报告一：Earnings Management via Not-wholly-owned Subsidiaries
摘要：We explore a new mechanism of earnings management whereby a parent company shifts income from not-wholly-owned subsidiaries to itself to avoid losses. Consolidated net income attributable to the parent company increases if earnings are shifted from not-wholly-owned subsidiaries to the parent, as the parent company enjoys the full amount of earnings shifted rather than sharing earnings with minority investors. In general, net income and noncontrolling interest in subsidiary earnings exhibit a strong positive correlation, suggesting that a firm’s earnings performance tends to co-move with its subsidiaries’ earnings. However, this positive relation turns significantly negative for firms just meeting or beating zero earnings, indicating that firms opportunistically decrease earnings of not-wholly-owned subsidiaries to manage consolidated net income to avoid losses. Income shifting from subsidiaries to the parent firm is mainly driven by firms with a very large percentage of noncontrolling ownership. In addition, related-party transactions and concurrent appointment of a parent’s top management member to subsidiaries’ management team play a complementary role in facilitating such income shifting. Overall, our evidence not only demonstrates a new mechanism of earnings management via not-wholly-owned subsidiaries, but also highlights the negative consequences to minority investors of income shifting from subsidiaries to the publicly listed company.
报告二：Does the One-Child Policy Impede Innovation in China? Evidence from a Regression Discontinuity Design
摘要：We analyze how the one-child policy (OCP) in China affects firm innovation. The OCP was intensively enforced from January 1980, causing a sharp increase in the single-child ratio among CEOs just born after this policy cutoff. Exploiting this discontinuity and using a Regression Discontinuity Design framework, we find that single-child CEOs lead to significant decreases in firm innovation. A separate, difference-in-differences analysis around the CEO turnover confirms this finding. We find that single-child CEOs are less willing to take risks by making significant R&D investments. Our findings indicate that radical population control policy impede innovation in China.