Table of Content

15 April 2018, Volume 0 Issue 04

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Venture Capital, Accredited Director and Enterprise Innovation: Influence and Mechanisms

XIONG Jia-cai, GUI He-fa

2018, 0(04):  135. 

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To enhance the independent innovation capability is the key to accelerate the transformation and upgrading of enterprises, transform China’s economic growth pattern and implement the strategy for innovation-driven development. By referring to the patent data, this paper investigates the impact of venture capital on the innovation capability of the innovative enterprises and its underlying mechanisms. The findings show that before IPO, there is no significant difference between the innovation capabilities of both the enterprises with and without venture investment background. However, after IPO, the former has more applications for invention patents and other patents, which indicates that the venture investment share holding can not only help to increase the number of achievements of corporate innovation, but also to improve the qualities of the innovative results. The venture capital has the effect of promoting innovations. Further analysis finds that it is the internal mechanism of the venture investment that can help the start-up enterprises to relieve their financing constraints, recruit high quality employees, and optimize their governance mechanisms.

Directors and Officers Insurance and Quality of Analysts’ Earnings Forecasts

QIN Shuai1, WU Xi-hao2

2018, 0(04):  136. 

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How to restrain the self-interests of the managers so as to improve the transparency of accounting information and then improve the quality of analysts’ earnings forecast is an important topic in the capital market. This paper first investigates how D&O insurance affects the quality of analysts’ earnings forecasts, and then explores the moderating effect of executive power on the relationship between the two parties. The result shows that, compared with the companies that purchase no D&O insurances, the forecast errors and forecast divergence are less in the forecast made by the analysts on the companies that purchase D&O insurances. In addition, the excessive executive power will weaken the positive correlation between D&O insurances and the quality of analysts’ earnings forecasts. However, this weakened relationship can only affect the forecast divergence significantly, but no significant impact on the forecast error.

A Study of the Division Position and Profit Distribution on the Global Services Value Chain: From the Perspective of Bilateral Nesting

XING Wei1, LI Chang-ying2

2018, 0(04):  137. 

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On the global value chain of service industry, the trend of bilateral nesting of value added in exports between trade partner countries has been increasingly intensified, which exerts important impact on the international division positions and trade benefit distributions. Through establishing an index system, this paper, from the three dimensions of balance, strength and position of bilateral nesting, studies the linked features of bilateral nesting and the evolution tendency between China and the major service trade partners (USA, Japan, Germany, Russia and India) on the global value chain of service industry. The result shows that China’s strength of service trade is being strengthened; the proportion of value added from China in the exports of more and more trade partner countries is gradually higher than the proportion of value added of the trade partner countries in China’s export. The strength of bilateral nesting between China and the trade partner countries is growing; China’s nesting position keeps rising and is gaining advantages in more and more service industries. China’s capital-intensive service industries are developing very well, while its knowledge-intensive service industries are comparatively weaker. Although China has bilateral nesting surplus against USA, the major cause is that the USA export volume of its service industry is much greater than that of China. China should strive to expand the export scale in its service industry, optimize the export structure, and pay more attention to the cooperation with the developed countries in knowledge-intensive service industries, so as to further improve China’s positions and earnings on the Global Value Chain in service industry.

China’s Interregional Trade: Data Acquisition and Database Construction

ZHANG Hong-mei1, LI Li-li2

2018, 0(04):  138. 

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The domestic interregional trade of China has been developing prosperously; however, the related study is quite lagging behind, which is to a large extent due to the availability of the domestic interregional trade data. On the basis of summarizing and clarifying the four existing ways of data acquisition, i.e., the“Golden Tax Project”information system, the railway freight volume data, the input-output tables, and the estimation method, this paper picks out one method which can acquire domestic interregional trade data more systematically and comprehensively, that is, the method of“gravity model plus single-point estimation”supplemented by the input-output table. By applying this method, it tries to construct a China interregional trade database, which includes 36 industries in 28 provinces and in the years of 1987, 1992, 1997, 2002, 2007 and 2012, so as to provide a new idea for further studies on interregional trade.

The Economic Situation when CEO Firstly Enters the Workplace and Corporate Donations

ZENG Chun-ying, MAO Ning

2018, 0(04):  139. 

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From the perspective of altruistic motivation, this paper examines the relationship between the economic situation in which a CEO firstly enters the workplace and the corporate donation by making use of the data of Chinese A share listed companies from the year 2008 to 2016. The results show that the economic situation when the CEO enters the workplace for the first time is significantly and positively correlated to corporate donations. The findings of further studies indicate that this relationship can be positively adjusted by the environmental dynamics in which enterprises are located and the managers’ decision power owned by the CEO, i.e., the stronger the environmental dynamics of the CEO’ enterprise, the greater the manager’s decision power owned by the CEO, and the smaller the donation value made by the enterprise in which a CEO works for the first time under relatively poor economic situation.

