Table of Content

16 August 2017, Volume 37 Issue 8

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BOUNCE, DIFFERENTIATION AND PERIODIC TRANSFORMATION IN CHINAS ECONOMY——Chinas Macroeconomic Analysis and Forecast in 2017 Interim Report

RUC Research Group of Macroeconomic Analysis and Forecast

2017, 37(8):  5-24. 

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 Chinas macro economy in the first half of 2017 showed two basic characteristics: bounce and differentiation. Taking the trend of differentiation between numbers and pricing as the example, Chinas economy showed a wider range and more level of differentiation characteristics in the process of bouncing. The major problem of the current economy is domestic economy failed to transmission in shortterm and productivity decline in longterm. This is the reflection of the structural problem of the release of various risks accumulated during the cyclical downturn of the economy and the tightening of domestic policies, the weakening of traditional kinetic energy and the birth of new cycles. The new cycle of the world is difficult to hold up the cycle of Chinas transition, but the pulling effect enabled us to have more time to solve the internal structural problems. To truly start a new cycle, we need a new reform to solve transmission difficulties of the economy, and with the construction of new kinetic energy as the core power of the new cycle. In this regard, we put forward the concerns and models of the new reform.

THE RELATIONSHIP BETWEEN HOUSING PRICE, LAND FINANCE AND URBANIZATION COORDINATED DEVELOPMENT——Based on the Perspective of Spatial Economics

WU Shi-wei1,WANG Xiao-qin2

2017, 37(8):  25-33. 

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The paper based on Chinese 289 prefecturelevel cities panel data between 2004 and 2013, from spatial economics perspective to discuss the relationship between housing price, land finance and urbanization. Through theoretical and empirical analysis found following conclusions. First, housing price is helpful to promote the development of land urbanization, but inhibit the development of population urbanization, then land finance is the source why local government to implement “spread pie” urbanization. Second, the population urbanization and land urbanization coordination index is uncoordinated in Chinese 289 prefecturelevel cities between 2004 and 2013, population urbanization was far lagged behind land urbanization. Third, housing price, land finance, population urbanization and land urbanization had a positive spatial correlation between 2004 and 2013. Finally, based on based on geographical distance, geographical neighboring and economic distance weight, through the static SDM model to empirical analyze found that the higher housing price and land finance, the more disadvantageous is to population urbanization and land urbanization coordinated development.

THE IMPACT OF MONETARY POLICY UNCERTAINTY ON ACCOUNTING INFORMATION QUALITY

SUN Jian1,ZHONG Kai2,LU Chuang1,LIU Xiang-qiang3

2017, 37(8):  34-45. 

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This paper investigates the impact of monetary policy uncertainty on accounting information quality. We find that monetary policy uncertainty can lead to high accounting information quality, and this is more significant in the firms with positive earnings. Furthermore, we find that high accounting information quality can mitigate the negative consequences of monetary policy uncertainty. Our study not only implies that it is important to increase the smoothness and consistency of monetary policy, but also the increasing accounting information quality could have positive effect on the defense of the volatility of macro economy and the allocation efficiency.

PUBLIC INVESTMENT, ENDOGENOUS GROWTH, AND THE OPTIMUM QUANTITY OF GOVERNMENT DEBT

YAN Xian-dong1,LIAO Wei-ding2

2017, 37(8):  46-59. 

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Based on a three sectors overlapping generations model with endogenous growth mechanism, this paper discusses longterm equilibrium of the economy in which government borrows finance for public investment. At the same time, we study Chinas equilibrium government debt scale and its influence factors through numerical simulation method. The following conclusions are found: firstly, there is a positive equilibrium government debt to output ratio in the economy system under certain conditions, which is affected definitely by the parameters of public investment to output ratio, proportion of debt financing in public investment and private capital output elasticity. Secondly, the equilibrium government debt ratio cant rise unlimitedly, as the economy would lose equilibrium, government debt to output ratio will continue to rise, and the fiscal policy will be unsustainable, when the mentioned parameters exceed the specific critical values. Thirdly, when the private capital output elasticity is relatively low, the high equilibrium government debt can lead to dynamic inefficiency of the economy. Additionally, the numerical simulation shows that, based on the different assumptions, currently the equilibrium government debt to output ratios in China are higher than the actual debt ratio, which provides a favorable basis for the future implementation of the expansionary fiscal policy.   


