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Brief

Journal of Finance and Economics is supervised by Ministry of Education of PRC, and sponsored by Shanghai University of Finance and Economics. It aims to include research results on the major theories and practical problems in China’s reform and opening up and modernization of economic construction. Its scope covers all the major fields of Economics, including Public Economy, Finance, Accounting, Economic history, Regional Economics, Industrial Economics, International Economics. The Journal is included in CSSCI.
Editorial Board

Editor-in-Chief
Fan Liming

Deputy Editor-in-Chief
Lu Rong

Can social capital reduce wage distortion of labor force?

PU Yanping;GU Ran;CHENG Xiao

Journal of Finance and Economics,2018,Vol 44,No. 05

In the past forty years, China has made great achievements in economic construction, and also faces many difficulties and challenges. In the critical period of changing the development way, China should not only pay attention to the promotion of labor productivity, but also take into account the synchronization of labor compensation and productivity. From the perspective of social capital as informal institution, we use CFPS2010 data to objectively assess the gap between wages and labor productivity in China, and examine the impact of social capital on the gap and the conduction mechanism. With the help of stochastic frontier analysis, we calculate the gap between wages and labor productivity in Chinese labor market, and the mean gap is about 33.2%–45.7%. On this basis, the empirical study shows that, social capital can narrow the gap between wages and labor productivity remarkably. On average, if social capital expands by 1%, then the gap will narrow by 3.42%. These labor forces can benefit more from social capital whose wages are closer to their productivity. It means that social capital widens the disparity between different labor groups in a way. To overcome the endogenous problem, we construct two instrumental variables of social capital: the average cash-gift expenditures at the community level, and the importance of nonlocal dialects for labors. We also design a placebo test. It has been verified that social capital itself, rather than the other characteristics of the labor forces associated with their social capital, has affected the gap between wages and labor productivity. A series of robustness tests support above conclusions. Furthermore, the analysis of mediating effect model shows the reasons why social capital can narrow the gap between wages and labor productivity as follows: firstly, the labor forces who have more social capital can join the formal sectors more easily, in which the wages are closer to labor productivity; secondly, the labor forces who have more social capital can get more trust, resources and promotion opportunities; thirdly, social capital helps to reduce information asymmetry and improve the degree of matching between labor forces and jobs by sending messages. It is worth noting that, if more and more persons use social capital within a region, then social capital effect for individual labor will be weakened. As an informal resource allocation method, social capital gives a preferential treatment for a part of labor forces. With the advancement of marketization, the role of social capital has been continuously weakened. Therefore, market-oriented allocation and regular society are the ultimate choices for the reform. In the new era, China should perfect the system and mechanism of distributing according to factors, pay efforts to reduce the gap between wages and labor productivity, actively create a market environment with free flow of labor, flexible price response and fair and orderly competition, and promote the income distribution more reasonably and orderly.

“Good citizen” or “good actor”: a study on corporate social responsibility behavior anomalies—from the perspective of corporate earnings forecasts

LIU Bai;LU Jiarui

Journal of Finance and Economics,2018,Vol 44,No. 05

Previous studies have shown that corporate social responsibility (CSR) is a corporate activity that goes beyond legal and economic obligations for the purpose of returning to society. Modern firms that enjoy the reputation of CSR are “good citizens” who are truly responsible for their stakeholders. However, due to the imperfection of current CSR rating system, the hypocrisy in CSR phenomenon has led to the fact that firms enjoying the reputation of such CSR cannot accurately reflect that they are “good citizens.” The purpose of this paper is to identify a firm working on CSR are sincerely “good citizens,” or just “good actors” who think in one way and behave in another. According to the existing literature, a firm implementing CSR is found to be “good citizen” of altruism from the perspectives of earnings management and financial reporting quality. However, in the aspect of tax avoidance, it is found that CSR cannot reflect firms’ “moral consciousness” and is a tool to cover up self–interest. Owing to the divergence between CSR image and the actual decision–making behavior in previous studies, none of the existing studies has focused on the perspective of earnings forecasts. Therefore, this paper tries to distinguish between the firms that are “good citizens” and the ones that are “good actors” from a perspective of earnings forecasts. From the perspective of corporate earnings forecasts, this paper studies the anomalies of the divergence between CSR reputation and the behavior. The results show that the firms that fulfill CSR better unexpectedly correspond to a lower probability of announcing their earnings forecasts. It is to say there may be “good actors” who deviate from CSR in China’s corporations. Furthermore, using the firm samples that announce their earnings forecasts, we find that CSR plays a significant role in enhancing the accuracy and precision of corporate earnings forecasts. In other words, the firms that both announce the earnings forecasts and have good CSR are the “good citizens” who really devote themselves to society. The contribution of this paper may lie in the following three aspects. Firstly, it verifies the connection between CSR and corporate earnings forecasts for the first time at home. At present, as we know, only Lee (2017) studied the relationship, and based on this, we further study the relationship between CSR and the probability and accuracy of earnings forecasts, expanding the existing research field to a certain extent. Secondly, CSR motivation is very complex, and so for a firm working on CSR, whether it is a sincerely “good citizen,” or just a “good actor” who thinks in one way and behaves in another, has always been a hot topic in the academic debate. Although the CSR reports released by the firms are conducive to a reduction in the asymmetry of market information, stakeholders are still skeptical of whether the firms are truly responsible for social responsibility. Therefore, the rating based on the CSR reports can only represent the external image of the firms. This paper chose the perspective of corporate earnings forecasts, playing a “filtering role” like a funnel, and screened and further identified “good citizens” or “good actors” among firms with sound CSR image, which has deepened the understanding of the “black box” of corporate social responsibility behavior and has provided new literature support for explaining existing corporate literature on CSR behavior. Thirdly, most of the existing literature examines the relationship between earnings and earnings forecasts in the aspects like corporate finance but seldom pays attention to non–financial factors. This paper expanded the relevant research in this area from the perspective of corporate social responsibility.