Poor-Mouth or Silence: An Empirical Research Based on the Data of China’s Parent-Subsidiary Corporations

WANG Qiong1, WANG Cheng-yuan2

2018, 0(04):  140. 

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When the performance of a subsidiary company in a corporate group is below the expected level, whether it chooses to actively develop cause marketing toward its head office to gain resource support or chooses the performance improvement strategy within the range of its own power performance is a problem worth a profound discussion. Through studying the behaviors of enterprises and the theories of performance feedback, this paper explores the willingness of the managers to carry out cause marketing, especially the cause marketing for innovations, when there are performance expectation gaps in the subsidiary. It also makes an analysis of the moderating effect of the influence of the subsidiary on the above-mentioned relationship. Through investigations and surveys of the senior managers of the parent-subsidiary corporations at different regions in China, we have collected 138 valid questionnaires which are filled out by the matched senior managers in both the headquarters and subsidiaries. The results of the empirical analysis reveal that along with the increasing gap of performance expectations, the willingness of the subsidiary managers for the cause marketing will be strengthened. However, the willingness to perform the cause marketing for innovation will be increased at first and then decreased. In addition, the influence of the subsidiaries can have positive moderating effects in the above-mentioned relationships.

An Analysis of Evolving Marginal Effect of Banking Structure in the Process of Technological Progress

WANG Bing-quan, LI Guo-ping, HAO Wei-ya

2018, 0(04):  141. 

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Whether the banking system can effectively support technological innovation is the key to China’s transformation of the mode of economic development. A theoretical analysis can see that at the stage of lower technological level, the major way to push technical progress is to introduce and imitate foreign advanced technologies, of which the information is rather transparent and the banks are faced with lower risks. The banking competition is conductive to lowering the credit costs and improving the credit availability, thus the incentive can be increased for enterprises to be engaged in the innovation activities. While at the stage of higher technological level, the way to push technical progress is mainly through R&D innovation. Due to higher uncertainty of R&D innovation, banks are faced with higher risks. Only through its market power to share the R&D earnings of the innovative enterprises, can the earnings match the risks, so as to enhance banks’ willingness to lend to the enterprises’ innovative activities. Therefore, the optimal banking structure should be in favor of monopoly with the technological progress. The empirical study shows that at the stage of lower technology level in China, the improvement of banking concentration is not conducive to technological progress; with the continuous progress of China’s technology, the impact of the concentration degree of the banking industry on technical progress will turn from negative into positive and get stronger. Both theoretical and empirical studies show that there is no difference between the so called good or bad banking structure, the key lies in the matching of the banking structure to the technologic level.

A Study of the Share-Price Effect of Underlying Stocks in Securities Margin Trading: A Case of Shenzhen A-Stock

HUANG Fei-ming

2018, 0(04):  142. 

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The securities margin trading business has the function of enhancing market liquidity and maintaining market stability. Taking Shenzhen A-shares as an example, this paper constructs the panel data model and takes the idiosyncratic yield rate of corporate stock price as the measurement standard to recognize the abnormal share price fluctuations by comprehensively considerations from the two dimensions of time series and cross section and to measure the abnormal share price fluctuations from the two aspects of frequency and amplitude. The results show that when the individual stocks are included in the underlying shares in securities margin trading, the development of the securities margin trading business will intensify the abnormal fluctuations in the stock prices, including the effects of both increasing the frequency and extending the amplitude of the abnormal fluctuations in the share prices; but when the individual stocks are deleted from the underlying shares in securities margin trading, the relationship between the two is not clear. The market managers should push out matching policy measures while develop the securities margin trading business, integrate the market environment closely, make relatively stable entrance and exit of the market capital, and avoid excessive speculations in the market. When the investors are doing the securities margin trading, they should clearly understand the close position risks that may be brought about by the securities margin trading; as for the securities companies, they should perform their social responsibilities even more strictly.

A Study of PPP Project Efficiency Dilemma and Related Specification Innovation under Incomplete Contract Framework

JI Fu-xing

2018, 0(04):  143. 

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Recently, although the cooperation between Chinese government and social capital (PPP) has developed rapidly and achieved remarkable results, there still exist various problems of lacking specifications and higher risks. It mainly stems from incomplete contracts; the weakened incentive-restraint mechanism certainly leads to behavior alienation and inefficiency. From the dynamic perspective of the full life cycle, this paper constructs Hart’s HSV extension model and cash flow discount (DCF) model respectively to analyze deeply the efficiency dilemma of PPP projects. This study believes that it is the characteristics of PPP incomplete contracts that lead to the uncertainty of their efficiency, and that the conditions for the maximization of the rights and interests for both sides of the government and the enterprises often deviate. The government should combine the project characteristics and the participants’ behaviors to carry out targeted mechanism design and governance arrangements, improve the contract completeness as far as possible, and establish reasonable risk sharing and incentive compatibility mechanism, so as to form the Pareto improvement. In particular, it should make full use of information and incentive, induce social capital to carry out continuous innovation, and strengthen continuously the project specifications and innovation management, so as to truly form a long-term cooperative partnership.

