Prior research documents that ownership by multiple large shareholders (MLS) could alleviate agency conflicts between controlling shareholders and small shareholders through improved monitoring. We provide evidence of a “dark side” to MLS. Using a sample of Chinese listed firms during 2005–2014, we find a positive association between the presence of MLS and excess executive compensation. Furthermore, excess compensation is greater in firms in which the different types of large shareholders have relatively equal voting power. Overall, these results imply that coordination friction among MLS reduces large shareholders' monitoring efficiency and exacerbates agency problems between shareholders and executives.

Kothari, Lewellen, and Warner (2006) document that aggregate earnings changes in the United States are negatively related to contemporaneous market returns. In this study we show that this negative aggregate earnings-returns relation is unique to the United States. In 28 non-U.S. markets, aggregate earnings changes are positively associated with contemporaneous market returns. Further evidence shows that the aggregate earnings-returns relation becomes less positive in countries with more transparent financial disclosure that helps investors forecast earnings more precisely. Our result supports Sadka and Sadka’s (2009) argument that predictability of aggregate earnings leads to the negative relation between aggregate earnings and market returns in the United States.

We examine whether religion affects the terms of bank loans. We hypothesize that lenders value the traits of religious adherents, such as risk aversion, ethical behavior and honesty, and thus offer favorable loan terms to religious borrowers. Consistent with this hypothesis, we find that corporate borrowers located in counties with a high level of religiosity are charged lower interest rates, have larger loan amounts and fewer loan covenants. These results suggest that the corporate culture of borrowers influences the availability and cost of bank loans.

We investigate the impact of the fiduciary duty of loyalty on corporate culture. Leveraging the staggered state adoption of corporate opportunity waiver (COW) laws as an exogenous fiduciary loyalty decline, we find that COW laws deteriorate corporate culture. This effect operates through increased board overlapping and director busyness and is more pronounced in firms with legal-expert directors, weaker governance, and greater outside opportunities as well as in smaller or younger firms. The results are robust across alternative measures, time frames, legislative events, estimation strategies, etc. Overall, the fiduciary duty of loyalty plays a crucial role in enhancing corporate culture and firm performance.

This article examines the impact of mainland Chinese buyers in the Hong Kong housing market, using complete transaction records between 2001 and 2017. We find that mainland buyers pay an average price premium of 1.4% compared with locals. The premiums are estimated to be 3.5% for large-sized luxury units and 1.6% for homes in central locations. The mechanisms that underlie the price premiums include a hedging effect, residential sorting, and information barriers, of which the hedging motive has the strongest impact. Mainland buyers’ price premiums rise significantly when the Chinese currency depreciates or China Economic Policy Uncertainty increases. Our study sheds light on the impact and mechanism of the ““China shock” on the global housing markets.

This study investigates the underexplored role of onsite viewing activities in the housing search process. By incorporating buyer heterogeneity into the housing search model of Courant (1978), we show that buyers with higher private valuations tend to view more properties onsite and ultimately pay higher prices. Utilising a proprietary dataset from the largest real estate agency in Beijing, our analysis reveals that increased onsite viewings significantly enhance both the likelihood of a transaction and the final purchase price. We establish causality by employing an instrumental variable approach that leverages exogenous variations in heavy pollution and rainfall, which hinder buyers’ ability to conduct onsite house viewings. More intensive onsite viewings raise transaction price as they reveal a buyer’s higher private valuation to the seller. Besides, onsite viewings also function through reducing information asymmetry and improving match quality.

Using a large sample of firms from 43 markets, we find significant time-series variation in firms’ leverage ratios around the world. Industry median leverage ratios and aggregate leverage ratios also change substantially over time. Relative to actual leverage ratios, target leverage ratios estimated from the time-varying target models are much more stable. Variance decomposition shows that leverage instability is largely driven by deviations from the target. A number of firm and market characteristics are related to capital structure instability. We also find evidence consistent with firms using financing activities to adjust their leverage ratios towards the target in global markets.

We identify exposure to political risk by exploiting a unique variation around land lease extension protection after 2047 in Hong Kong’s housing market due to historical arrangements. Relative to properties that have been promised an extension protection, those with unprotected leases granted by the current government are sold at a discount of 8 percent; those with colonial leases suffer an additional discount of 8 percent. Incorporating estimated structural parameters that suggest an additional 20 percent ground rent after 2047, our model matches empirical discounts well across lease horizons. Discounts increase over time, particularly in areas with greater pessimism about the city’s future.