1. 逯晓玮（2016级博士生）：Litigation Risk, Political Connections, and Corporate Governance
2. 李晴（2018级博士生）：Law, Finance, and Economy in China, Evidence from Bond Market
3. 喻曾（2018级博士生）：The effect of relative performance evaluation contracts on accounting conservatism
魏旭 中央财经大学金融学院 副院长、教授
陈宇子 中央财经大学金融学院 助理教授
柯劭婧 中央财经大学金融学院 助理教授
五、主持人：魏旭 中央财经大学金融学院 副院长、教授
1. Litigation Risk, Political Connections, and Corporate Governance
This study first document models that measure litigation risk in China and to benchmark these models against the industry measure widely used in the literature. Moreover, I examine the impact of litigation risk on corporate investment policies, and in shaping corporate performance. I document a negative association between litigation risk and corporate investment expenditures, and also a negative relationship between litigation risk and corporate performance. Lastly, I investigated the mediating impact of the political connection factor, concluding that having political connections to the government could mitigate the negative impacts of litigation risk on corporate investment policy, and also mitigate the negative impacts caused by litigation risk on corporate performance.
2. Law, Finance, and Economy in China, Evidence from Bond Market
Using a unique litigation dataset involving corporate bond issuers, we find that the bond issuance yield spread for issuers who are expecting a lawsuit as a defendant increases around 6 bps two months before the financial disputes are actually filed. Using the policy notice issued by the Supreme People’s Court as an exogenous shock, we provide strong causal evidence that legal trial (rather than firm fundamentals) induced litigation risk leads to higher yield spread at issuance. Further analysis confirms the real impact of legal power on China’s economy.
3.The relative performance evaluation and a firm’s accounting conservatism
Using the information on relative performance evaluation grants to managers of US firms between 2006 to 2018, we examine the effect of relative performance evaluation contracts on a firm’s accounting conservatism. We discover that firms whose managers have RPE on the performance evaluation period tend to have a higher level of accounting conservatism. Furthermore, we find this effect is through the channel of effective monitoring. This evidence suggests that RPE provides better monitoring of managers’ unobserved private actions, and facilitate shareholder to monitor managers more cost-efficient and in a timelier manner, thus result an increase in a firm’s accounting conservatism.