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    Essays on corporate social responsibility : a thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Finance, School of Accountancy, Economics and Finance, Massey University
    (Massey University, 2025-09-18) Zhang, Xiaochi
    This thesis comprises three essays advancing the literature on workplace safety, an important component of corporate social responsibility. The first essay examines how generalist CEOs with transferable managerial skills enhance workplace safety. These executives improve safety by optimizing labor investments, reducing employee workloads, and ensuring higher information quality. The relation is more pronounced among firms facing financing constraints or intense market competition. The study also shows that workplace injuries and illnesses reduce innovation, productivity, and firm value. The second essay explores the impact of shareholder distraction on workplace safety. Distracted shareholders are linked to higher rates of work-related injuries, especially in firms with weak governance and high competition risks. Our findings suggest that reduced monitoring by distracted shareholders leads to lower safety investments, increased workloads, and greater earnings management, resulting in a poorer safety environment. The third essay investigates how the inclusion of general counsel in top management improves employee safety. Firms with general counsel in senior leadership are associated with lower injury and illness rates. The relation is more pronounced for firms with better information quality, more efficient labor investment, leadership by lawyer CEOs, weaker governance structures, and heightened agency problems. Overall, these essays provide new insights into how corporate leadership and governance influence workplace safety. The thesis offers contributions to the literature on workplace safety by addressing critical gaps in existing research. This work extends theoretical frameworks such as upper echelon theory by applying it to the domain of workplace safety. It also underscores the practical implications of aligning leadership capabilities and governance mechanisms to safeguard human capital, ultimately driving sustainable firm performance.
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    Labour market friction effect on corporate performance : evidence in the global market : a dissertation submitted in fulfilment of the requirements for the degree of Doctor of Philosophy in Finance at Massey University, School of Economics and Finance, Massey University
    (Massey University, 2023-08-31) Bai, Hengyu
    This thesis represents the first academic endeavour to investigate the impact of labour market friction on corporate performance in a global context. In traditional neoclassical economic theory and relevant research, human capital was considered merely an input to generate economic value. Unemployed workers were assumed to fill vacant job positions perfectly, similar to interchangeable machine parts. However, as understanding has evolved, economists now recognise the complexities of filling a job vacancy, which needs to take into account the skills, geographic locations, labour preferences, and various objective factors of the labour force. Consequently, a mismatch often occurs between unemployed workers and vacant jobs, resulting in simultaneous unemployment and job vacancies. This phenomenon is termed labour market friction. This thesis comprises three subprojects, each contributing a distinct essay. The first essay examines the effect of labour market friction on expected stock returns in the Chinese stock market. Utilising the portfolio sorting approach and the Fama-MacBeth regression model, the findings indicate that firms with higher labour friction risk are likely to experience higher stock returns in the subsequent month. This suggests that labour friction risk serves as a significant risk factor in asset pricing. Additionally, the study reveals that the positive effect of labour friction on expected stock returns is more pronounced in firms with either high productivity or poor employee welfare. Furthermore, firms in regions with high levels of development are more likely affected by the labour friction risk. The second essay expands the scope from the Chinese stock market to global stock markets, including North America, Asia-Pacific, and Europe. The results reveal regional variations in the impact of labour market friction on expected stock returns. Specifically, labour friction risk has a negative association with expected stock returns in North American markets, whereas it is positively correlated in Asia-Pacific markets. The significant labour market friction effects are pronounced in different industries due to the varieties of labour market structures, where the North American markets contain a large partial of high technology companies, while the Asia-Pacific markets are dominated by numerous industrial companies. There is no significant relationship between labour friction risk and expected stock returns in European markets. The study also finds that the effect of labour friction is particularly pronounced in markets that are non-immigrant or non-English-speaking, providing higher external labour supply and mobility in such markets, which reduces firms’ recruitment pressures. The third essay centres on Corporate Social Responsibility (CSR) behaviours under the influence of labour market friction in a global setting. The results suggest that firms facing higher labour friction risks are more inclined to engage in CSR activities, even when controlling for year, industry, and region effects in the regression model. This CSR engagement is notably more prominent in markets with a higher demand for labour, characterised by a higher number of new businesses and job vacancies. These findings remain consistent across markets that encourage business creation and expansion through strong investor protection and low labour taxation policies. Markets with higher levels of advanced education have a more significant labour market friction effect on CSR decision-making as they have numerous labour-intensive firms which require a large labour force. Additionally, when labour unions have the strong bargaining power to protect the welfare of employees, firms are less inclined to conduct CSR activities due to the less function in controlling the labour market friction risk. In summary, this thesis contributes to the existing literature by providing empirical evidence of the effects of labour market friction on corporate performance and behaviours across different global markets. It demonstrates that the impact of labour market friction varies due to differing labour market policies and structures and is significantly influenced by the dynamics of labour supply and demand. The insights derived from examining labour market friction across diverse markets have critical implications for both corporate managers and policymakers seeking to mitigate the associated risks.
