To read this content please select one of the options below:

Corporate ownership concentration and financial reporting quality: International evidence

Neal Arthur (Business School, The University of Sydney, Sydney, Australia)
Huifa Chen (School of Economics and Management, Shanghai Maritime University, Shanghai, China)
Qingliang Tang (School of Business, Western Sydney University, Sydney, Australia)

Journal of Financial Reporting and Accounting

ISSN: 1985-2517

Article publication date: 11 March 2019




The purpose of this study is to investigate whether a country’s ownership concentration affects the financial reporting quality in a cross-country setting.


This paper uses six accounting and auditing indicators to construct a comprehensive index to measure the country-level financial reporting quality.


The authors find a non-linear nature of the relationship between the national financial reporting quality and national ownership structure. Specifically, the relation is negative in a relatively spread ownership structure with no controlling shareholders, implying the entrenchment effects dominate. When ownership is highly concentrated, particularly with controlling shareholders whose interest is aligned with that of the firm, the relation turns to positive and alignment effects dominate.


The study is an important extension of prior research examining the financial reporting quality effect of ownership concentration. It enhances the understanding of the role of ownership concentration in determining a country’s financial reporting quality and has potential important policy implications for countries’ reformers and regulators who are concerned with the transparency of financial reporting and the quality of corporate governance.



These authors contributed equally to this work and are listed in alphabetical order. The authors thank the participants at the Western Sydney University, the University of Sydney and Shanghai Maritime University for their insightful comments and suggestions on earlier versions of this paper. Particularly, insightful comments and suggestions from the anonymous reviewer and the editorial support from Professor Aziz Jaafar, the Journal Editor, are highly appreciated. In addition, Dr Neal Arthur acknowledges the financial support from Business School, The University of Sydney. Dr Huifa Chen acknowledges the financial support from the grants of National Social Science Fund of China (NSSFC, No. 14CJY006). Dr Qingliang Tang acknowledges the financial support from the Accounting and Finance Association of Australia and New Zealand.


Arthur, N., Chen, H. and Tang, Q. (2019), "Corporate ownership concentration and financial reporting quality: International evidence", Journal of Financial Reporting and Accounting, Vol. 17 No. 1, pp. 104-132.



Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

Related articles