ABSTRACT We examine how creditor control influences corporate social responsibility (CSR) when firms breach financial covenants. Covenant violations, which signal deteriorating financial performance and shift control rights to creditors, enable them to play a significant role in shaping borrowers’ CSR activities. We find that CSR performance declines following covenant violations, driven mainly by reductions in more discretionary social initiatives, while activities with clearer links to risk mitigation remain largely intact. Cross-sectional analyses indicate that the decline in CSR is concentrated among financially constrained firms and in settings where creditor intervention is both necessary and effective, consistent with financial-constraint and creditor-monitoring mechanisms. Overall, the evidence shows that creditor interventions aimed at protecting financial value under stress can inadvertently diminish firms’ broader social engagement, particularly in community- and employee-related activities.

ABSTRACT Using the staggered shock of China’s major coal mine disasters, we investigate how negative peer events affect corporate labour protection. We provide robust evidence that mining disasters significantly decrease high-risk firms’ safety expenditures, echoing the contagion effect theory. Mechanism analysis indicates that the major coal mine disasters, acting as negative signals, raise external stakeholders’ perceptions of safety risks. This leads to risk-averse actions from them, including tighter bank lending and lower investor capital, imposing financing constraints on firms and diminishing safety expenditures allocated to labour protection. Additional analysis shows that the documented effect is amplified among firms with greater financing frictions and higher external finance dependence, while it is mitigated among firms with a more effective safety regulation environment and better corporate safety culture. Taken together, the findings suggest that negative peer events play a critical role in labour protection.

ABSTRACT This paper investigates the long memory properties of supply shortages by analysing their sectoral components, including industry, labour, goods, food, and energy, and the aggregated indices across six major economies, Canada, France, Great Britain, Germany, Japan, and the United States, covering the period from 1900 to 2025 with monthly frequency. We examine the persistence and the dynamic behaviour using a set of fractional integration techniques. Our results show that shortages in the industry and labour sectors are highly persistent, exhibiting long-memory behaviour, while all series exhibit mean-reverting, indicating that supply disruptions are both enduring and self-correcting over time. Across countries, Germany and the United States show higher persistence, suggesting that structural characteristics and the scale of industrial sectors amplify the long-term effects of supply disruptions. These findings suggest that persistent shortage shocks could impact macroeconomic stability, underscoring the need for targeted policies to strengthen sectoral resilience.

ABSTRACT Urban green spaces play a vital role in mitigating climate change and promoting sustainable development. However, does rapid development of trade compromise urban green space? Based on prefecture-level city statistics and satellite remote sensing data from China (2000–2017), this paper examines the impact of export trade on urban green spaces and reveals that export trade significantly reduces green spaces. Mechanism analysis indicates that this reduction operates through scale effects and composition effects. Specifically, export expansion promotes urban construction land use and aggravates environmental pollution while simultaneously accelerating the shift from primary to secondary industries, thereby reallocating labour from agriculture to manufacturing. This study is the first to systematically identify the mechanisms through which trade affects green spaces, providing new urban-scale empirical evidence for the ‘trade-environment’ theory. These findings also provide differentiated policy guidance for reconciling trade growth with ecological sustainability in the pursuit of green urban development.

ABSTRACT As global climate change intensifies, climate risk has become a significant factor affecting commercial banks’ financial performance and operational stability. Addressing climate risk has consequently emerged as a major challenge for the high-quality development of the banking sector. Over the past decade the overall charter value of Chinese commercial banks has shown a declining trend, making the impact of extreme weather events on bank charter value worthy of investigation. This paper examines the impact of physical climate risks on commercial banks’ charter value, employing empirical analyses based on financial data from 182 Chinese commercial banks spanning 2009 to 2023. The findings reveal that physical climate risks significantly diminish commercial banks’ charter value, a conclusion that holds up after undergoing a series of robustness tests. Concurrently, the deposit insurance system effectively mitigates the negative impact of physical climate risks on charter value. When confronting physical climate risks, joint-stock commercial banks and banks in eastern regions experience greater adverse effects on their charter value, while smaller banks benefit more markedly from the buffering effect of the deposit insurance system.