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    Three essays on corporate finance studies in China : a thesis presented in fulfilment of the requirements for the degree of Doctor of Philosophy in Finance at Massey University, Palmerston North, New Zealand
    (Massey University, 2023-11-13) Yue, Shuai
    This thesis investigates three aspects of listed firms in the Chinese market. The first essay in the thesis examines the impact of state ownership on firm performance using hand collected ownership data of firms with state-private mixed ownership structures. We find a U-shaped relationship between state ownership and firm performance. At lower levels, state ownership has a negative association with firm performance, but beyond a certain threshold (e.g., 55% for ROA and 44% for Tobin's Q), state ownership becomes positively associated with firm performance. This finding indicates a trade-off between the negative effects of grabbing hand and the monitoring benefits of state owners. In addition, the introduction of strategic investors moderates the influence of state ownership on firm performance. The results show that the U-shaped impact of state ownership on firm performance diminishes after the introduction of strategic investors, implying that strategic investors may mitigate the underperformance observed around the threshold state ownership levels. The second essay focuses on the corporate information environment. It investigates the behaviour of firms with politically connected executives regarding information disclosure when subject to government inspection influences. China initiated the central environmental protection inspection in 2016. We find that while firms with politically connected executives generally exhibit lower stock price crash risk, these politically connected firms are more prone to crash risk when subject to inspection influences than firms without political connections. Further, we examine whether the inspection effect on crash risk varies based on the type of political connections developed by executives, namely achieved and ascribed political connections. Our results show that firms with executives having achieved political connections are related to higher crash risk when under government inspection influences, but no significant impact is observed for firms with executives having ascribed political connections. The final essay examines the influence of firms’ exposure to economic policy uncertainty (EPU) on environmental investment and investigates whether firm size plays a significant role in this relationship. We find that although small firms are generally associated with lower levels of environmental investment compared to large firms, there is a positive association between small firms’ EPU exposure and environmental investment, indicating that small firms are more inclined to invest in environmental initiatives when facing higher EPU exposure.
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    Essays on product market competition : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Finance at Massey University, Palmerston North, New Zealand
    (Massey University, 2023) Zang, Suxiang
    Product market competition is a fundamental economic mechanism and a key topic in recent decades. In this thesis, we analyse competition measurement to improve the credibility of relevant analyses, and we study relation of firm market power with investor sentiment to fill the gap in current literature. Essay One and Essay Two investigate a typical measure of industry concentration, the Herfindahl-Hirschman index (HHI), which is widely used to gauge competition based on industrial organisation theories. To facilitate HHI application and improve its measuring accuracy, we review the existing HHI proxies and recommend two simple HHI measures. Our survey shows that the convenient but misleading Compustat HHI is most frequently employed by researchers, while Census HHI that contains the most complete market share information of US firms is less preferred mainly due to low publication frequency and narrow industry coverage. Other HHI proxies developed recently often require extra data with complicated computation and are only occasionally employed. Comparatively, the simple HHI measures we propose are strongly correlated with the comprehensive Census HHI and are available at high frequencies for wide industries. Further, compared with Compustat HHI, the simple HHI measures better approximate Census HHI in association with important firm characteristics, and lead to more similar results as Census HHI in empirical examinations. Essay Three explores the relation between market power and stock sensitivity to investor sentiment, on which previous studies basically keep silent. We show that firms with the weakest market power have the most susceptible returns to investor sentiment, and that return spreads between firms with high and low market power are significantly higher after optimistic sentiment than pessimistic sentiment. The return patterns across market power portfolios are more evident when sentiment is more extreme, and when sentiment later weakens than strengthens. Our baseline regressions usually show significantly positive relation between the high-minus-low market power portfolio returns and the preceding sentiment levels, which pulls through a set of robustness tests. Conclusively, our finding reveals a negative relation between market power and sentiment-driven misvaluation, consistent with the argument that market power insulates profits and reduces performance uncertainties.
