China Journal of Accounting Research最新文献

We investigate the impact of industry information disclosure (IID) on audit quality in Chinese listed companies from 2010 to 2021, by constructing a staggered difference-in-differences model based on the implementation of the IID guidelines in the Shanghai and Shenzhen stock exchanges in 2013 as an exogenous shock. Audit quality is significantly improved after the implementation of the IID guidelines. We also use a parallel trend test, different measurements of key variables, propensity score matching, a placebo test and different samples, to ensure the validity of our findings. IID enhances audit quality by improving auditor independence, professionalism and audit engagement, particularly in firms with high-quality and numerous IIDs, high auditor rankings, strong auditor industry expertise, IIDs with a negative tone and low R&D investment. We demonstrate the effectiveness of the IID guidelines from the perspective of auditing.

The acquisition of external financing is an important factor affecting the development of enterprises and even the economic growth of a country. However, changes in the external environment often expose enterprises to uncertainties in obtaining external financing. Taking China’s initial public offering (IPO) suspension policy as a setting, this paper examines the impact of the associated external financing uncertainty on firms. The empirical results show that firms that are unable to secure planned financing due to the IPO suspension policy engage in greater tax avoidance activities than successful IPOs during the IPO suspension period; this phenomenon is mainly concentrated in firms that are not state-owned, have no venture capital or private equity backing, have lower debt servicing capacity and have lower tax avoidance risk. Moreover, the tax avoidance activities of enterprises positively influence their fixed asset investment and innovation investment during the IPO suspension period. Evidence based on IPO price performance indicates that investors respond positively to firms’ tax avoidance practices during IPO suspensions.

This study examines the relationship between analyst forecast dispersion or accuracy and supplier concentration of listed firms in China from 2008 to 2019. Our findings suggest that higher supplier concentration is associated with lower analyst forecast dispersion, which can be attributed to the increased attention from analysts. Moreover, this effect is more pronounced when firms have less bargaining power and higher institutional ownership, indicating a greater reliance on the supply chain. Our study highlights the importance of disclosing supply chain information, which provides insights beyond those of traditional financial information.

This paper reviews the practice and research on environmental, social and governance (ESG) in China. It finds that (1) under China’s top-down framework, ESG practices have grown substantially in ESG disclosure, ESG rating and ESG investing; and (2) ESG research has focused on corporate ESG disclosure and performance as well as ESG investing. Although the topics of the ESG studies reviewed in this paper are similar to those of ESG research in other countries, China’s ESG research enriches international ESG research by showing two distinct characteristics, namely, the country’s unique institutional context and the dominance of quantitative research methods. Future research can investigate ESG standards development and the impact of traditional Chinese ethics, modernization and internationalization on ESG in China.

This study investigates the effect of flexible tax enforcement on firms’ excess goodwill using unique manually collected data on taxpaying credit rating in China from 2014 to 2021. We document that A-rated taxpayer firms have less excess goodwill; A-rated firms reduce excess goodwill by 0.005 vis-a-vis non-A-rated firms, which accounts for 100% of the mean value of excess goodwill. This finding holds after multiple robustness tests and an endogeneity analysis. Moreover, this negative effect is more pronounced in firms with low information transparency, that are non-state-owned and that are located in regions with low tax enforcement intensity. The channel test results suggest that taxpaying credit rating system as flexible tax enforcement reduces firms’ excess goodwill through a reputation-based effect and not a governance-based effect. This study reveals that the taxpaying credit rating system in China as flexible tax enforcement can bring halo effect to A rating firms, thereby limiting irrational M&As and breaking goodwill bubble.

This study takes advantage of the Forbes Rich List as an external shock to examine its effect on internal control quality in mainland China. Using the difference-in-differences (DiD) method for a large sample of 17,910 firm-year observations from 2000 to 2014, we find that firms controlled by entrepreneurs included in the Forbes Rich List tend to have higher internal control quality than firms not controlled by entrepreneurs in the list. The listed entrepreneurs improve their firms’ internal control quality by means of reducing the information asymmetry between the firms and outsiders. Further tests show that the event effect is more pronounced when firms have higher misreporting costs and when listed entrepreneurs hold chairman positions than in other situations. Our results remain robust after applying the propensity score matching method, stacked DiD estimation, and an alternative measure of internal control quality. These findings enrich the literature on the effect of the Rich List and the determinants of internal control quality in emerging markets.

When negative media coverage causes reputational crises, companies must find suitable tools to repair their reputation and reverse their negative image. As a CSR activity with political- and livelihood-related implications, targeted poverty alleviation may be an effective tool. Using data on negative media coverage of Chinese A-share private listed companies, we examine whether companies engage in targeted poverty alleviation in response to reputational crises caused by negative media coverage. We find that negative media coverage leads private companies to engage more actively and intensively in targeted poverty alleviation because of the significant increase in public attention to the bad news. These companies must urgently rebuild their positive image using targeted poverty alleviation to resolve their public opinion crisis. Further analyses suggest that original and in-depth negative media coverage is more likely to cause companies’ active participation in targeted poverty alleviation. In addition, negative media coverage is more likely to lead companies to engage in targeted poverty alleviation when they are in heavily polluting industries or face greater pressure from external investors. Finally, we find that active involvement in targeted poverty alleviation helps companies improve their market reputation and thus effectively manage public relations crises caused by negative media coverage.

We propose that stakeholder demand can explain firms’ corporate social responsibility (CSR) activities and empirically test our proposition using 2002–2016 panel data from multiple countries. We select the Olympic Games as our experimental context and use a difference-in-differences design. We find that firms domiciled in countries that host the Olympic Games subsequently experience a significantly smaller increase in CSR commitment than firms in countries that unsuccessfully bid to host the Olympics. We also find that firms domiciled in cities that host the Olympic Games exhibit a significantly smaller increase in CSR than those domiciled in other cities in the same country. Additional tests indicate that firms in host countries with greater increases in the levels of happiness tend to experience an even smaller increase in CSR. Our findings are consistent with the stakeholder demand explanation, as stakeholders are less likely to require local firms to invest in CSR if utilities, such as those from environmental improvement, increase.

Running head: Olympic Games and CSR.

In digital economy, firm’s digital transformation is an important means of achieving high-quality development. Adopting career concerns theory, we examine rookie CEOs’ impact on firms’ digital transformations, using Chinese A-share listed firms from 2007 to 2019. (1) Rookie CEOs disclose more digital transformation information, but invest less in substantial transformation, i.e., “more words but less investment”. (2) Under high performance pressure and difficult digital transformation, rookie CEOs are more likely to adopt the above strategy. (3) Internal and external governance mechanisms help effectively monitor and mitigate such behaviors. (4) The above strategy helps CEOs decrease short-term, but not long-term, dismissal probabilities. Our findings elucidate firms’ digital transformation practices and the decision styles of CEOs with different experience levels.

As a city–county consolidation with Chinese characteristics, China’s county-to-district (CtD) reform transfers a county’s autonomy to a city, thereby strengthening the administrative, decision-making, fiscal and other powers of the prefecture-level municipal government, which effectively enables the centralization of local governments. Based on this exogenous quasi-natural experiment, we use a difference-in-differences (DID) approach to empirically examine the impact of prefecture-level municipal government centralization on companies’ ESG performance. The results show that municipal government centralization can significantly promote corporate ESG performance, which represents environmental protection, social responsibility and corporate governance behavior. The mechanism analysis also shows that the CtD reform can address market segmentation, alleviate policy uncertainty and reduce rent-seeking, which further improves ESG performance.