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Financial management in China

Financial management in China


J. of Multi. Fin. Manag. 23 (2013) 125–133

Contents lists available at SciVerse ScienceDirect

Journal of Multinational Financial Management
journal homepage: www.elsevier.com/locate/econbase

Financial management in China
Zhan Jiang a,1, Kenneth A. Kim b,?
a Shanghai Advanced Institute of Finance, Shanghai Jiaotong University, 211 West Huaihai Road, Datong Plaza, Shanghai 200030, China b School of Business, Renmin University of China, 59 Zhongguancun Street, Haidian District, Beijing 100872, China

a r t i c l e

i n f o

a b s t r a c t
This paper introduces the Journal of Multinational Financial Management’s special issue on ?nancial management in China. We provide a brief literature review of China’s ?nancial management policies, practices, and recent research ?ndings, and describe how papers published in this special issue contribute to this literature. We also make many suggestions for future research. ? 2013 Elsevier B.V. All rights reserved.

Available online 14 March 2013

JEL classi?cation: G30 G31 G32 G34 G35 Keywords: Financial management Capital structure Investment policy Payout policy China

1. Introduction China will soon become the largest economy in the world, yet ?nance scholars in the international academic community still know very little about ?nancial management policies and practices in China. There are several reasons for this lack of knowledge. First, it is only recently (primarily during the past decade) that China has transitioned from a planned economy to a market economy, a transition that is still not complete. Second, and on a related note, many stocks in China used to be primarily state-owned

? Corresponding author. Tel.: +86 10 82500480; fax: +86 10 82509169. E-mail addresses: zjiang@saif.sjtu.edu.cn (Z. Jiang), kennethakim@gmail.com (K.A. Kim). 1 Tel.: +86 135 85967060. 1042-444X/$ – see front matter ? 2013 Elsevier B.V. All rights reserved. http://dx.doi.org/10.1016/j.mul?n.2013.03.007

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and/or nontradable, making studies on China’s ?nancial management practices not generalizable to capital-market-oriented economies. Third, China’s stock markets are young, as they were opened only in 1990. Fourth, the quality of Chinese ?nancial statements used to be questionable, and many important data items were unavailable until recently. Fifth, and perhaps most importantly, China’s economy, along with its regulatory and institutional environment, changes rapidly. Indeed, papers on China’s ?nancial markets published in academic journals ten years ago may report ?ndings not even relevant or useful today. We, the editors of this special issue, both teach modern corporate ?nance theory in business schools in China. When we describe or illustrate a ?nancial management theory, concept, or practice, all of which are based primarily on Western thought and practices, our Chinese students often respond, “this is not how it is done in China.” As we have gotten to learn China’s ?nancial management policies and practices, and the regulations that directly affect these policies and practices, we have to come to realize that our students are sometimes right. However, they are also sometimes wrong. In what ways is ?nancial management in China similar to what is practiced in other countries, and in what ways is it different? Shedding some light on this question is the purpose of this special issue. In our introduction to the special issue, we ?rst brie?y review the literature on China’s ?nancial management policies and practices.2 In this way, we try to narrow the gap in the profession’s understanding of China’s ?nancial management practices. We document both similarities and differences between China and the rest of the developing and developed world. Second, and more importantly, we describe how the papers in this special issue improve our understanding of ?nancial management practices in China. Finally, we make many suggestions for future research. 2. Financial management practices in China 2.1. Capital structure Capital structure policy is, of course, one of the fundamental policies in ?nancial management. Yet we continue to debate as to which theory determines a ?rm’s capital structure. The three theories most commonly debated today are the classic tradeoff theory (i.e., ?rms trade off the tax advantage of debt with ?nancial distress costs), the pecking order theory of Myers (1984) and Myers and Majluf (1984) (i.e., because of costs associated with information asymmetry, ?rms use internal ?nancing before external ?nancing, and if ?rms use external ?nance then they choose debt before equity), and more recently, market-timing theory (Baker and Wurgler, 2002) (i.e., ?rms’ capital structures are driven by share valuation, as ?rms issue/repurchase shares depending on whether those shares are over- or undervalued). Many papers studying data from developed and developing countries ?nd support for one or more of these theories. Which of these theories, if any, explains capital structure for Chinese ?rms? Huang and Song (2006) study ?rm-speci?c determinants of capital structure in China. They ?nd that large ?rms with high ?xed-asset ratios hold more debt, while ?rms with high pro?ts carry less debt. Note that these results are found in almost every developed and developing country (see, e.g., Rajan and Zingales (1995) for a literature review of capital structure studies). More to the point, Huang and Song also ?nd a positive relation between the ?rm’s effective tax rates and leverage. This ?nding, coupled with their ?nding that ?rm size (which can be viewed as an inverse proxy for bankruptcy risk) is also positively related to the leverage ratio, suggests that tradeoff theory explains capital structure in China. However, note that their documented negative relation between pro?tability and the debt ratio is also consistent with a pecking order. That is, pro?table Chinese ?rms appear to use their own internally generated earnings to ?nance growth before they seek external ?nancing. The third capital structure theory, market timing, argues that the issuance (repurchases) of stocks when they are over (under) valued explains the capital structures that we observe. A recent paper by Bo et al. (2011) ?nds that Chinese ?rms issue seasoned equity offerings (SEOs) when the market overvalues their stocks, suggesting that market timing could very well play an important role in