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    Essays on managerial foreign experience and corporate behaviours in China : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Finance at Massey University, Palmerston North, New Zealand
    (Massey University, 2022) Sun, Zixiong
    Managerial foreign experience is a type of resource which allows managers to think globally and act locally. This thesis contributes to the literature on how foreign experienced managers impact corporate behaviour in China, the world’s largest emerging market. The first essay examines how managers with foreign experience influence corporate risk-taking. I find that foreign experienced managers are positively associated with corporate risk-taking. This relationship only robustly exists among private firms rather than state-owned enterprises (SOEs). The excess risk-taking through foreign experienced managers is positively related to Tobin’s Q, indicating that foreign experienced managers increase firm value through value-enhancing projects, which benefits shareholders. The second essay concentrates on the relationship between managerial foreign experience and earnings quality. I find that foreign experienced managers improve corporate earnings quality, and this improvement is more pronounced in private firms. Moreover, I document that the improved earnings quality is an important mechanism for which foreign experienced managers increase stock returns and decrease agency costs. The third essay in the thesis investigates the relationship between foreign experienced managers and corporate labour investment. I find foreign experienced managers are more likely to recruit and retain high skilled employees, which in turn increases labour cost for firms in total. The positive relationship between managerial foreign experience and labour cost is significant in both SOEs and private firms. Foreign experienced managers may focus on employees’ well-being to complete political goals in SOEs while they are more likely to retain and attract high skilled employees to benefit shareholders’ value in private firms. I further document that the increased labour costs through managerial foreign experience can influence firm value positively. However, it also increases the labour stickiness cost. Overall, this thesis documents the benefits and costs of hiring foreign experienced managers in firms.
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    Essays on Shari'ah compliant equities : a dissertation presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Finance at Massey University, Albany, New Zealand
    (Massey University, 2020) Karimov, Jamshid
    This dissertation presents three essays on Shari’ah Compliant Equities. The reported work analyses the impact of Shari’ah Compliant Requirements (SCR) on the capital structure of the firms and its effect on the cost of equity capital, payout policy and mitigation of firm-level political risk. The first study examines if the adoption of SCR affects the cost of equity capital for firms. It estimates the cost of equity capital, implied by market prices and analyst forecasts, and account for changes in growth expectations around the adoption of SCR. The results of the study show that the transitional implications of Shari’ah compliance can diverge depending on information spread. The findings reveal that getting a Shari’ah compliance certificate, initially increases the cost of equity for a firm, potentially due to higher financial constraints and other burdens associated with Shari’ah requirements. However, with greater exposure and awareness in Islamic markets, Shari’ah compliance eventually leads to a fall in the cost of equity. The industry-level, SCR adoption effects are stronger in relatively tangible sectors. Robustness analyses confirm that becoming Shari'ah-compliant increases the stock liquidity of SCR adopted firms, which co-varies negatively with the cost of equity. The second study examines if and to what extent the adoption of SCR affects the payout smoothing policy of firms. More importantly, this study aims to identify and assess a possible mechanism behind such linkage and measure the amount of fluctuations of earnings absorbed by investment, borrowings, and payout policies. Variance decomposition strategy that enables to empirically analyse the adjustments of borrowings and investment policies to comply with payout smoothing in order to buffer net income fluctuations in the environment of Shari’ah compliance is employed. Using a new approach in the literature, this chapter measures the extent of intertemporal payout smoothing across business cycles to test the permanent income hypothesis for firms. Accordingly, the impacts of temporary vs. permanent net income shocks on the payout policy of firms are distinguished. The study also, documents that even though their payout ratios are mostly independent from the year by year net income growth (temporary shocks), dividends are impacted deeply by long term net income growth (permanent shocks). Interestingly, being Shari'ah-compliant makes dividends more dependent on permanent income growth. The third study, using a novel Economic Policy Uncertainty (EPU) firm-level political risk index as a proxy for political risk and uncertainty firms face, examines the impact of firm-level risk on the cost of equity and dividend payouts policy of firms. The paper aims to shed light on the transitional implications of Shari’ah compliance on firms exposed to firm-level political risk. It analyses if the adoption of SCR mitigates the firm-level political risk and their impact on the cost of equity and dividend policy. Benchmark results show that 1% increase in the exposure of political risk contributes to a rise in its cost of equity capital by 0.2% and in dividend payout by 13%. Shari’ah compliance eventually leads to a fall in the cost of equity and a rise in dividend payouts, despite the exposure of the firm to political risk. These findings have important policy implications that are relevant to Shari’ah compliant equities and beyond.
