Through using 17,995 firm‐year observations of all the Chinese A‐share listed firms from 2008 to 2016 as a sample, we document that firms with vertical interlock have a lower likelihood of committing corporate fraud. We further test the underlying mechanisms, and we find that the effect of vertical interlock on the occurrence of corporate fraud is more pronounced when firms operate in a region with poor legal protection; with the legal environment being enhanced in China, the effect of vertical interlock has become less significant; and the effect of vertical interlock is also more pronounced when firms exhibit poor information environment at the firm level. Our results in this paper imply that the role of large shareholders and legal protection are substitutes in an emerging economy, and even with rapid economic and legal development in China, large shareholders keep playing a positive role in controlling fraudulent behaviours in Chinese listed firms.
{"title":"Intervention of large shareholders and corporate fraud – evidence from vertical interlock in corporate pyramids in an emerging economy","authors":"Dan Yang, Canyu Xu, Shangkun Liang","doi":"10.1111/acfi.13206","DOIUrl":"https://doi.org/10.1111/acfi.13206","url":null,"abstract":"Through using 17,995 firm‐year observations of all the Chinese A‐share listed firms from 2008 to 2016 as a sample, we document that firms with vertical interlock have a lower likelihood of committing corporate fraud. We further test the underlying mechanisms, and we find that the effect of vertical interlock on the occurrence of corporate fraud is more pronounced when firms operate in a region with poor legal protection; with the legal environment being enhanced in China, the effect of vertical interlock has become less significant; and the effect of vertical interlock is also more pronounced when firms exhibit poor information environment at the firm level. Our results in this paper imply that the role of large shareholders and legal protection are substitutes in an emerging economy, and even with rapid economic and legal development in China, large shareholders keep playing a positive role in controlling fraudulent behaviours in Chinese listed firms.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":" December","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138611354","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We find a significant positive role of chief executive officer (CEO) social capital on the level of corporate risk‐taking for Chinese listed firms from 2008 to 2019. We reveal that a better business environment tends to reduce this positive relationship. In addition, we also find that corporate innovations provide moderation effects on the relationship. Further analysis of heterogeneity tests on firm characteristics suggests that CEO social capital's effect on corporate risk‐taking is significant and stronger for non‐state‐owned enterprises, firms with fewer female directors on their board, and firms with more cash holdings.
{"title":"CEO social capital, business environment, and the level of corporate risk‐taking in China","authors":"Xin Su, Wenxiu Fu, Liping Zou, J. Wu","doi":"10.1111/acfi.13201","DOIUrl":"https://doi.org/10.1111/acfi.13201","url":null,"abstract":"We find a significant positive role of chief executive officer (CEO) social capital on the level of corporate risk‐taking for Chinese listed firms from 2008 to 2019. We reveal that a better business environment tends to reduce this positive relationship. In addition, we also find that corporate innovations provide moderation effects on the relationship. Further analysis of heterogeneity tests on firm characteristics suggests that CEO social capital's effect on corporate risk‐taking is significant and stronger for non‐state‐owned enterprises, firms with fewer female directors on their board, and firms with more cash holdings.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"263 ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139245335","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Steven Dellaportas, Lina Xu, Sophia Ji, Dudu Luo, Xiaoming Song
Interviews with accounting scholars in China found that the pressure to publish in English language journals is high for reasons of tenure and promotion, but the expectation of acceptance is low. Publishing in Chinese language journals is equally as difficult because of socio‐cultural factors that favour a limited group of scholars with reputational capital. Scholars in China either avoid submitting articles to English language journals, collaborate with western scholars to enhance the probability of success, or focus on quantitative methodologies because of a perception that it is less demanding on language capability compared with qualitative approaches to research.
{"title":"The challenges facing Chinese accounting scholars publishing in English (and Chinese) language journals","authors":"Steven Dellaportas, Lina Xu, Sophia Ji, Dudu Luo, Xiaoming Song","doi":"10.1111/acfi.13203","DOIUrl":"https://doi.org/10.1111/acfi.13203","url":null,"abstract":"Interviews with accounting scholars in China found that the pressure to publish in English language journals is high for reasons of tenure and promotion, but the expectation of acceptance is low. Publishing in Chinese language journals is equally as difficult because of socio‐cultural factors that favour a limited group of scholars with reputational capital. Scholars in China either avoid submitting articles to English language journals, collaborate with western scholars to enhance the probability of success, or focus on quantitative methodologies because of a perception that it is less demanding on language capability compared with qualitative approaches to research.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"10 ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139243068","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
There is concern that accounting standards are difficult to understand by those who use them. We investigate factors that enhance and inhibit the ability of the standards' users to comprehend their meaning and requirements. Readability statistics reveal that Australian accounting standards are difficult or very difficult to read. Interviews with experienced financial statement preparers and auditors from the for‐profit, not‐for‐profit private, and public sectors reveal that ‘understandability’ is a function of many inter‐related factors, only some of which relate to how standards are written and presented. We offer recommendations to standards‐setters about how the understandability of standards could be improved.