2

Our literature review is not thorough, and we apologize to all authors whose papers are not cited.

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determining capital structure in China. Currently, however, there is little evidence on the role of repurchases in capital structure determination in China, as repurchases have only recently been allowed. Overall, therefore, even when researchers use Chinese data, they continue to debate as to which theory explains capital structure. But how are Chinese ?rms different from ?rms in other countries with respect to their capital structures? Three observations are particularly noteworthy. First, Chinese listed ?rms appear to maintain lower ?nancial leverage ratios than ?rms in other developing economies (see, e.g., Fan et al., 2012). Second, Chinese listed ?rms especially hold low levels of long-term debt. Finally, almost all of the debt comes from commercial banks, as China’s corporate bond market is still underdeveloped. These three observations are, of course, not mutually exclusive. That is, when ?rms have only one primary source of debt, they tend to have low debt levels (see, e.g., Faulkender and Petersen, 2006). When ?rms rely primarily on bank debt, it is usually short-term debt, as it is easy for ?rms and large lenders (such as banks) to renegotiate rollover terms. Therefore, the important questions that a sample of Chinese ?rms can help us answer include, ?rst, what effect do these three particular factors have on ?rms? For example, how do small ?rms obtain ?nancing? This is an important question, as small ?rms are well known to be the drivers of a country’s economic development and growth. It seems that some small ?rms are able to obtain ?nancing from rural credit cooperatives (these are similar to credit unions in the U.S.), but as these cooperatives merge to form regional banks, these small ?rms struggle to ?nd ways to obtain bank loans. China started allowing its Postal Savings Bank (a bank that had traditionally been a savings bank only) to start lending to small and medium-sized enterprises. And recently, China’s government has speci?cally pledged strong ?nancial support of small ?rms.3 Another important question we can raise, given Chinese ?rms’ heavy reliance on bank debt, is whether this reliance has drawbacks. For example, Gibson (1995) and Kang and Stulz (2000) ?nd that bank-dependent Japanese ?rms are unable to ?nance pro?table projects when their banks are experiencing ?nancial dif?culties. It would seem that Chinese ?rms would be similarly vulnerable, but unfortunately it may be hard to obtain a reliable answer to this question without a comparison sample of Chinese ?rms that do not rely primarily on bank debt. If scholars can obtain a suf?cient sample of such ?rms, then future research should attempt to identify whether there are any drawbacks to Chinese ?rms’ heavy reliance on bank debt. Chinese ?rms are well known for having local and national governments as signi?cant owners and controllers, and those that do are commonly referred to as state-owned enterprises (SOEs). What role does the government play in SOEs’ capital structures? Banks, which are also signi?cantly owned by the government, prefer to lend primarily to SOEs rather than non-SOEs (Brandt and Li, 2003). Some argue that this represents discrimination in lending. A more rational explanation is that banks view lending to SOEs as being safe given that the government will probably not let any SOEs fail. This implies that SOEs will have higher debt ratios than non-SOEs, but in conducting our own private empirical analyses, we ?nd that SOEs and non-SOEs have similar debt ratios. So how do non-SOEs, which can be large listed ?rms, obtain ?nancing? Some non-SOEs appear to use foreign debt (Poncet et al., 2010). In a recent paper, Lu et al. (2012) ?nd that some non-SOEs will sometimes own signi?cant shares of banks to form economic bonds with lenders. They ?nd bene?ts to these ties, as these ?rms are able to obtain bank debt at low costs. Finally, some non-SOEs might use whatever political connections they have to obtain bank loans (Li et al., 2008). Zheng and Zhu (2013) look at Chinese banks’ lending incentives. Like Li et al. (2008), they also ?nd that Chinese ?rms with political connections are more easily able to obtain bank debt. Specifically, Zheng and Zhu ?nd a positive relation between past pro?tability and changes in bank debt. That is, banks lend to pro?table ?rms. This ?nding is expected. However, when a ?rm has a politically connected CEO (i.e., a CEO who used to work for the government), the positive relation between profitability and changes in bank debt is less strong. That is, politically connected ?rms do not have to be as pro?table as others to obtain bank loans. They further ?nd that politically connected ?rms that show an abnormal increase in bank debt subsequently invest less ef?ciently (i.e., these ?rms overinvest). Finally, Zheng and Zhu (2013) document negative announcement returns when politically connected

