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Article
Publication date: 10 September 2021

Kathryn Bewley, Cameron Graham and Songlan Peng

This article is a reply to “On theoretical engorgement and the myth of fair value accounting in China” Nobes (2019) from the authors of “Adaptability to fair value…

Abstract

Purpose

This article is a reply to “On theoretical engorgement and the myth of fair value accounting in China” Nobes (2019) from the authors of “Adaptability to fair value accounting in an emerging economy: A case study of China's IRFS convergence” (Peng and Bewley, 2010) and “The Winding Road to Fair Value Accounting in China: A Social Movement Analysis” (Bewley et al., 2018).

Design/methodology/approach

This article engages directly with the arguments of the criticism.

Findings

This article argues that the author of the commentary misunderstands the purpose, content and findings of both papers. By providing only a narrowly focused technical analysis of the new Chinese accounting standards, the author fails to see that their qualitative research approach reveals important, complex social and political factors at play in China's attempts to adopt modern international accounting principles. The commentary expresses a view that accounting is a neutral technology that needs only to be clearly defined and enumerated to be correctly implemented, whereas this research takes a much broader and deeper perspective. The authors seek to understand how China was able to successfully adopt fair value accounting standards in 2006, whereas an earlier attempt to introduce fair value in 1998 had led to abuse of fair value measurements and the eventual repeal of fair value regulations in 2001.

Practical implications

This article helps clarify the purpose of qualitative accounting research, the role of theory in such research and the usefulness of theory in describing and explaining empirical case facts related to changes in accounting standards, particularly in an international context.

Originality/value

This article contributes to a better appreciation of qualitative accounting research.

Details

Accounting, Auditing & Accountability Journal, vol. 34 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

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Article
Publication date: 21 May 2018

Kathryn Bewley, Cameron Graham and Songlan Peng

The purpose of this paper is to examine China’s stop-start adoption of fair value accounting (FVA) into its national accounting standards. The paper analyzes how FVA…

Abstract

Purpose

The purpose of this paper is to examine China’s stop-start adoption of fair value accounting (FVA) into its national accounting standards. The paper analyzes how FVA standards promoted by transnational organizations were eventually adopted in China despite its conservative accounting traditions.

Design/methodology/approach

The study uses archival records and an analytic framework adapted from the studies of social movements to identify the institutional factors that differ between China’ first unsuccessful attempt to adopt FVA and its second successful attempt.

Findings

Shared interests of elite national and international groups, creation of social infrastructure, marshaling of key resources, and specific actions to frame FVA standards are found to be crucial factors supporting FVA reform in China.

Practical implications

The study helps advance our understanding of dissemination of international accounting regulations in non-Western societies. The findings can help accounting standard setters to avoid costly failures.

Originality/value

The study provides a structured analysis of the propagation of global accounting regulations. It exposes the factors in the failure and success of FVA adoption in China.

Details

Accounting, Auditing & Accountability Journal, vol. 31 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

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Article
Publication date: 26 October 2010

Songlan Peng and Kathryn Bewley

This paper seeks to assess the feasibility and desirability of a major emerging economy adopting and implementing fair value accounting (FVA), as codified in the…

Abstract

Purpose

This paper seeks to assess the feasibility and desirability of a major emerging economy adopting and implementing fair value accounting (FVA), as codified in the International Financial Reporting Standards (IFRS), by studying China's recent experience.

Design/methodology/approach

The paper examines the extent of FVA adoption in China's new accounting standards (“2007GAAP”), reasons for differences from the International Accounting Standard Board's IFRS, and how 2007GAAP has been implemented in practice. Data are obtained from content analyses of IFRS and 2007GAAP FVA requirements, critical assessments of standard setters' official statements, and analyses of empirical evidence from official reports, media, and academic research.

Findings

The authors find a high degree of adoption of IFRS FVA standards in China's 2007GAAP for financial instruments, but many differences for non‐financial long‐term asset investments. Standard setters justify this divergence by fundamental characteristics of the Chinese environment. The resulting differences from IFRS in the 2007GAAP FVA standards, and in their implementation, challenge official claims of “substantial convergence” between 2007GAAP and IFRS. Hence, the benefits desired by Chinese regulators from adopting FVA and international accounting convergence to IFRS may not be realized.

Research limitations/implications

The findings are derived from aggregated data in government reports. These findings can be extended in future research by examining specific implementation outcomes in company financial statements.

Originality/value

The paper contributes a timely critical examination of a major emerging economy's convergence with the controversial FVA requirements, which supports the IFRS's standing as a high quality set of accounting standards. The findings provide new insights into factors that can impede international accounting convergence in emerging economies.

Details

Accounting, Auditing & Accountability Journal, vol. 23 no. 8
Type: Research Article
ISSN: 0951-3574

Keywords

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Article
Publication date: 17 September 2019

Christopher Nobes

The purpose of this paper is to provide “Comments” on two previous papers in this journal about fair value in Chinese accounting. It extends those papers by considering…

Abstract

Purpose

The purpose of this paper is to provide “Comments” on two previous papers in this journal about fair value in Chinese accounting. It extends those papers by considering developments since 2006.

Design/methodology/approach

The paper analyses the contents of Chinese Accounting Standards, dividing the references to fair value into several different categories. This analysis is compared to the findings of the two previous papers. This paper then re-assesses the evidence about the alleged pressures from international institutions on Chinese accounting.

Findings

The two previous papers greatly overstate the importance of fair value in Chinese accounting, partly through misinterpreting Chinese standards and partly because of a lack of caveat that the instructions about fair value often relate to special circumstances or unusual companies. The theorising about Chinese enthusiasm for fair value is misguided: the present author suggests that China became keen to adopt international standards despite their use of fair value not because of it, and that China removed much of the fair value when it adapted international standards. The extension of the analysis beyond 2006 provides a fuller coverage but does not alter the conclusions.

Research limitations/implications

The earlier of the two papers examined has been extensively cited. Researchers need to be warned that the technical content and the conclusions of both papers are questionable. Authors should define terms clearly and should provide sufficient reference detail to enable readers to check findings.

Practical implications

Multinational companies, auditors and financial analysts should not be misled into thinking that Chinese accounting makes extensive use of fair value accounting.

Originality/value

This paper critically re-assesses two previous papers, starting with detailed technical data and moving through to the influence of international institutions. This paper also newly extends the analysis of Chinese standards beyond 2006.

Details

Accounting, Auditing & Accountability Journal, vol. 33 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

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