{"title":"Are accounting standards understandable?","authors":"Bryan Howieson, Janice Loftus, Sabine Schührer","doi":"10.1111/acfi.13173","DOIUrl":"https://doi.org/10.1111/acfi.13173","url":null,"abstract":"There is concern that accounting standards are difficult to understand by those who use them. We investigate factors that enhance and inhibit the ability of the standards' users to comprehend their meaning and requirements. Readability statistics reveal that Australian accounting standards are difficult or very difficult to read. Interviews with experienced financial statement preparers and auditors from the for‐profit, not‐for‐profit private, and public sectors reveal that ‘understandability’ is a function of many inter‐related factors, only some of which relate to how standards are written and presented. We offer recommendations to standards‐setters about how the understandability of standards could be improved.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128228961","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The diffusion of credit cards may have relaxed households' liquidity constraints, thereby stimulating the diffusion of commercial insurance. By investigating Chinese urban households who had no commercial insurance in 2013, we find that their initial access to credit cards significantly increased the likelihood of their holding commercial insurance in 2015. Our instrumental variable (IV) estimations confirm the causality. This positive effect is more pronounced among more liquidity‐constrained households and among households with more financial knowledge. Last, the initial access to credit cards also significantly enhanced commercial insurance renewal in 2015 among those households who had commercial insurance in 2013.
{"title":"Credit cards and commercial insurance participation: Evidence from urban households in China","authors":"Nancy R. Xu, Zhao Rong, Li Yu","doi":"10.1111/acfi.13176","DOIUrl":"https://doi.org/10.1111/acfi.13176","url":null,"abstract":"The diffusion of credit cards may have relaxed households' liquidity constraints, thereby stimulating the diffusion of commercial insurance. By investigating Chinese urban households who had no commercial insurance in 2013, we find that their initial access to credit cards significantly increased the likelihood of their holding commercial insurance in 2015. Our instrumental variable (IV) estimations confirm the causality. This positive effect is more pronounced among more liquidity‐constrained households and among households with more financial knowledge. Last, the initial access to credit cards also significantly enhanced commercial insurance renewal in 2015 among those households who had commercial insurance in 2013.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121979305","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Md Mahmudul Hasan, Md. Safayat Hossain, David R. Tree
Using executives' decision horizon as a measure of internal governance, this study examines the association between customer's internal governance and supplier's extension of trade credit. Suppliers may extend more trade credit to customers with strong internal governance because of their lower operational risk, higher firm performance, and better information environment. However, firms with better internal governance may have easier access to other sources of financing, and thus may need less trade credit. Using a sample of US listed firms between 1992 and 2021, we find that suppliers extend more trade credit to customers with strong internal governance. We also find that the association between internal governance and trade credit is more pronounced for financially, and informationally constrained firms. Our results are robust to alternative measures and specifications. Incremental to prior studies, we show that effectiveness of customers' internal governance affects suppliers' lending decisions.
{"title":"Executives' horizon and trade credit","authors":"Md Mahmudul Hasan, Md. Safayat Hossain, David R. Tree","doi":"10.1111/acfi.13175","DOIUrl":"https://doi.org/10.1111/acfi.13175","url":null,"abstract":"Using executives' decision horizon as a measure of internal governance, this study examines the association between customer's internal governance and supplier's extension of trade credit. Suppliers may extend more trade credit to customers with strong internal governance because of their lower operational risk, higher firm performance, and better information environment. However, firms with better internal governance may have easier access to other sources of financing, and thus may need less trade credit. Using a sample of US listed firms between 1992 and 2021, we find that suppliers extend more trade credit to customers with strong internal governance. We also find that the association between internal governance and trade credit is more pronounced for financially, and informationally constrained firms. Our results are robust to alternative measures and specifications. Incremental to prior studies, we show that effectiveness of customers' internal governance affects suppliers' lending decisions.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"48 4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127992809","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Nicola J. Beatson, Paul A. De Lange, M. Tharapos, Brendan O'Connell, Jeffrey Smith, Stephen Scott, Richard Greatbanks
Student success is impacted by many factors, both individual and institutional. We examine Tinto's (Journal of College Student Retention: Research, Theory & Practice, 2017, 19, 254) theoretical model of achievement by surveying students enrolled in an introductory accounting subject (n = 132) at a New Zealand university twice and relating their responses to their levels of achievement in the subject. We find that both self‐efficacy beliefs and a sense of belonging to the university are significantly related to academic success. This study builds on the body of work examining non‐cognitive factors in accounting education and provides practical implications for accounting educators.