3

http://ieli.pku.edu.cn/ieli/legalnews/l111013.html.

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?rms announce increases in bank loans, further suggesting that loans given to politically connected ?rms reduce the ?rms’ values. Overall, therefore, Zhen and Zhu ?nd two costs to political connections: they lead to suboptimal ?nancing and investing policies. That is, political connections can destroy ?rm value. We should point out an alternative view. There is every possibility that political connections can enhance ?rm value. For example, if a ?rm deserves ?nancing but is unable to obtain it on favorable terms because of information asymmetry, a political connection can reduce the information asymmetry. Currently, most papers point out economic costs of political connections. Future research might attempt to uncover bene?ts. What about external equity ?nancing? Despite the fact that China’s stock markets are among the largest in the world, external equity ?nancing still lags far behind debt ?nancing (Tong, 2005; Fan et al., 2008). However, this is not due to a lack of desire for external ?nancing. Hundreds (and maybe thousands) of ?rms have applied to conduct initial public offerings (IPOs), but there is a regulatory quota for the number of ?rms that can go public. Therefore, many Chinese ?rms go public abroad rather than in mainland China (see Busaba et al., 2012). However, the government seems to be doing a good job in picking which ?rms go public. The ?rms that are allowed to go public are the better performing ?rms (Du and Xu, 2009). Once ?rms become listed, they continue to face regulatory hurdles to raise additional equity capital. In China, a ?rm must meet certain pro?tability thresholds (e.g., a speci?c ROE) before it is allowed to issue seasoned equity offerings (SEOs). On the one hand, there may be a bene?t to this hurdle. Since the establishment of this regulation, Chinese ?rms have suffered less from negative abnormal announcement returns when they announce the issuance of SEOs (Chen and Wang, 2007). But on the other hand, it is precisely unpro?table ?rms that would bene?t the most from access to capital markets so they can eventually become pro?table. Therefore, it is uncertain whether pro?table Chinese ?rms issue SEOs for the right motivations (e.g., to ?nance positive net present value projects). For example, as we previously mentioned, Chinese ?rms seem to be motivated by share overvaluation in their decisions to issue SEOs. Others argue that Chinese ?rms issue SEOs to expropriate wealth from minority shareholders (e.g., see discussions in Bo et al., 2011). Dang and Yang (2013) take advantage of unique changes in the regulatory environment in China to compare rights offerings to underwritten equity offerings. In China’s recent past, there have been times when the pro?tability requirement to conduct rights offerings was higher than the requirement to conduct underwritten offerings, but at other times the reverse has been true. They ?nd that when ?rms choose an offering method simply because they did not qualify for the alternative method, the announcement returns and buy-and-hold returns are lower than when ?rms had a choice of methods. Their results suggest that China’s regulatory requirements for conducting equity offerings reduce information asymmetry, so the regulatory requirements enhance value. However, they wonder to what extent these regulatory requirements encourage ?rms to manage earnings. Indeed, this is an intriguing question for future research. 2.2. Capital investment Firms obviously need to make capital investments, either in capital expenditures for ?xed-assets investment and/or in research and development for non?xed-asset investment, to ensure future net operating cash ?ows. Among the many issues that researchers have studied when it comes to capital investment, we ?rst focus on the following two issues: (1) ?rms may under- or overinvest (e.g., Myers, 1977; Stulz, 1990) and (2) ?rms may not be able to make value-enhancing investments if they are ?nancially constrained (Fazzari et al., 1988; Hubbard, 1998). Regarding the topic of under- and overinvestment, a negative relation between ?nancial leverage and investment is well documented in the U.S., especially for low-growth ?rms (e.g., McConnell and Servaes, 1995; Lang et al., 1996). There are two classic reasons for this negative relation. First, ?rms with high leverage may forgo investing in positive NPV projects as the bene?ts may go primarily to debtholders. Second, debt, in and of itself, is a disciplinary mechanism that discourages overinvestment (Jensen, 1986). For low (high) growth ?rms, a negative relation between leverage and investment is consistent with high leverage discouraging overinvestment (encouraging underinvestment). However, in China, given that bank debt is the primary source of external ?nance and given that many

