This study examines the relationship between inflation rate and reserve requirement ratio in China. Our findings show that there is a long-term relationship between reserve requirement ratio and inflation rate. In the short-run, the central bank adjusts the reserve requirement ratio upwards faster than they adjust them downwards. The asymmetric adjustment reflects the fact the Chinese economy was overheating over the past few years as a result of the stimulus package implemented after the onset of the global financial crisis and inflation was threatening the stability of the society.
Although several studies have examined the economic consequences of large shareholders’ tunneling behavior, little attention has been paid to the negative effects of tunneling on firms’ extreme events. In this article, we investigate how tunneling behavior affects firm-level stock price crashes. The findings indicate that the probability of stock price crashes is positively associated with the extent of tunneling behavior by large shareholders. The positive relationship is more pronounced after the split of share structure reform and is moderated by the firm’s financial conditions. This study contributes to the emerging body of literature focusing on the economic consequences of tunneling and stock price crashes. The conclusions drawn from the study also provide a frame of reference for investor protection and investment portfolios based on large shareholders’ tunneling behavior in China.
This research explores what product attributes consumers value and how consumer face consciousness influences ecological product preference. Study I shows that environmental attribute enhances product preference to a greater extent when consumers value gentleness-related attributes more than strength-related attributes. However, when the strength-related attributes are valued, the benefit of environmental attribute is attenuated, and sometimes even leads to greater preference for non-ecological products. Study II reveals that Chinese consumers with high face consciousness show a significant difference between explicit and implicit preferences for ecological products. In other words, these consumers believe in only their own preference for ecological products. In contrast, Chinese consumers with low face consciousness show no difference between explicit and implicit preferences, i.e., they believe that other people prefer ecological products as much as they do.
This study investigates whether accounting firms match the experience level of individual auditors with the risk level of clients in order to control audit risk. We find that accounting firms tend to assign more experienced auditors to non-state-owned clients that typically have higher tendency to engage in earnings management. Such an assignment pattern is more pronounced for non-Big 4 accounting firms. Further analysis suggests that auditors’ experience helps reduce clients’ earnings management level, proxied by abnormal accruals, and thus improves the audit quality. This study enriches the literature on the allocation of human resources and the risk control mechanism in the audit services industry, which has been seldom explored in prior studies.
As the role of information technology (IT) in business innovation becomes increasingly important, an increasing number of organizations have started to consider how to promote IT-enabled business innovation. Although extant studies have identified organization, environment, and innovation’s characteristics as substantial determinants of IT innovation, they do not emphasize the accompanying innovation in processes, products or services, which distinguish IT-enabled business innovation from general IT innovation. Therefore, the reason why few companies succeed in realizing IT-enabled business innovation remains obscure. Anchored on the institutional entrepreneurship theory, this paper examines determinants of the success of IT-enabled business innovation in a fast-growing company using the case study approach. Our findings indicate that IT-business coordination competency, degree of institutionalization, participation of business managers, top management team’s (TMT) attitude towards the innovation, and the innovation’s relative strength, have significant impacts on the success of IT-enabled business innovation. Our findings also contribute to IT innovation research by identifying special determinants of IT-enabled business innovation and redirecting research ranging from innovation in IT itself to IT-enabled innovation in business processes, products or services.
This paper explores the mechanism between leadership and knowledge transfer in a top management team (TMT) via a case study of ZOJE Group, a private listed company in China. Three recently rotated executives with different leadership styles from the parent or subsidiary companies are chosen and studied. Findings show that for the visionary leadership executive, his vision incentive has a limited effect on knowledge transfer, but organization culture, especially the decentralization management culture, can greatly enhance the knowledge transfer process. For the paternalistic leadership executive, authoritarianism helps him manage the management team in disarray; while benevolence and morality improve the knowledge transfer standard. Lastly, for the servant leadership executive, his leading by example and altruism behaviors contribute to a higher level of knowledge transfer among TMT.