{"title":"An examination of self‐efficacy and sense of belonging on accounting student achievement","authors":"Nicola J. Beatson, Paul A. De Lange, M. Tharapos, Brendan O'Connell, Jeffrey Smith, Stephen Scott, Richard Greatbanks","doi":"10.1111/acfi.13160","DOIUrl":"https://doi.org/10.1111/acfi.13160","url":null,"abstract":"Student success is impacted by many factors, both individual and institutional. We examine Tinto's (Journal of College Student Retention: Research, Theory & Practice, 2017, 19, 254) theoretical model of achievement by surveying students enrolled in an introductory accounting subject (n = 132) at a New Zealand university twice and relating their responses to their levels of achievement in the subject. We find that both self‐efficacy beliefs and a sense of belonging to the university are significantly related to academic success. This study builds on the body of work examining non‐cognitive factors in accounting education and provides practical implications for accounting educators.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"135 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131819233","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores how power exercised at the individual level within existing power relations in a university influences its enabling and coercive budgeting forms. A qualitative case study in a Sri Lankan university involved interviews and document analysis. Findings demonstrate the dominance of coercive controls over enabling controls in the university due to the power and influence of dominant individuals stemming from ongoing struggles among those pursuing diverse interests and strategic actions. We contribute to the literature by demonstrating how power is mobilised by actors and its impact on the variations of the enabling and coercive budgetary forms and practice.
{"title":"The interplay of episodic power in enabling and coercive budgetary designs in universities: A case study","authors":"C. Seneviratne, Z. Hoque","doi":"10.1111/acfi.13171","DOIUrl":"https://doi.org/10.1111/acfi.13171","url":null,"abstract":"This paper explores how power exercised at the individual level within existing power relations in a university influences its enabling and coercive budgeting forms. A qualitative case study in a Sri Lankan university involved interviews and document analysis. Findings demonstrate the dominance of coercive controls over enabling controls in the university due to the power and influence of dominant individuals stemming from ongoing struggles among those pursuing diverse interests and strategic actions. We contribute to the literature by demonstrating how power is mobilised by actors and its impact on the variations of the enabling and coercive budgetary forms and practice.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114075219","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In a workgroup setting, we use a quasi‐experiment to examine whether and why proself rather than prosocial employees benefit more from high group identity to foster group cooperation. We validate the goal‐transformation hypothesis that proself rather than prosocial employees benefit more from high group identity. Consistent with the goal‐expectation hypothesis, we show that goal alignment explains why proself rather than prosocial employees benefit more from high group identity. The main implication of our results is that, when group identity is high, proself employees reinforce their strategic behaviour to cooperate with the group to obtain higher individual payoffs through greater goal alignment.
{"title":"Group budget‐based bonus scheme and group cooperation: The role of social value orientation, goal alignment, and group identity","authors":"Andson Braga Aguiar, Mamadou Dieng, R. Guerreiro","doi":"10.1111/acfi.13172","DOIUrl":"https://doi.org/10.1111/acfi.13172","url":null,"abstract":"In a workgroup setting, we use a quasi‐experiment to examine whether and why proself rather than prosocial employees benefit more from high group identity to foster group cooperation. We validate the goal‐transformation hypothesis that proself rather than prosocial employees benefit more from high group identity. Consistent with the goal‐expectation hypothesis, we show that goal alignment explains why proself rather than prosocial employees benefit more from high group identity. The main implication of our results is that, when group identity is high, proself employees reinforce their strategic behaviour to cooperate with the group to obtain higher individual payoffs through greater goal alignment.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124768901","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Karel Hrazdil, Jiyuan Li, Gerald J. Lobo, Ray Zhang
We examine whether the facial attractiveness of borrower firms' chief financial officers (CFOs) influences bank loan contracting terms. Using a machine learning‐based algorithm to measure facial attractiveness, we document that firms led by CFOs with greater facial attractiveness receive more favourable loan contracts from their banks. We further show that the relation between CFO facial attractiveness and bank loan contracting terms is significantly influenced by the characteristics of both the borrower and the lender. Collectively, our results suggest that loan contracting is not an entirely rational process, as the ‘beauty premium’ is at least partly driven by taste‐based discrimination.
{"title":"CFO facial beauty and bank loan contracting","authors":"Karel Hrazdil, Jiyuan Li, Gerald J. Lobo, Ray Zhang","doi":"10.1111/acfi.13168","DOIUrl":"https://doi.org/10.1111/acfi.13168","url":null,"abstract":"We examine whether the facial attractiveness of borrower firms' chief financial officers (CFOs) influences bank loan contracting terms. Using a machine learning‐based algorithm to measure facial attractiveness, we document that firms led by CFOs with greater facial attractiveness receive more favourable loan contracts from their banks. We further show that the relation between CFO facial attractiveness and bank loan contracting terms is significantly influenced by the characteristics of both the borrower and the lender. Collectively, our results suggest that loan contracting is not an entirely rational process, as the ‘beauty premium’ is at least partly driven by taste‐based discrimination.","PeriodicalId":335953,"journal":{"name":"Accounting & Finance","volume":"50 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128765279","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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