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?rms are owned and controlled by the government, might we see different results? Firth et al. (2008) ?nd the usual negative relation between leverage and investment, but they ?nd that this relation is weaker when ?rms have low growth prospects and are controlled by the government. Their results suggest that Chinese banks, which are primarily state-owned, are lenient in lending to ?rms (especially state-owned ?rms) despite their low growth prospects, re?ecting the banks’ role as a rescuer of ?rms in economic distress rather than as a monitor or discipliner. As we mentioned earlier, Zheng and Zhu (2013) also ?nd that that politically connected ?rms are able to obtain bank debt more easily than other ?rms, and that these ?rms use these funds to overinvest. Regarding the topic of investment and ?nancing constraints, it is generally well known that there is a positive relation between internally generated funds (usually proxied by cash ?ow or free cash ?ow) and investment (usually measured by capital expenditures). This positive relation suggests that it is much easier for ?rms to make capital investments when they are able to generate their own funds (Fazzari et al., 1988). In a recent paper, Firth et al. (2012) ?nd that government-controlled ?rms have the usual positive cash-?ow–investment relation, but they also ?nd that these ?rms continue to invest when internally generated cash ?ows are low, and even when these ?rms have low growth opportunities. This ?nding is again consistent with the view that state-owned ?rms overinvest. Their explanation is that state-owned ?rms prioritize a responsibility to foster government policies (e.g., maintain low unemployment) over a desire to maximize ?rm value. However, we should caution that the debate continues. Other researchers (most notably, Poncet et al., 2010) using Chinese data ?nd that non-state-owned ?rms are more ?nancially constrained than state-owned ?rms (i.e., their negative cash-?ow–investment relation is more sensitive). Earlier, we suggested that future research should look for costs to ?rms with signi?cant bank relations and bank-dependency. But there are obviously also bene?ts to maintaining bank relations. An interesting area for future research would be to see whether bank-dependent ?rms are able to overcome ?nancial constraints, as Hoshi et al. (1991) have suggested. They ?nd that bank-dependent Japanese ?rms do not have to rely on internally generated funds to invest. Of course, research and development (R&D) expenditures can also lead to subsequent pro?ts. Indeed, Fan et al. (2013) ?nd a positive relation between ?rms’ sales and R&D. That is, a ?rm’s innovations lead to higher sales. Given this ?nding, we might assume that Chinese ?rms then rationally invest in R&D, but this is not necessarily the case. Many Chinese ?rms may not have a strong incentive to invest in R&D given that their competitors may imitate (or outright steal) their ideas, inventions, and innovations. According to anecdotal evidence, Chinese ?rms have an unfortunate reputation of violating intellectual property rights. Fan et al. (2013) cite earlier studies that ?nd that Chinese ?rms located in provinces with weak intellectual property rights engage in less R&D. So Fan et al. ask an important follow-up question. How are R&D spillovers affected by the legal environment, and are they correlated with R&D expenditures? Note that R&D spillovers (in which one ?rm’s innovation is used by other ?rms) are generally bene?cial for economic development. When one ?rm makes a new discovery, it is best for as many ?rms as possible to use it as well. This way, ?rms, consumers, and society as a whole bene?t. However, such knowledge transfers can be either compensated (e.g., ?rms pay to adopt the patent) or uncompensated (the ideas or innovations are simply stolen or imitated). If knowledge is transferred in the latter way, then ?rms may have no incentive to engage in R&D. Using many different straightforward and also creative ways of measuring intellectual property rights, Fan et al. (2013) ?nd that in regions with weak intellectual property rights, an individual ?rm’s sales are positively and strongly related to R&D expenditures by competitors (i.e., ?rms from the same industry). In other words, ?rms bene?t when other ?rms in their industries invest in R&D. They further ?nd that when this spillover is larger, ?rms engage in less R&D. Therefore, they identify a speci?c channel (R&D spillovers) through which weak intellectual property rights reduce innovation. When most scholars suggest that China needs further reforms to become a market-driven economy, they usually point to reforms in the ?nancial sector and infrastructure (e.g., banking, and interest rate and exchange rate liberalizations). The paper by Fan et al. (2013) reminds us that China should seriously engage in legal reform as well. Finally, another form of capital investment (and perhaps the most dramatic in terms of scope) is the acquisition of other ?rms. The mergers and acquisitions (M&A) market is growing in China. Currently, many Chinese ?rms are engaging in cross-border acquisitions as they attempt to globalize and to seize