IS MARKET DISCIPLINE ON CHINAS SYSTEMICALLY IMPORTANT BANKS REALLY EFFECTIVE——Based on Empirical Analysis on 9 Regulatory Events

CHEN Zhong-yang1,XU Yue2

2017, 37(8):  60-74. 

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Due to the toobigtofail problem, effective regulation of systemically important financial institutions (SIFIs) is always an important issue for regulators. Based on Pillar III of the Basel Capital Accord, namely market discipline, and event study methodology, this paper analyses the stock market reaction to 9 regulatory events of Chinas global systemically important banks (GSIBs) proposed by Basel Committee on Banking Supervision, Financial Stability Board and China Banking Regulatory Commission and compares the stock price reaction of GSIBs and nonGSIBs. Results show that only one of the events cause negative stock price reaction of GSIBs while others do not cause significant market reaction, which shows ineffective market discipline and indicates that most regulatory measures did not reduce the moral hazard problem of Chinas SIBs effectively.


CEO OVERCONFIDENCE, POWER CONFIGURATION AND STOCK PRICE CRASH RISK

ZENG Ai-min1,LIN Wen2,WEI Zhi-hua3,ZHANG Chun4

2017, 37(8):  75-90. 

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From the perspective of behavioral finance, this paper studies the impact of CEOs overconfidence, CEOs power and its configuration on stock price crash risk based on the 2006—2013 panel data of ashare companies listed in Shanghai Securities Exchange and Shenzhen Securities Exchange. Empirical evidence shows as follows: First, CEOs overconfidence increases the stock price crash risk. Second, the overconfidence is more likely to lead to share price collapse with the increase of CEOs power. Third, after further subdividing the CEOs power into decision power and choice power, we found that its the CEOs decision power rather than choice power plays the main role on moderating the relationship between CEO overconfidence and stock price crash risk. While, even with the large decision power, CEOs overconfidence cant aggravate the negative effect on stock price cash risk with the restriction of choice power.

DO CONNECTIONS OF INDEPENDENT DIRECTORS REDUCE THE FUNCTION OF THE BOARD——A Game Analysis Based on Grey Directors Theory

LIU Cheng

2017, 37(8):  91-99. 

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The researches focusing on the function of independent directors have evolved over three stages: the agent theory, friend board directors and the grey board directors whose chief concern is the connections between CEO and directors of board. This paper builds a theoretical model to study the interactions between stock holders, directors and CEO in a unit framework. The main focus is to study the effects of grey directors on supervising and advising function of board of directors. Our results show that the connections between CEO and directors of board reduce the supervising function of the board, but can enhance the advising ability of board. Moreover, this advising function increases with the CEO owing a higher share of stocks. However, the connections between large shareholder and independent directors cannot resolve the first agency problem, instead it may worsen the second agency problem.


DOES ICT PROMOTE THE CHINESE LOCAL GOVERNMENT RESPONSIVENESS

LIU Cheng-kui,XU Xiao

2017, 37(8):  100-112. 

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Modern information and communication technologies, such as the Internet, reduce the cost of information to improve government transparency. This can enhance the external constraints and intrinsic motivation in the field of public services. Empirical results pass the placebo test and substitution variable test.Theoretical analysis shows as follows. First, the ICT development strengthens the supervision of the public and the central government to local governments, forcing local government spending preferences to transfer the infrastructure construction to public services. Second, the ICT development increasing the complexity of the social structure, and it threats the promotion of the local government governance, which forces the government to transform the spending preferences. Third, ICT has direct and indirect effect mechanism of local public services, and examining the impact of ICT on the different regions. The policy implication of this paper is to promote the development of the network information industry, and accelerate the serviceoriented government construction.