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AbstractThis paper mainly discusses how tax reduction policies may affect a firm's debt maturity structure by altering firm performance. When an indirect financing system is dominated by banks, such as is the situation in China, tax reduction policies impose two opposite effects on the firm debt maturity structure. The improved profitability will encourage banks to lengthen debt maturity to retain firm customers, which can be called the 'customer competing effect'. Meanwhile, the increased free cash flow will exaggerate the principle‐agent problem between banks and firms, leading to a shortened debt maturity, which is designated the 'agency cost effect'. In this paper, based on China's Industrial Enterprise Database, we use China's VAT (value‐added tax) reform as a natural experiment to empirically test the two effects. After the tax reduction, firm debt maturity was found to generally lengthen. Meanwhile, such an extension is found to be larger when the firm's profit gain is greater or the increased free cash flow is less, which confirms our hypothesis.

AbstractThis paper studies the relationship between firms' excess capacity and their environmental behaviour by matching the environmental data of China's major iron and steel firms with the Chinese Industrial Enterprises database. The findings are as follows. (1) A firm's excess capacity leads to myopic decisions, and firms will pay more attention to short‐run economic benefits at the cost of long‐run environmental benefits, which strengthens their dependence on the polluting path. (2) The dependence is positively correlated with the transformation barriers, and either a higher innovation cost or a higher possibility of regulatory capture in local official governance would lead to greater dependence on the pollution path. (3) Mergers & acquisitions (M&As) may hopefully cut such dependency, but only cross‐provincial M&As led by central state‐owned enterprises (SOEs) can effectively alleviate the "pollution effect" of excess capacity, while intra‐provincial M&As led by local SOEs fail to achieve such a goal.

AbstractThis study discusses the role of firm risk in the declining labour share in China. Based on the model developed by Holmström and Milgrom (1987), the authors demonstrate that lower firm risk can motivate workers to work harder, leading to higher output per worker and average wage. However, increased output will lower the labour share. Using data from the Chinese Industrial Enterprises Database for the period 1998–2007 and the World Bank's Investment Climate Survey 2005, empirical evidence supports this hypothesis and performs robustly across various model specifications and proxies for firm risk, indicating a positive correlation between labour share and firm risk.

ResumenEste estudio analiza el papel del riesgo empresarial en la disminución de la participación del trabajo en China. A partir del modelo desarrollado por Holmström y Milgrom (1987), los autores muestran que un menor riesgo empresarial puede motivar a los trabajadores a trabajar más, aumentando el producto por trabajador y el salario medio, pero el incremento de la producción reducirá la participación del trabajo. Utilizando la base de datos sobre empresas industriales chinas para el periodo 1998‐2007 y la encuesta sobre clima de inversión del Banco Mundial de 2005, obtienen evidencia robusta de una correlación positiva entre la participación del trabajo y el riesgo empresarial.

RésuméLes auteurs examinent la relation entre risque d'entreprise et déclin de la part du travail en Chine. Partant du modèle d'Holmström et Milgrom (1987), ils montrent qu'un risque d'entreprise moindre motiverait les travailleurs à travailler plus intensément, ce qui augmenterait le produit par tête et le salaire moyen. Toutefois l'augmentation du produit peut faire baisser la part du travail. Une étude empirique, fondée sur la CIED, base de données des entreprises industrielles chinoises, (1998‐2007), et sur l'enquête de la Banque mondiale sur le climat de l'investissement (2005), confirme cette hypothèse d'une corrélation positive entre part du travail et risque d'entreprise.

AbstractThe impact of producer services on manufacturing growth has long been disputed. Using a unique dataset from the Catalogue for the Guidance of Foreign Investment Industries (CGFII), we construct a set of regulation indicators for each industry in the service sector. Then we explore the effect of upstream producer services, instrumented by regulation indicators, on manufacturing growth. The findings are as follows. First, the development of producer services can effectively promote the growth of manufacturing, and such an effect is stronger in more developed regions. Second, regulations are negatively related to the development of producer services, and among various kinds of regulations, prohibition is the one with the largest marginal effect. Third, consumer services fail to promote manufacturing growth, indicating the irreplaceability of producer services, which also suggests that we should pay more attention to the structure of the service sector.