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market share. But the domestic M&A activity is heating up as well. Bhabra and Huang (2013) study the wealth effects on Chinese listed ?rms that acquire other ?rms, which are mostly local unlisted ?rms. They ?nd abnormal positive stock returns surrounding M&A announcements and also for the three-year period following the acquisition. Note that many M&A studies do not ?nd positive abnormal returns to acquirers (e.g., Jensen and Ruback, 1983; Loughran and Vijh, 1997). However, the recent evidence is mixed (e.g., Moeller et al. (2004) ?nd situations where acquiring ?rms enjoy wealth gains). What is it about China that allows acquirers to enjoy positive stock returns? The acquisitions that were most value-enhancing to acquirers were ones where the target was an unlisted ?rm and was purchased with cash (so the ease of negotiations may play a role), and the target is in an industry related to that of the acquirer (so these are not diversifying mergers). Most interestingly, it also turns out that SOEs enjoy the larger positive stock returns than non-SOEs do. Many studies argue that SOEs are not as pro?table as private ?rms (a notable exception is Chen et al., 2009). Bhabra and Huang (2013) show that SOEs do engage in value-maximizing activities. A fruitful area for future research is to see whether acquirers still enjoy abnormal positive stock returns when they start acquiring other listed ?rms. 2.3. Payout policy Why do ?rms pay dividends? There are several theories, but the two primary ones are that (1) dividends signal future pro?tability (e.g., Bhattacharya, 1979; John and Williams, 1985; Miller and Rock, 1985) and (2) dividends reduce the agency cost of free cash ?ow (Easterbrook, 1984). More important from our paper’s perspective is the question, why do Chinese ?rms pay dividends? There is evidence consistent with the second hypothesis. Gul (1999) ?nds that ?rms with low investment opportunities pay more dividends, in accord with the notion that dividends reduce cash available for discretionary spending. In a similar vein, Zhang (2008) ?nds that when managers serve on boards in China, cash dividends are lower, indicating an agency problem, but when ownership concentration is high, the negative relation between managerial membership on boards and cash dividends is weaker, suggesting that large owners use dividends to mitigate the agency problem. However, the question that we want to raise is how dividend policy in China differs from that in other countries. In China, institutional factors appear to play a key role. Since 2001, listed ?rms have been required to pay cash dividends for three consecutive years if they wish to conduct rights issues (Huang et al., 2011). Further, given that owners of nontradable shares (who are usually the government) are not able to pro?t from capital gains on their shares, ?rms with a high concentration of nontradable shares are more likely to pay larger cash dividends (Huang et al., 2011). An interesting puzzle related to dividends in China is the popularity of stock dividends (Su, 2005). Given that stock dividends do not change shareholders’ total stock value, why are they so popular? This is yet another promising topic for future research. Finally, stock repurchases only recently became allowed in China (Huang et al., 2011), so we have yet to know their determinants and roles in ?nancial management in China. When repurchases become more often used in China, future research should study their motivations and effects. Overall, very little is known about payout policy in China. Perhaps the main reason for this is that China is still in a developing phase in which many of its ?rms, especially non-SOEs, are still growing. It will be interesting to see, someday in the future, how these ?rms choose and use payout policy as a ?nancial management tool when they stop growing at a rapid pace. 2.4. Corporate governance Corporate governance can obviously in?uence ?nancial management practices, as sound governance can ensure value-maximizing ?nancial management policies. Ding et al. (2013) examine the relation between Chinese ?rms’ stock price informativeness and mutual fund ownership. Mutual funds are well known to be monitors and active shareholders of ?rms in which they own stock. Therefore, when ?rms’ shares are signi?cantly held by mutual funds, then their stock prices should be more informative. However, for those ?rms that are also signi?cantly owned by the government, mutual funds may have less power over the ?rms. The authors ?nd empirical support for both hypotheses. That is, when stock price informativeness is a dependent variable in a regression framework, the mutual

