Browsing by Author "Yao, Shouyu"

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    Collusion or governance? common ownership and corporate risk-taking
    (Wiley, 2023-09-13) Yao, Shouyu; Guo, Xinyu; Şensoy, Ahmet; Goodell, John W.
    Research Question Disputes over the corporate governance impacts of common ownership continue. Differentiating from existing studies, we focus on the Chinese stock market, exploiting the Top 10 Shareholding File, which includes various investors besides institutional investors, to study the impact of common ownership built through blockholders on corporate risk-taking behavior. Research Findings We find that firms with higher common ownership are less likely to engage in corporate risk-taking, with concomitant decreases in future growth rates. Mechanism analysis shows that blockholders' common ownership exerts its influence through increasing market concentration, with concomitant lessening of market competition. Interestingly, further analyses indicate that, in contrast to blockholders, ownership connectedness built by mutual fund families significantly raises corporate risk-taking along with growth. However, individual investors' common ownership does not show the significant statistical relationship with corporate risk-taking. Theoretical Implications We add to the debate on common ownership on corporate governance. Consistent with the anti-competition stream of literature, the risk-taking-reduction role we identify for blockholder common ownership supports the theory of anti-competition. Our results highlight the need to consider the heterogeneity of common ownership. Policy Implications While blockholder common ownership is evidenced to have a negative effect on corporate risk-taking, with, by extension, a negative impact on economic development, our results also suggest that efficient monitoring mitigates these effects. We also document an interesting heterogeneity in investor types. Mutual fund common ownership, in contrast to blockholder common ownership, is associated with higher risk-taking and more robust firm growth. This suggests the positive role of institutions in corporate governance and the necessity of considering the heterogeneity of common ownership.
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    Local happiness and corporate financial misconduct: Does happiness reduce organizational opportunistic behavior?
    (Elsevier Inc., 2023-11-01) Cheng, Feiyang; Liao, Jing; Liu, Xutang; Şensoy, Ahmet; Yao, Shouyu
    This study explores the impact of local happiness on corporate financial misconduct. Using large-scale survey data to construct the measurement of the local happiness level, we find that firms headquartered in happier regions are less likely to engage in financial misconduct. Our mechanism analysis indicates that local happiness promotes the building of regional social capital and the cost of misconduct is higher in regions with higher happiness levels, which explains the mitigating effect of local happiness on corporate misconduct. Moreover, the effect of local happiness is more salient when firms are in regions with a lower level of marketization and less financial supervision expenditures and firms with weaker corporate governance mechanisms and risk tolerance. Our results highlight that happiness, a measure of subjective well-being, can serve as a substitute for formal institutions to alleviate organizational misconduct, especially when formal institutions are weak.