China Journal of Accounting Research最新文献

This research contributes to understanding the spillover effect of customer digital transformation along the supply chain. We take a supply chain relationship perspective to explore the influence of customers’ digital transformation on suppliers’ audit fees and find a significant reduction in such fees when customers undergo digital transformation. An economic mechanism analysis reveals that this transformation reduces audit fees by lowering the risks and costs encountered by auditors. This is achieved by mitigating suppliers’ business risks and improving earnings quality. Heterogeneity analysis reveals that the impact of customers’ digital transformation on suppliers’ audit fees is more pronounced when the supply chain is geographically distant, suppliers with more specific investments and with high levels of market competition.

This study investigates the valuation and real effects of the mandatory disclosure of greenhouse gas (GHG) emission costs from the perspective of “double materiality.” We consider a firm with a Cobb-Douglas production function that combines GHG-related and non-GHG-related investments to produce short-term and long-term returns. In particular, the GHG-related investment entails short-term and long-term social costs of GHG emissions, including corporate costs and negative externalities. We demonstrate how the mandatory disclosure of the long-term costs of GHG emissions affects capital market valuations and corporate investment decisions relative to a non-disclosure regime. The social welfare in an accounting regime hinges on three parameters: the persistence of the short-term investment return, the ratio of the productivity of GHG-related investment to that of non-GHG-related investment, and the social cost parameter for GHG emissions. Our findings suggest that disclosing the long-term costs of GHG emissions may be detrimental to social welfare. Specifically, the non-disclosure regime results in higher social welfare than the disclosure regime for high values of these parameters.

We investigate how the accounting treatment of intangible assets on managers’ likelihood of issuing voluntary earnings guidance (MEF). We find that unrecognized intangibles (immediately expensed) are negatively associated with MEF issuance, while recognized intangibles (capitalized) show a positive association. These findings hold across various factors such as analysts’ coverage, industry type and for a subsample that excludes software firms permitted to capitalize software development costs under SFAS No. 86. In additional, we investigate the cross-sectional determinants of MEF issuance based on the characteristics of firm intangibility. We find a significant increase in the likelihood of MEF issuance for higher unrecognized intangibles with greater earnings uncertainty. This suggests that managers may prioritize delivering value-relevant information to market participants to alleviate uncertainty.

We examine stakeholders’ comment letters regarding the Hong Kong Exchange’s (HKEX) 2015 Consultation Paper, which proposed mandating ESG reporting in Hong Kong. We test for significant differences in responses between stakeholder groups and whether the HKEX’s decision was consistent with stakeholders’ preferences in the consultation process. Examining comment letters submitted by six lobbying groups—preparers, investors, the accounting profession, NGOs, other institutions and individuals—we analyze survey responses using textual analysis software and statistical tests. We find that users and the accounting profession participated more than preparers. We also find that preparers and users took different positions on mandating ESG reporting when lobbying the HKEX, whereas preparers and the accounting profession advocated similar positions. Moreover, we find a significant association between stakeholder groups’ preferences and the HKEX’s decision on most proposed changes.

This paper explores the positive governance effects of the Procuratorate’s Public Interest Litigation System in China, which combines the powers of litigation and administrative supervision, on the quality of information disclosure by listed state-owned enterprises. We report several findings. (1) The likelihood that listed state-owned enterprises would issue financial restatements and participate in financial fraud decreased significantly in areas selected for pilot implementation. (2) The governance effect is stronger in regulated industries than in unregulated industries. After the pilot implementation, the agency costs decreased, and the increase in legal litigation risks related to false statements faced by enterprises played a deterrent effect. (3) The significance of the above results is stronger when a company’s external and internal governance are weaker. This study provides both new evidence of the effectiveness of the integrated governance mechanism and inspiration for future efforts to widely implement this mechanism in the capital market.

Drawing on the implementation of the compliance management guidelines issued by China’s SASACs, we construct a quasi-natural experiment to examine the impact of the implementation of these guidelines on the investment efficiency of SOEs. The investment efficiency of SOEs is significantly improved after the implementation of the guidelines. The impact is more pronounced on SOEs with significant financing constraints, high financing requirements and intense competition in the product market. We also find that the guidelines improve efficiency investment by reducing management’s risk appetite, mitigating the Type I agency problems and enhancing the level of internal control. The conclusions indicate that compliance management is an important strategy for enhancing the investment efficiency of SOEs.

This paper empirically examines how sustainability-oriented social responsibility influences corporate innovation quantity and radical innovation from the perspectives of environment- and employee-oriented social responsibility. Both forms of social responsibility are found to contribute significantly to corporate innovation. Corporate environment-oriented responsibility increases innovation by increasing R&D. Employee-oriented responsibility increases innovation by helping firms retain talent; by motivating employees, employee-oriented social responsibility promotes both innovation quantity and radical innovation. Furthermore, both environment- and employee-oriented responsibility can alleviate financing constraints, and the positive effects of environment- and employee-oriented responsibility on radical innovation and innovation quantity, respectively, increase total factor productivity. Following sustainable development theory, this paper analyzes the heterogeneous mechanisms of the influences of environment- and employee-oriented social responsibility on corporate innovation and provides empirical evidence of high-quality, innovation-driven corporate development through social responsibility.

Using rumor verification data from investor interactive platforms, we investigate the effect of stock market rumors on price efficiency. We find favorable rumors are positively correlated with stock price synchronicity, while unfavorable rumors are negatively correlated with stock price synchronicity. Both favorable and unfavorable rumors are positively correlated with stock mispricing levels, and stock price crash risk. Mechanism tests reveal that favorable rumors about industry leaders have industry spillover effects. The effect of rumors on mispricing levels and stock price crash risk are more pronounced when there are more retail investors. Further analysis shows stronger detrimental impacts of rumors on price efficiency for small-cap companies, companies with low information transparency and companies with low institutional ownership.

Earnout provisions (“earnouts” hereafter) provide for contingent payments in M&A agreements and play a role in reducing information asymmetry. However, in China, earnouts are not solely driven by negotiations between acquirers and targets but are also related to regulatory preference. The CSRC amended the M&A regulation in 2014, deregulating mandatory earnouts while retaining the approval system. Leveraging on this context, we explore whether regulators implement implicit regulation by encouraging the usage of voluntary earnouts, and the economic consequences of such action. Our results show that earnouts are more likely to be included in an M&A contract when the deal requires CSRC approval. M&As that involve earnouts are also more likely to obtain regulatory approval and in a shorter time. These findings suggest that regulators may still prefer earnouts even after deregulation. In addition, we find that the association between voluntary earnouts and acquirers’ post-acquisition performance is negative when the M&A deal requires regulatory approval, suggesting that voluntary earnouts influenced by regulatory preference can potentially have a negative impact. Further analyses indicate that this impact can be alleviated by comment letters and market monitoring. Our findings provide regulators with insights into the effects of the regulatory reform in the M&A market.

Audit practice is a team effort led by signing auditors. We examine the impact of the heterogeneity of signing auditors’ audit-firm serving experiences on the disclosure of key audit matters (KAMs). Auditors with more heterogeneous serving experiences demonstrate more adequate KAM disclosure, as evidenced by more KAMs, longer texts and clearer attributions in their disclosures. This effect is influenced by the quality of audit knowledge that auditors accumulate from different serving experiences and the team- and audit-firm-level knowledge integration environment. Furthermore, signing auditors with more diverse service experience tend to improve audit quality, reduce the incidence of restatement or misconduct and enhance the informativeness of financial reports. Our findings enrich the KAM disclosure research and provide insights into audit firms’ human resource allocation and internal management.