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fund independent variable is signi?cantly positive and an interaction term between the mutual fund variable and the government ownership variable is signi?cantly negative. This paper is timely. Very little is known about institutional investors’ monitoring and activism in China. The reason is clear. As the paper points out, the large presence of institutional investors in China is a fairly recent phenomenon. Future research could study whether mutual funds in China are simply attracted to ?rms with high stock price informativeness. That is, are we sure about the direction of causality documented by Ding et al.? Furthermore, if governments mitigate the in?uence that mutual funds can have over government-dependent ?rms, then why do mutual funds still own these shares? Do these institutions believe that state-owned ?rms are good investments? These questions represent future areas of research. Finally, it is also important to realize that price informativeness can also be linked to corporate investment policy. For example, a paper by Wang et al. (2009) ?nds little relation between stock market valuation and ?rm investment because stock prices do not predict Chinese ?rms’ future operating performance. In a similar vein, note that corporate governance may also play a role in accounting informativeness. Speci?cally, ?rms with good governance or oversight may produce more accurate ?nancial statements. Matsunaga and Yeung (2008) document that CEOs with ?nancial expertise provide more precise earnings information. That is, CEOs with ?nancial experience are less likely to engage in earnings manipulation. Jiang et al. (2013) ?nd that Chinese ?rms with CEOs who were previously CFOs, chief accounting of?cers, or vice-CEOs for ?nance or accounting engage in less real earnings management. The Matsunaga and Yeung study focuses only on accruals-based earnings management. Therefore, Jiang et al. (2013) present important further evidence on the bene?ts of having CEOs with ?nancial experience. Indeed, Jiang et al. suggest that this may be one reason why more Chinese ?rms are hiring CEOs with ?nancial backgrounds. In general, we need more research on corporate governance in China. As China becomes the largest developed market economy in the world, investor con?dence is going to play a crucial role. Yet we currently know very little about corporate governance practices in China. One of the reasons is that corporate governance regulations change constantly. 3. Conclusion The papers in this special issue contribute importantly to our understanding of ?nancial management policies and practices in China. But more research is needed. In our paper, we suggest many topics for future research. The papers published in this issue also raise additional questions that can be addressed by future research. There are many unique institutional and regulatory differences between China and the rest of the world. And, at the same time, many Chinese ?rms are enjoying tremendous growth and pro?tability. Therefore, China provides an excellent setting and opportunity for empirical ?nance research. We hope that our paper and this special issue will motivate some of that future research. Acknowledgments We obviously could not have compiled this special issue without a lot of help. However, we also recognize that our colleagues in this profession are busy people and that their time is one our profession’s most valuable resources. Therefore, we took the liberty to conduct initial screens for all submitted papers before we decided to send them out for review. As a result, we desk-rejected most submissions for one reason or another, with the most common reason being lack of ?t with the special issue. Of those papers that were sent out for review, we acknowledge the following referees, who provided timely, thorough, and thoughtful reports: Xin Chen, Shanghai Jiaotong University; Fuxiu Jiang, Renmin University of China; Dolly King, University of North Carolina at Charlotte; Byron Lee, Renmin University of China; Bingxuan Lin, University of Rhode Island; Qingzhong Ma, Cornell University; Jiaren Pang, Tsinghua University; Oranee Tawatnuntachai, Penn State University at Harrisburg; Carol Wang, Wright State University; Qinghai Wang, Georgia Tech University; Xue Wang, Tulane University; Hao Zhang, Rochester Institute of Technology.

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Finally, we thank Fuxiu Jiang for many insightful comments on an earlier draft of this paper, Yao Liu for excellent research assistance, and Steve Ferris for letting us put together this special issue on ?nancial management in China. The usual disclaimer applies. References
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