This paper contributes to the literature on foreign strategic investors (FSIs) by examining the influence of FSIs on non-interest activities. Using data from China’s banks for 2001–2016, we find that FSI entry is associated with significantly increased non-interest activities, especially commission and fee activities, of Chinese banks. Furthermore, local banks with directors appointed by FSIs have increased non-interest activities. Moreover, in state-owned banks, the effects of FSIs and directors assigned by FSIs on non-interest activities are both weaker. We also find that non-interest activities have not significantly changed after the exit of FSIs. These empirical findings will be informative and relevant to both policymakers and practitioners.

Can leaders’ names have an impact on their compensation and firm performance? We reason about how and why certain leaders’ names are related to higher financial compensation, yet unrelated to their ability to lead a company and thus firm performance. Based on a sample of 6132 CEOs working at large, publicly traded (S&P 1500) firms, we find that CEOs who have more “fluent” names—or names associated with feelings of cognitive ease (e.g., shorter length, more common)—obtain greater financial as well as non-financial perks, even though they are no more competent. Therefore, the study looks beyond the influence of sex- and race-typed names to help explain the observed mismatch between top management compensation and firm performance. We discuss the theoretical implication of this study for the cognitive bias and discrimination literature, and managerial implications for strategic human resource management.

There have been profound changes in both political and economic institutions in China over the last 20 years. Moreover, the pace of transition has led to variation across the country in the level of development. In this paper, we use panel data for the Chinese provinces to study the role of legal institutions, financial deepening and political pluralism on growth rates. The most important institutional developments for a transition economy are the emergence and legalization of the market economy, the establishment of secure property rights, the growth of a private sector, the development of financial sector institutions and markets, and the liberalization of political institutions. We develop measures of these phenomena, which are used as explanatory variables in regression models to explain provincial GDP growth rates. Our evidence suggests that the development of financial markets, legal environment, awareness of property rights and political pluralism are associated with stronger growth.

This paper investigates the effects of focus versus diversification on bank performance using data on Chinese banks during the 1996–2006 period. We construct a new measure, economies of diversification, and compare the results to those of the more conventional focus indices, which are based on the sum of squares of shares in different products or regions. Diversification is captured in four dimensions: loans, deposits, assets, and geography. We find that all four dimensions of diversification are associated with reduced profits and higher costs. These results are robust regardless of alternative measures of diversification and performance. Furthermore, we observe that banks with foreign ownership (both majority and minority ownership) and banks with conglomerate affiliation are associated with fewer diseconomies of diversification, suggesting that foreign ownership and conglomerate affiliation may play important mitigating roles. This analysis may provide important implications for bank managers and regulators in China as well as in other emerging economies.

This paper studies the differences in the announcement effects of seasoned equity offerings (SEOs) of commercial banks and non-banks, and explores the influence of bank regulation and the financial crisis on such differences. We find that abnormal stock returns on SEO announcements for US commercial banks are significantly higher than those of non-banks, consistent with the hypothesis that bank regulations reduce the likelihood that bank SEOs signal overpriced equity. The propensity score matching-based difference-in-difference analysis indicates that the differences in stock returns between banks and non-banks decreased during the 2007–2009 financial crisis period and increased after the passage of the Dodd-Frank Act in 2010.