Browsing by Author "Bai M"

Now showing 1 - 5 of 5
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    Heterogeneous firm-level responses to the US 2018 tariff announcement
    (Emerald Publishing Limited, 7/12/2020) Qin Y; Yang Z; Bai M; Yawson, A
    Purpose This study examines the impact of the $60 billion tariff announcement of the US government on the Chinese exporting firms. In particular, we focus on firms whose revenues are highly dependent on the US economy. Design/methodology/approach This study uses an experimental analysis and event study methodology. The sample includes firms listed in mainland China and Hong Kong stock exchanges that have the highest revenues from exporting to the US. The data are obtained from CSMAR and DataStream. Findings We find that the tariff announcement has significantly negative impacts on stock performance both before and after the announcement, and the impacts are heterogeneous across our sample firms. For A-shares listed in Mainland China, firms with more revenues from the US experience greater price drops on the announcement day, regardless of being in the targeted industry or not. But such a finding is absent from H shares listed in Hong Kong. We also find that for all the firms, greater pricing power can alleviate the impacts of the tariff announcement. Originality This is the first study documenting the heterogeneity of the impact of the tariff announcement and thus contribute to the prosperous studies on the varied firm-level responses in the Chinese stock market, and to the burgeoning literature by filling the gap of the financial market responses to the protectionist policy announcement.
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    Shortability and Asset Pricing Model: Evidence from The Hong Kong Stock Market
    (Elsevier BV, 2017-12) Bai M; Li X-M; Qin Y; Alexander, C
    This study explores how the violation of free short selling assumption affects the performance of CAPM and the Fama-French three-factor model, as existing studies show that short-sales constraints affect asset pricing of the stocks. Using data from the Hong Kong Stock Market which has unique regulations on short selling, we conduct both time-series and cross-sectional regression analyses to evaluate the performance of the two models under the short-sales-constraints and the no-constraints market environment. The two models perform much worse in the former environment than in the latter, indicating a significant impact of the short sales constraints on the explanatory power of the models. We then augment the two models with a shortability-mimicking factor. Our results show that the factor has a significant power in explaining both time-series and cross-sectional variation in the size-B/M portfolio returns. The addition of the factor to the two models considerably increases their overall performance.
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    The COVID-19 outbreak and corporate cash-holding levels: Evidence from China
    (Frontiers Media S.A., 2022-10-17) Zhou D; Zhou H; Bai M; Qin Y; Husin MM
    By employing data from Shanghai and Shenzhen A-share markets for the period of 2019-2020, this paper examines the relationship between the degree of the COVID-19 pandemic's impact on firms' cash-holdings levels in China. We find that firms that are severely affected by the COVID-19 pandemic have higher current cash holdings levels, suggesting that the more positive (negative) the management tone in responding to the COVID-19 pandemic impact, the lower (higher) the firm's current cash holdings. However, future corporate cash holdings decrease considerably irrespective of the corporate sentiment towards COVID-19. The positive sentiment of each firm's management team towards the supply chain and the government policies results in a relative reduction of current cash holdings, whereas the severe impact on operating performance, especially the impact of the outbreak on the supply chain, demand, production and operations, and government policies, reduces the firm' s future cash holdings. In addition, the impact of the pandemic has increased the current cash holdings of state-owned enterprises and reduced the future cash holdings of non-state-owned enterprises. Meanwhile, companies located in a city with a higher density of population or companies that experience relatively higher competition in the industry tend to undergo a severer impact on their current and future cash holdings due to the COVID-19 pandemic. Overall, this study sheds the light on stimulating the vitality of enterprise investment and promoting the domestic economic cycle.
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    The Effect of Corporate Sustainability Performance on Leverage Adjustments
    (Elsevier, 2021-01-30) Ho L; Bai M; Lu Y; Qin Y
    We examine the impact of corporate sustainability performance (CSP) on the speed at which firms adjust their leverage ratios to the target levels for a large sample of 31 countries from 2002 to 2018. Using two proxies of CSP, we find that firms with superior CSP tend to adjust faster toward their target leverage ratios. In exploring the potential underlying economic mechanisms through which CSP affects leverage adjustments, we find that better CSP helps firms to ease information asymmetry, enhance stakeholder engagement, push up stock prices in the stock market, and improve competitive advantage in the product market. In the cross section, the positive association between CSP and leverage adjustment speed is less pronounced in countries with high-quality institutions. The results remain unchanged in robustness tests. Overall, this paper highlights the important role of CSP in shaping corporate capital structure dynamics and suggests implications for corporate strategic planning on the privately optimal levels of CSP activities.
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    The religion effect on corporate cash holding in China: Buddhism and Taoism
    (John Wiley and Sons Ltd., 2023-10) Xiong L; Xiao L; Bai M; Qin Y; Yang L
    Buddhism and Taoism have been deeply rooted in China for generations and both of them have a profound impact on the local culture and social norms. By employing 23,999 firm-year observations between 2008 and 2018, we examine how local religious norms affect corporate cash policies. We provide strong evidence that religiosity significantly reduces the level of corporate cash holdings, by mitigating financial constraints and earnings management of the listed companies. Managers from religious areas make more effective investments and distribute more dividends. Furthermore, our findings document that religion has a more pronounced influence on cash holdings amongst the firms with the smaller size, lower leverage, higher marketization, effective internal control and facing fierce market competition. Overall, Buddhism and Taoism, constituting the main religious norms in China, significantly optimize the firms' cash holdings and firm value.