Professor Zhisheng Li, the director of the research base, published a collaborative paper titled "Stock market liberalization and corporate investment revisited: Evidence from China" in the Journal of Banking & Finance.

Journal of Banking & Finance primarily publishes theoretical and empirical papers in the fields of banking and finance, and is widely recognized by the international academic community as a leading journal in the field of finance.

Abstract：Recent reform in China has made a subset of Chinese stocks available to foreign investors, partially opening up China's stock market. Our difference-in-differences analysis shows that this liberalization reform boosts investments in investable firms relative to noninvestable ones, with results robust to various sensitivity analyses. Besides capital inflows and risk sharing, a potential but underexplored channel is improved corporate governance due to direct and indirect pressures from foreign investors, which lowers the cost of capital and improves capital allocation efficiency. Consistent with this corporate governance channel, we find that the liberalization reform reduces investable firms’ agency costs, increases their investment efficiency and total factor productivity, and improves their operating performance. Further analysis finds that the positive investment effect from the liberalization reform is stronger among firms that were poorly governed before the reform.

Link：https://doi.org/10.1016/j.jbankfin.2023.107053

Author profile

Zhisheng Li is a professor of finance and vice president at Southwestern University of Finance and Economics. He is also the director of the Innovation and Talent Base for Digital Technology and Finance, and the deputy director of the Hubei Collaborative Innovation Center for Industrial Upgrading and Regional Finance. In 2006, he obtained a Ph.D. in Decision Sciences and Engineering Systems from Rensselaer Polytechnic Institute in the United States. From 2009 to 2011, he conducted postdoctoral research at the School of Economics and Management, Tsinghua University. He has been selected for the National Talent Program for Young Professionals, the Ministry of Education's New Century Excellent Talents Program, and the Hubei Provincial New Century High-Level Talent Project. His main research areas include financial innovation, financial risk management, market microstructure, and regional financial development. He has presided over several major projects such as the National Social Science Fund Major Project, the National Natural Science Foundation of China Youth Project, and the General Project. His research results have been published in journals such as Economic Research, China Economic Quarterly, Financial Research, Journal of Financial Markets, Journal of Banking & Finance, Journal of Futures Markets, and Pacific-Basin Finance Journal.