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    Ownership structure and firm risk : evidence from China : a thesis presented in fulfilment of the requirement for the degree of Doctor of Philosophy in Finance at Massey University, Manawatu campus, New Zealand
    (Massey University, 2018) Xie, Feng
    This thesis investigates the effects of ownership structure on firm risk in China. The first essay of this thesis provides an overview of the Chinese privatisation programmes that profoundly shapes the ownership structure of Chinese listed firms, and it reviews and discusses the corporate governance and firm outcomes resulting from the privatisation programmes in China. In particular, it presents a detailed survey of China’s privatisation programmes from its Share Issue Privatisation (SIP) to the Non-tradable Share (NTS) reform, Overall, it reveals that the SIP has achieved limited success in China, which is mainly due to the partial trading policy and partial privatisation characteristics, while the NTS reform yields greater improvements of governance mechanisms and outcomes. This thesis then, examines the impact of ownership structure on firm risk in privatised firms. Essay two examines the effect of residual state ownership on stock return volatility following the NTS reform. The empirical evidence shows that residual state ownership mitigates the stock return volatility. It indicates that state ownership retention in the aftermath of sudden privatisation reform can signal the government willingness to bear the firm risk. The mitigating effect is especially pronounced in firms controlled by the government agents. Furthermore, firms with higher government ownership reduce stock return volatility through implementing more conservative corporate policies. However, the volatility-mitigating effect appears to be temporary, lasting only for three years after state shares become fully tradable. Essay three investigates the relationship between the shareholdings of the Qualified Foreign Institutional Investors (QFIIs) and stock price crash risk. This essay adopts a governance mechanism, threat of exit, to examine the role of QFIIs on stock price crash risk. The evidence shows that long investment horizon and existence of multiple QFIIs exert credible exit threat to discipline management, and in turn, reduce stock price crash risk. Further, it shows that the corporate site visits of portfolio firms by QFIIs is a channel through which the credible exit threat works effectively.
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    The impact of corporate political connections and political instability on audit fees and earnings quality in Pakistan : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Accountancy at Massey University, Albany, New Zealand
    (Massey University, 2018) Ahmad, Fawad
    This study investigates the impact of corporate political connections on audit fees and earnings quality. Prior literature reports that politically connected companies pay higher audit fees and have poor earnings quality. The key motivation of this study hinges on the argument that in some institutional settings, there can be multiple power sources with dissimilar degrees of resource allocation and decision making abilities. This will affect the costs and benefits accrued to politically connected companies. For example, Pakistan has two visibly distinct power sources, political institutions, and the military. Political institutions are fragile and politicians are prone to public, media, and judicial scrutiny. The military has emerged as a key power player enabling them to command the process of resource allocation. Based on this visible distinction of the power streams, this study segregates politically connected companies in Pakistan into two groups, companies connected to the political elites, termed as civil connected companies and military connected companies. This study also examines the impact of political instability on audit fees and earnings quality. Prior literature examining the impact of political instability reports that political instability results in higher business risk and poor economic performance. Prior auditing literature reports that auditors charge a price premium from high risk clients. Prior earnings quality literature reports that poor economic performance results in poor earnings quality. By combining these streams of literature, this study investigates the auditing and earnings quality implications of political instability. Essay 1 of this study investigates the political determinants of audit fees in the context of Pakistan. The results indicate that civil connected companies pay significantly higher audit fees while military connected companies pay significantly lower audit fees relative to non-connected companies. The findings for political instability indicate that political instability has a positive association with audit fees. Nonetheless, this positive association is weaker for military connected companies relative to non-connected companies. Results for the interaction effect for civil connected companies are not significant. Essay 2 of this study investigates the political determinants of earnings quality in Pakistan. Earnings quality is measured by the level of absolute magnitude of discretionary accruals and earnings persistence. The results indicate that civil connected companies report a significantly higher level of absolute magnitude of discretionary accruals indicating poor earnings quality, while the earnings persistence results are not significant for civil connected companies. The discretionary accruals results for military connected companies are not significant. Nevertheless, military connected companies have more persistent earnings indicating better earnings quality. Essay 2 also examines the impact of political instability on earnings quality. Results indicate a significant negative association between political instability and the level of absolute magnitude of discretionary accruals; and between political instability and earnings persistence. The interaction effects show that the negative association between political instability and the level of absolute magnitude of discretionary accruals is stronger for civil connected companies and not significant for military connected companies. The negative association between political instability and earnings persistence is weaker for military connected companies and not significant for civil connected companies. This study adds to the literature that aims to provide a deeper understanding of the relation between political connections, political institutions, and its auditing and earnings quality outcomes. The study adds to the existing political connections literature by identifying the military as a source of significant power. It also adds to the auditing and financial reporting literature by identifying political instability as a variable which significantly affects the audit fees and earnings quality.
