Asia-Pacific Journal of Financial Studies

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  • Customer‐based Concentration and Firm Innovation

    Based on a sample of listed companies in Shanghai and Shenzhen, China from 2007 to 2015, this paper discusses the relationship between customer concentration and corporate innovation. The results show that this relationship is nonlinear and U‐shaped. In addition, this paper finds that when the bargaining power of large customers is weak and the level of supply chain integration is high, the U‐shaped relationship becomes more significant. Additional analyses show that the U‐shaped relationship between customer concentration and corporate innovation is more significant for non‐state‐owned enterprises and those with lower levels of cash holding.

  • Ethnic Ties in US Venture Capital Stage Financing

    This paper examines the effect of ethnic ties on venture capital (VC) stage financing in the US market. After dealing with the endogeneity problem, the paper shows that VC investors who share ethnicity with an entrepreneur tend to finance the company using a smaller number of rounds, longer durations between successive rounds, and a larger amount in each round. The effect is more pronounced when the startup company and the VC firm are not located in the same city or the VCs lack industry‐specific expertise. My findings also suggest that such trust due to co‐ethnicity leads to bad investment performance.

  • Issue Information
  • Finance and Corporate Innovation: A Survey

    Corporate innovation is an increasingly important topic that has attracted great attention from academic researchers in financial economics in recent years. Although the top three finance journals (i.e. the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies) together published a total of only five papers on corporate innovation from 2000 to 2008, the number of such papers published by these three journals skyrocketed to 56 from 2009 to the third quarter of 2017. The purpose of this survey is to provide a synthetic and evaluative monograph of academic papers that examine the drivers and financing sources of corporate innovation.

  • Does Managerial Ability Matter in Private Firms? Evidence from Korea

    Using a large dataset of Korean private firms, we examine the value consequences of managerial ability. We document that private firms with more able managers achieve better performance, are less likely to over‐invest, and are more likely to go public. However, we find that these firms experience more severe underperformance following an IPO than firms with less able managers. We provide evidence of more capable managers exhibiting lower earnings quality before an IPO, which is a potential explanation for our findings. The results are consistent with the notion that in the absence of effective monitoring mechanisms, owner‐managers in private firms can use their discretion in an opportunistic way.

  • Firms’ Technology Innovation Activity: Does Financial Structure Matter?

    In this paper we estimate the extent to which financial structure influences technology innovation activity (TIA) in China. Based on a variety of specifications and by employing panel data estimation techniques, we find that a capital‐market‐based financial structure supports TIA more efficiently than a bank‐bases financial structure does. Chinese firms in high‐tech industry are getting privilege from overwhelming financial development in China to enhance their TIA. Private firms in particular are becoming more and more active in TIA by taking advantage of China's developing capital market, whereas state‐owned enterprises are advancing in technological innovation owing to continuous financial support from the state‐owned credit market.

  • Issue Information ‐ Call for Papers
  • Patent as a Quality Signal in Entrepreneurial Finance: A Look Beneath the Surface

    We examine the value of patents on Chinese firms’ access to venture capital (VC). We find that the patent applications (grants) of firms significantly increase their likelihood of obtaining VC funding in the following year(s), particularly for high‐quality patents in high‐tech industries. Depending on investment, patent quantity significantly improves the size of VC investment and firm valuation. This effect is pronounced in first‐round investment, strong intellectual property protection regions, during periods of loose monetary policy, and state/corporate VC. Overall, we support the use of patent as a quality signal in attracting entrepreneurial finance outside the US and warrant the conditions it holds.

  • Issue Information ‐ Call for Papers
  • Institutional Ownership and Stock Liquidity: International Evidence

    This paper investigates the relation between institutional ownership and stock liquidity, and explores whether this relation differs across institutional settings. Using a comprehensive data set across 41 countries from 2000 to 2010, we find that institutional ownership is positively correlated with stock liquidity. Importantly, the positive association between institutional ownership and stock liquidity is stronger (weaker) for firms in countries with opaque (transparent) information environments or poor (good) institutional characteristics. Our additional analysis reveals that the positive association between institutional ownership and liquidity is attributable to non‐block institutional investors.

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