Hong Bo

SOAS, University of London | SOAS · School of Finance & Management

In this short article, I provide a preliminary assessment of the economic consequences of possible secondary sanctions on China. Considering the interdependence of China with the rest of the world, I analyse challenges and opportunities China would face in the scenario of secondary sanctions. My analysis covers China’s real economy, domestic financ...

In this paper, we argue that China's P2P lending is influenced by the behavioural factors of P2P platforms. This is because severe information asymmetry results in high uncertainty surrounding China's P2P lending industry. Specifically, we examine three behavioural aspects of P2P lending: lending sentiments, herding, and speculation. Using a sample...

Exploiting regulatory changes in China that govern the use of stock options, we investigate whether executive compensation affects acquisition decisions and post-acquisition performance from 2005 to 2014. We find that acquisitions are not driven by stock options. Managerial stock ownership promotes acquisitions at low levels of ownership – but lead...

A regulatory change in 2006, permitting equity compensations in China, offers a natural experiment to investigate drivers and outcomes of stock options. There are two unique features. First, adoption of stock options occurred rapidly compared to the US, where stock options have been around for more than 100 years with periods of high (1990s) and lo...

We examine whether board attributes, including board age, gender diversity, board independence, CEO duality, and board size, explain investment herding by using a panel of 1155 Chinese-listed non-financial firms during 1999-2004. Investment herding is measured by the absolute value of the difference between the investment ratio of firm i in year t...

How does private equity (PE) investment affect recipient firms? Existing research based on firms in mature financial markets (hereafter mature firms) has documented three possible mechanisms: First, PE investment brings in new financing to the firm, which releases financial constraints faced by the firm and supports the firm’s real activities (e.g....

We examine China’s state energy investment during 1991-2007 using provincial level panel data. We find that China’s state energy investment is (1) driven by demand for energy, (2) unrelated to energy efficiency in economic terms, (3) undertaken with the consideration of reducing negative externalities associated with energy production, (4) used by...

We reveal motivations of Chinese firms for issuing Seasoned Equity Offerings (SEOs) during 1998-2006 by examining who has changed the use of proceeds from SEOs and how they use them. We pay special attention to the use of SEO proceeds in the category of corporate general purposes since the destination for the use of this type of SEO proceeds is off...

We reveal motivations of Chinese firms for issuing Seasoned Equity Offerings (SEOs) during 1998-2006 by examining who has changed the use of proceeds from SEOs and how they use them. We pay special attention to the use of SEO proceeds in the category of corporate general purposes since the destination for the use of this type of SEO proceeds is off...

We reveal motivations of Chinese firms for issuing Seasoned Equity Offerings (SEOs) during 1998-2006 by examining who has changed the use of proceeds from SEOs and how they use them. We pay special attention to the use of SEO proceeds in the category of corporate general purposes since the destination for the use of this type of SEO proceeds is off...

China’s growth model suggests that the 2008 financial crisis may have affected the Chinese economy differently from what one observes in mature market economies. In this paper, we examine how Chinese corporate investment responded to the financial crisis by using 1689 listed nonfinancial firms during Q12006-Q32010. We document that (1) the overall...

We examine how state-ownership affects financial constraints on investment of Chinese-listed firms during 1999–2008. We find that although an average sample firm experiences some degree of financial constraints, state-ownership does not necessarily help in reducing the firm's financial constraints on investment. Further evidence shows that state-ow...

Using a panel of Dutch listed firms this paper provides empirical evidence for the hypothesis that more risky firms are confronted with more severe capital market constraints than relatively less risky firms. The paper also contributes to the discussion on the usefulness of cash flow as a measure of financial constraints. We present a stochastic ve...

We examine the empirical relevance of standard theories explaining the motivation of Seasoned Equity Offerings (SEOs) in the Chinese context. Analyzing Chinese SEOs during 1994–2008 and controlling for other factors reflecting features of Chinese corporate finance, we find that Chinese SEOs are mostly motivated by timing the market. Financing for i...

We apply the theory of corporate social responsibility to analyse social welfare investment undertaken by Chinese State Owned Enterprises (SOEs). We present a simple theoretical model to illustrate how the presence of social objectives in the firm's objective function changes its investment behaviour. Our theoretical model accommodates special feat...

Nonlinear effects of debt on investment are investigated using an unbalanced panel of 94 Dutch listed nonfinancial firms during the period 1985-2000. Evidence shows that the nonlinear relation between debt and investment can be represented by a U curve, which contradicts the financial constraints theory. One possible explanation of the U curve rela...

We explore the relevance of the risk attitude of managers to the investment-uncertainty relation. Higher moments of the distribution of net profits are used to measure the risk premium of the firm, from which we derive a proxy for the risk aversion of managers. Using an unbalanced panel of Dutch listed firms, we find that in general a low degree of...