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    The regulation of takeovers in New Zealand and returns to shareholders : a thesis presented in partial fulfilment of the requirements for a Master of Business Studies at Massey University
    (Massey University, 2001) Kittle, Andrew Gordon
    Between 1 January 1996 and 30 June 2001 takeovers in New Zealand were governed by a set of regulations that formed part of New Zealand Stock Exchange ("NZSE") listing rules. The NZSE rules were relatively light in their approach to governing takeovers and received much criticism throughout their tenure. Prior to 1 January 1996 takeovers had been regulated by the Companies Amendment Act 1963. We examine the returns to targets and bidders between 1 January 1990 and 30 June 2000 to determine how effective the rules were in promoting shareholder wealth. The change in regulations between 1995 and 1996 also presents an opportunity to examine the impact on returns from moving from a lightly regulated regime to one which is more regulated with a greater amount of required disclosure. We find that returns to both targets and bidders were lower under the NZSE regime than under the Companies Amendment Act 1963. This result is attributed to several specific aspects of the Companies Amendment Act 1963 such as the ability of the target to recover defense costs from bidder and a set period for which the offer must remain open.
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    The development of environmental management systems and corporate responsibility reporting in NZ, UK and USA : a thesis presented in partial fulfilment of the requirements for the degree of Master of Environmental Management at Massey University, New Zealand
    (Massey University, 2017) Martinez, Lucy
    L. C. Martinez. The Development of Environmental Management Systems and Corporate Responsibility Reporting in NZ, UK and USA, 121 pages, 2 figures, 2017. The study reviews the initiation and development of environmental management systems (EMSs) and how EMS and corporate responsibility (CR) reporting developed over time in New Zealand, the United Kingdom (UK) and the United States of America (USA). Comparing the three countries provides New Zealand with a global perspective to identify if northern hemisphere countries have better systems. The study has two aims: 1. To compare and contrast the initiation and development of EMSs and CR reporting in New Zealand, the UK and the USA; and 2. To suggest strategies New Zealand’s government and businesses could use to improve EMS and CR reporting systems, and thereby strengthen the country’s business environmental performance. The scope of the thesis is the urban corporate and manufacturing sectors; the timeframe is from the mid-twentieth century to the present. Scholarly journal and media articles, industry publications and reference books used for the research were accessed via the ProQuest database, Massey University online library, the New York Public Library and Google. Results show that there has not been a clear and consistent pattern of EMS development in each study country, but each country has been a leader and innovator at different stages. An initial scan suggested that New Zealand has lower ISO 14001 certification numbers and CR reporting rates than the UK and USA. When examined more closely, results show that New Zealand’s ISO 14001 certification intensity (rather than raw numbers) is actually higher than the USA, although New Zealand and the USA both lag behind the UK. Results also show that CR reporting is now completely mainstream business practice worldwide. Despite this, New Zealand’s CR reporting is limited; unlike the other two study countries, this form of reporting is not legislated. Conclusions were that economic instruments in the UK and USA are shown to be an effective way to incentivise clean business practices and increase EMS uptake. Multinational companies increasingly scrutinize suppliers’ environmental credentials, which will impact New Zealand’s SMEs more into the future. ISO 14001 is a necessary universal tool to remain relevant in today’s global economy, which may incentivise higher uptake among New Zealand’s export businesses. It was recommended that New Zealand’s government form a legislative requirement for CR reporting, and firms should be encouraged to look to organizations such as the NZ Sustainable Business Council, the Global Reporting Initiative and the International Integrated Reporting Council for guidance on CR reporting.