap would have a nonlinear transfer. With the development of the marketalization process, the role of foreign capital economy played on China’s income gap changed its nature around 2000; during the period of 2002-2010, the role of foreign capital economy in narrowing the income gap may be close to or reach the maximum.

CPA’s Job-Hopping: Reason and Result

XIE Sheng-wen, LIU Yang-hui

2014, 0(05):  1646. 

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From the perspective of CPA’s job-hopping, this paper explores the potential incentives of the phenomenon of changing the firm while keeping the same CPA due to the clients following their signed CPAs. It analyzes the motive of this peculiar behavior from such angles as customer resource controlling, interpersonal relationship driving and audit opinion demanding, as well as the special incremental information and the ultra-instrumental relationship this behavior carries. Then, by referring to the rules about human reciprocity in the human relation theory, it dissects the weighing and selection of the human feeling compensation mechanism behind the behavior of changing the firm while keeping the same CPA, as well as its impacts on the audit quality, audit opinion and audit pricing. Finally, this paper puts forward some proposals to help the improvement of the regulatory policy on the individual practical behavior of the signed CPAs.

Institutional Environment, Separation between Control Rights and Cashflow Rights, and Family Firms’ Cash Dividend Behavior: Evidences from China’s Listed Family Firms

ZHANG Jian1, SHI Ben-ren2

2014, 0(05):  1647. 

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Based on the agent theory and the combination of law and finance theory, this paper studies the impact of the separation between the control rights of actual controllers and the cashflow rights on the cash dividend intention and level in family business. Furthermore, it tests the difference of the abovementioned impact under different institutional environments. The rsults indicate that the greater the separation degree of the two rights, the lower the willingness to pay cash dividend; the separation degree of the two rights is negatively correlated with cash dividend intension and level significantly. In addition, the impact of separation degree on the dividend policy is quite different under different institutional environments. The negative correlation is more significant when companies are under worse institutional environments, while better institutional environments can restrain the lower dividend tendency of the actual controllers. This suggests that, to a certain degree, better external institutional environment can be an important alternative mechanism to protect the interests of the medium and small investors.