This paper presents a threshold uncertainty investment model for Dutch firms. The proposed uncertainty measure is constructed as an empirical proxy for the standard real options multiple. The uncertainty measure serves as the threshold variable in estimating a piecewise linear accelerator investment model using Hansen's panel data threshold estimat...

Irreversibility does not only raise the user cost of capital and discourage new investment but also hinders disinvestment because of the hangover effect. This paper derives a theoretical model that separates the impact of conventional convex adjustment costs from the impact of irreversibility, based on which we test the hangover effect of irreversi...

We examine the investment-uncertainty relationship for a panel of Dutch non-financial firms. The system generalized method of moments (GMM) estimates suggest that the effect of uncertainty on investment is nonlinear: for low levels of uncertainty an increase in uncertainty has a positive effect on investment, while for high levels of uncertainty an...

We model fixed investment incorporating the inventory decision of the firm. Using Dutch listed nonfinancial firms during 1985-2000, we find that the inventory stock is negatively associated with fixed investment. The results suggest that the inventory stock may be used by the firm as a buffer in response to unexpectedly high demand. In addition, th...

Using a panel of Dutch listed firms this paper provides empirical evidence for the hypothesis that more risky firms are confronted with more severe capital market constraints than relatively less risky firms. The paper also contributes to the discussion on the usefulness of cash flow as a measure of financial constraints. We present a stochastic ve...

We test the impact of uncertainty on investment of Chinese firms during market transition with a sample of 195 firms in the machinery industry in Liaoning province of China during 1993–1998. The system Generalized Method of Moments (GMM) estimates show that both demand and labor costs uncertainties do not affect investment of state enterprises, whi...

This paper analyses inventory investment using a balanced panel of 82 Dutch firms. We start from the Lovell (1961) inventory model and amend it with cash flow to introduce capital market imperfections. The empirical evidence provides support for the relevance of capital market imperfections in explaining Dutch inventory investment. The results sugg...

We test the impact of idiosyncratic demand uncertainty on investment using a panel of 82 Dutch listed manufacturing firms in the period 1984-95. The measure of uncertainty is constructed by estimating a state space model at the firm level to isolate idiosyncratic uncertainty from other unobserved components. Generalised Method of Moments estimators...

This paper tests whether demand uncertainty, which is measured by the volatility of sales, affects inventory investment based on the accelerator buffer stock inventory model. Using a panel of Dutch listed firms in the period 1984–1996, we find that the estimated coefficient of the speed parameter of adjusting inventories increases vastly when the v...

This paper analyzes the joint impact of the interest rate volatility and debt on firm investment. We derive an investment model taking account of the risk attitude of the owners of the firm. Using a panel of Dutch listed firms in the period of 1984 – 1995, we find that the cross-effect of the interest rate volatility and debt on investment is posit...

Abstract We contribute to the debate on the interpretation of investment-cash flow sensitivities by including uncertainty measures in both a simple theoretical investment model and an empirical illustration for Dutch firm-level data. Using a slightly modified version of the Kaplan-Zingales (1997) model we show that it is likely that firms facing hi...

This paper examines the investment-uncertainty relationship for a panel of Dutch firms. The uncertainty proxy is derived from daily stock market prices of individual firms. We show that some macro indicators, in combination with firm fixed effects, are able to give a reasonable explanation of the uncertainty a firm is faced with, and hence can be u...

The paper tests a standard real options model of investment using a data set of listed Dutch manufacturing firms over the period of 1984-1997. The threshold value that triggers investment is based on the historical distribution of the profit process and the risk-adjusted discount rate of the firm. The system Generalized Method of Moments (GMM) esti...

We examine the investment-uncertainty relationship for a panel of Dutch manufacturing firms. The system generalised method of moments (GMM) estimates suggests that the effect of uncertainty on investment is non-linear: for low levels of uncertainty an increase in uncertainty has a positive effect on investment, whereas for high levels of uncertaint...

Does Uncertainty Affect Economic Growth? An Empirical Analysis. — This paper investigates the effect of uncertainty on economic growth. We construct measures of export uncertainty, government policy uncertainty and price uncertainty to augment a growth model, and using econometric techniques we test for robustness of the effects of these measures o...

This paper includes uncertainty in the Q-model of investment. A structural Q-type investment model is derived, which contains the information on uncertainty effects of random variables that affect the future profitability of a firm. We use a panel of 82 Dutch firms to test whether the presence of uncertainty affects the performance of the Q-model....

We apply the theory of Corporate Social Responsibility (CSR) to analyze social welfare investment undertaken by Chinese State Owned Enterprises (SOEs). Our theoretical model accommodates special features of Chinese SOEs, whose social welfare investment is driven by both social objectives and profit motivation. The model is then tested using a panel...