Knowledge that Transforms

We investigate how trust shocks affect innovation networks through an incomplete contracting framework. Using academic misconduct cases in China (2015–2021) as an identification strategy, we construct a comprehensive dataset combining patent activities and venture capital investments. We document three key findings. First, academic misconduct triggers persistent declines in university–industry collaboration, reducing both joint patents and citations to university research. Second, affected firms strategically shift toward inter-firm R&D alliances. Third, trust shocks propagate to capital markets, with venture capitalists reducing investments in firms previously linked to universities involved in misconduct. Our findings highlight trust as an irreplaceable mechanism in innovation governance and demonstrate how trust breakdowns reconfigure contractual relationships and resource allocation in innovation networks.

Migrant welfare policies serve as crucial institutional levers for achieving sustainable urban development, yet the underlying mechanisms through which they influence firm value remain largely underexplored. This study proposes a new method for measuring the level of urban migrant welfare policies based on policy text scoring, and, using Chinese data, explores the impact of urban migrant welfare on corporate value and its underlying mechanisms. We find relatively robust evidence consistent with urban migrant welfare policies spilling over onto local corporate value. Mechanism tests suggest that these policies enhance corporate value by improving human capital allocation, promoting corporate social responsibility, and fostering innovation. The positive effect is more pronounced for firms in the growth stage and those operating in less competitive industries. Furthermore, we show that local fiscal capacity acts as a binding constraint: the value-enhancing effect of migrant welfare policies depends on sufficient fiscal resources for implementation. Our findings provide a new methodological perspective on quantifying policy text and elucidate the micro-foundations of how public policy shapes corporate performance.

Following the 2023–2024 Tokyo Stock Exchange (TSE) capital-efficiency initiative, investors favored low price-to-book (PBR) firms, particularly those with high return on equity (ROE). These effects are concentrated among persistently undervalued firms, increase smoothly with the degree of undervaluation rather than jumping at the regulatory threshold, and are robust to endogenous treatment assignment. Although firms’ value-enhancing plans were already publicly available in corporate governance reports, the TSE’s consolidated compliance list triggered strong market reactions, consistent with a salient informational event. We find no short-run improvements in realized profitability or upward revisions in analyst earnings forecasts, but significant declines in illiquidity and increases in valuation ratios among low-PBR firms. We also find little evidence of a persistent “price-of-shame” mechanism or strong industry-level spillovers, although spillovers through non-industry links cannot be fully ruled out. Overall, the evidence suggests that the reform primarily triggered investor-side repricing of chronic undervaluation rather than immediate changes in firm behavior.