Dayong Lv

I. Corporate debt maturity structure has received extensive academic attention because it is closely related to firms’ investment, cash holding, and operating decisions (Barclay and Smith 1995; Dat...

This paper examines the influence of green bond investments on bond fund performance in China from June 2016 to June 2023. We find that funds investing in green bonds (“green funds”) significantly outperform their non‐green counterparts. This outperformance can be attributed to a “redemption risk story,” where green bond investments mitigate redemption pressures, enabling fund managers to reduce liquidity buffers and reallocate capital to higher‐yielding assets. Consistent with this story, the outperformance of green funds is more pronounced during periods of heightened redemption risk. Our research contributes to understanding the benefits of socially responsible investments in bond mutual funds.

On April 10, 2023, China's Main Board stock market implemented a new quote limits rule, restricting the range of permissible order prices. Utilizing a regression discontinuity design (RDD), this study investigates the causal effect of this rule on stock market efficiency. We find that the rule leads to a significant reduction in pricing errors, indicating improved market efficiency. In addition, the rule is associated with a decrease in medium‐sized orders, fewer large price jumps, and a lower probability of end‐of‐day manipulation, suggesting that the rule improves market efficiency primarily by constraining manipulative trading activities from financially advantaged investors (e.g., institutional investors). Consistent with this manipulation‐curbing explanation, the rule's positive impact is more pronounced for small‐capitalization and low‐liquidity stocks, which are typically more vulnerable to price manipulation. Our findings provide robust causal evidence on the efficacy of quote limits in mitigating stock price manipulation and offer valuable regulatory insights for emerging markets.

Purpose: This paper explores the linkage of digital infrastructure to the cost of debt. Design/methodology/approach: This study uses the implementation of the “Broadband China” policy that improves digital infrastructure as an exogenous shock and exploits the difference-in-differences method (DID). Findings: Empirical analyses show that digital infrastructure leads to increased firms’ borrowing costs, which is robust to several robustness checks. In addition, we find that this unfavourable effect can be attributed to intensified market competition led by digital infrastructure construction. Cross-sectional analysis shows that this effect is greater for non-SOEs and smaller firms. Finally, we offer additional evidence of the unfavourable effect by showing that digital infrastructure construction leads to decreased fundamentals. Originality/value: Our paper unveils how digital infrastructure construction affects firms’ business strategy in using private debts and extends the determinants of firms’ borrowing costs.

This study investigates whether directors' and officers' liability insurance (D&O insurance) misleads creditors' lending decisions by examining its effect on corporate debt maturity structure. We find that purchasing D&O insurance leads to increased corporate debt maturity, and this effect is more pronounced for firms with weaker corporate governance. These results suggest that creditors may view D&O insurance as an external monitoring tool that helps improve corporate governance. However, D&O insurance induces higher firm risk, but cannot help decrease agency costs or improve firm performance, that is, it results in more severe managerial opportunism. Our findings suggest that D&O insurance, to some extent, misguides creditors' lending decisions.

The daily price limits in the ChiNext stock market were relaxed from [ ]% to [ ]% on 24 August 2020. Using the multifractal detrended moving average cross-correlation analysis (MF-X-DMA) method, we find that relaxing daily price limits leads to a greater degree of multifractality of the ChiNext stock market, suggesting that the relaxation of daily price limits harms stock market efficiency. In addition, the positive cross-correlation between ChiNext and Chinese main board stock markets becomes weaker, i.e., relaxing daily price limits also decreases the connection between ChiNext and other stock markets. Moreover, there is an increase in the degree of the cross-correlation multifractality between ChiNext and Chinese main board stock markets, suggesting that the linkage of ChiNext and other stock markets is more complicated and risky after the relaxation of daily price limits. Our findings fulfill related literature from the perspective of multifractality and have important implications for investors.