Government Intervention, Local Financial Development and Economic Growth

ZOU Wei, LING Jiang-huai

2018, 0(04):  144. 

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By making use of China’s provincial panel data, this paper makes an analysis of the relationship between government intervention, financial development and economic growth. The findings indicate that a moderate scale of financial development can promote economic growth, and that at the intermediate level of financial development the economic growth effect of financial development is the maximum. In the areas with lower level of financial development, the moderate intervention of local government is conducive to the promotion of economic growth; while in the areas with higher level of financial development, there is a negative correlation between local government intervention in financial development and economic growth. The impact of local government intervention in finance on economic growth presents the characteristics of diminishing marginal efficiency. Therefore, government intervention in financial development should not be mandatory intervention such as the intervention in micro behaviors or administrative interventions. The intervention should be based on the respect for the laws of the market, so as to improve the level of public services in finance, reduce the degree of information asymmetry and transaction costs, and guide the financial services to the real economy.

Evaluations on the Division Effects between Fiscal Responsibility and Expenditure Liability in Urban Areas: Taking Shanghai as an Example

TIAN Fa1, ZHOU Chen-ying2

2018, 0(04):  145. 

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This paper focuses on the theoretical framework of the division between the intergovernmental fiscal responsibilities and expenditure liabilities and takes Shanghai as a research sample to assess the division effect of the fiscal responsibilities and the expenditure liabilities in urban areas. The findings show that the city government actually assumed 43.85% of the total expenditure liabilities from 2007 to 2016 in average relative to the nominal expenditure. Of the 3 kinds of fiscal responsibilities, the proportions of the actual average assumption of the city government in the order of high to low are social expenditure (40.13%), maintenance expenditure (37.42%) and economic expenditure (34.42%) respectively. Among the selected 8 items of the key fiscal responsibilities, there is a certain degree of dislocation for the different proportions of the actual average assumption of expenditure. Thus this paper offers the following reform suggestions: to encourage the city government to take back part of the fiscal responsibilities and expenditure liabilities, to draw lists of the division between the urban fiscal responsibilities and expenditure liabilities, and to construct the mechanism to match the urban fiscal responsibilities with the urban expenditure liabilities.

Measurement of Polarization of Chinese Residences’ Income Distribution and the Affecting Factors

HU Zhi-jun, TAO Ji-kun

2018, 0(04):  147. 

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By making use of the grouped data of urban-rural income from 1985 to 2015, this paper estimates the degree of polarization of Chinese residents’ income distribution based on the assumption of the generalized Beta II distribution and in the identity-alienation framework. The findings show that the degree of polarization was generally rising from 1985 to 2009, and then it has been declining since 2009. Among which, the degree of identity was declining from 1985 to 2015, while the degree of alienation was rising from 1985 to 2009, and has been declining since 2009. The results of further analysis based on stepwise regression and co-integration regression show that such factors as industrial structure, capital formation rate, inter-industrial wages inequality, opening degree and changes of bank loan scales have significant positive effect on the degree of polarization, while the enrollment rate of junior high school, the changes of employment structure and inflation have significant negative impact. Among them, the opening degree, the enrollment rate of junior high school, the inter-industrial wage inequality and the capital formation have rather significant impacts on the degree of polarization.

Urban Housing Price Bubble and Financial Stability: An Empirical Study Based on the PVAR Model of 35 Large and Medium-Sized Chinese Cities

SHEN Yue, LI Bo-yang, ZHANG Jia-wang

2018, 0(04):  1797. 

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The ever expanding housing price bubble has become the largest“grey rhino”hidden in Chinese economy. Based on the expected equilibrium price model of real estate, this paper makes a scientific measurement of China’s urban housing price bubble. On the basis of theoretical analysis, it takes the panel data of 35 large and medium-sized cities during the period of 2000-2017 as the samples to conduct an empirical analysis of the dynamic relationship between China’s urban housing price bubble and financial stability with the PVAR model. The findings shows that the impact of housing price bubble on financial stability can support the price deviation hypothesis, in the eastern cities and the cities with stronger financial support, the housing price bubble has a greater destructive effect; moreover, compared with bubble expansion, the reduced housing price bubble has a stronger impact on financial stability. In this regard, the real estate regulation and control should adhere to the differentiated regulation measures according to the real conditions of the cities, squeeze out the bubbles in a fine adjustment way, guard against the risk of“two way imbalance”in the implementation of regulation policies, speed up the establishment of a long-acting housing system with multi-subject supply, multi-channel protection, and the double way of rent and purchase.