ABSTRACT This paper investigates whether income inequality is associated with unauthorized building across Italian regions over 2004–2019. While prior research has examined the socio-economic and institutional determinants of environmental crime, the role of inequality in illegal construction remains largely unexplored. Using a panel dataset for all 20 Italian regions, we estimate log-log fixed-effects models under alternative temporal specifications, including two-way fixed effects and region-specific trends. Across all models and alternative Gini measures, we find a positive and robust association between income inequality and illegal building. Estimated elasticities suggest that a 1% increase in regional inequality is associated with a 0.6% to 1.3% increase in unauthorized construction. The findings indicate that illegal building is linked not only to weaknesses in planning enforcement, but also to broader territorial disparities in economic opportunities, housing access, and institutional capacity. Overall, the paper highlights illegal building as a structural regional development issue shaped by inequality, governance, and compliance.

ABSTRACT The accelerating trend towards digital transformation has significantly redefined supply chain management practices and offered opportunities to improve corporate sustainability and governance. Using information asymmetry theory, this study capitalizes on the Supply Chain Innovation and Application Pilot (SCIAP) policy as a quasi-natural experiment. We examine the impact of supply chain digitalization (SCD) on corporate environmental, social, and governance (ESG) performance by drawing on data from Chinese A-share listed companies from 2013 to 2023. Using a difference-in-differences approach, we empirically examine the causal relationship. The results suggest that SCD boosts corporate ESG outcomes. Mechanistic analyses identify three distinct channels through which SCD enhances ESG performance: reducing information asymmetry, enhancing environmental compliance, and fostering green technology innovation. Heterogeneity tests reveal that the favourable effects of SCD on ESG are pronounced in non-state-owned firms, low-tech businesses, entities operating in heavily polluting industries, and firms with higher supply chain network centrality. Furthermore, the regional marketization level has a positive moderating effect on the relationship between SCD and ESG performance. This study provides new theoretical explanations and empirical evidence of the effect of SCD on corporate ESG performance and offers valuable guidance for firms seeking sustainable development through digital initiatives.

ABSTRACT We study the effect of local air pollution on corporate innovation in China using a comprehensive dataset of industrial enterprises from 1998 to 2013. We find that higher PM2.5 concentrations significantly reduce firms’ innovation output in both quantity and quality. Our results further suggest that this effect operates partly through deterioration in the local talent environment and health-related productivity losses. The effect is also attenuated for firms with stronger political support and in cities with stronger talent supply and healthcare capacity, while amplified in provinces with stronger marketization and intellectual property protection and in cities with greater exposure to heavily polluting industries.

ABSTRACT Wastewater treatment plants (WWTPs) are essential for sustainable water management, yet efficiency gaps in achieving effective operation remain an important policy challenge in many countries, including South Korea. Using plant-level panel data for 2017–2021, this study applies stochastic frontier analysis (SFA) to assess productive efficiency and its determinants. The results show that economies of scale associated with plant size expansion exist up to a certain level. Large-scale WWTPs exhibit higher productive efficiency and increasing returns to scale at the plant-level, whereas small-scale plants operate below optimal scale and experience lower efficiency. However, these results primarily reflect plant-level efficiency and do not necessarily imply system-level cost-effectiveness where sewerage network and collection costs are considered. Ageing effects are found to be heterogeneous, with small-scale plants experiencing a pronounced decline in utilization rates and productive efficiency after approximately 25–30 years of operation, while larger plants benefit from accumulated operational experience and persistently high demand associated with their locations. Outsourcing arrangements also matter. Outsourcing to private agencies is associated with higher short-run productive efficiency based on treated volume, whereas outsourcing to public corporations is linked to stronger effluent quality performance.

ABSTRACT This study examines how platforms can strategically adopt generative AI (GenAI) to enhance user participation in value creation, focusing on the competition between value co-creation (VCC) and independent value creation (IVC) models. This study develops a two-dimensional differentiation model, with user preference in two dimensions: anthropomorphism degrees and value creation models, and accounts for differential effort expectancy (participation or production costs) across user roles. The results indicate that: (1) Optimal anthropomorphism degree is to choose two kinds of anthropomorphic features from visual, identity, and emotional cues. (2) Symmetric competition (VCC-VCC or IVC-IVC) leads to zero prices and no GenAI investment. In mixed-model competition (VCC-IVC), GenAI investments are impacted by investment efficiency and the users’ effort expectancy. (3) The superior value creation model depends on the ratio of production to participation costs and the proportion of buyers. Theoretically, this work distinguishes between the VCC and IVC models, identifies different user effort expectancy based on user roles, and studies the impact of anthropomorphism degrees. Practically, it demonstrates that differentiation via mixed models is crucial to avoid competition leading to no profits and provides guidelines for GenAI design and investment.