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Book part
Publication date: 7 January 2015

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Adoption of Anglo-American Models of Corporate Governance and Financial Reporting in China
Type: Book
ISBN: 978-1-78350-898-3

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Article
Publication date: 1 May 2000

Z Jun Lin and Feng Chen

Outlines economic and accounting reforms in China since the late 1970s and assesses the impact of the 1997 Asian financial crisis on them. Suggests that although China…

Abstract

Outlines economic and accounting reforms in China since the late 1970s and assesses the impact of the 1997 Asian financial crisis on them. Suggests that although China escaped the recession suffered by neighbouring countries, it still has a high risk of financial crisis/recession and enumerates the reasons why. Explains the steps taken by the government to reduce the risk, including reforms aimed at the standardization of accounting practices and improved reliability and comparability of financial information. Discusses the nine practical accounting standards issued between May 1997 and July 1999, which are in line with international standards and summarizes the reforms to enhance the independent status of public practitioners and the auditing standards issued so far. Identifies six remaining problems in the process of accounting reform but believes it is on the right track.

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Managerial Finance, vol. 26 no. 5
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 7 January 2015

Forces of globalization have driven international convergence in corporate governance and accounting considerably over the past few decades. Nevertheless, despite the…

Abstract

Forces of globalization have driven international convergence in corporate governance and accounting considerably over the past few decades. Nevertheless, despite the global trend, convergence of corporate governance and financial reporting remains a subject of debate. This research monograph critically examines whether China’s convergence with Anglo-American corporate governance principles and the International Financial Reporting Standards (IFRS) is likely to produce the expected outcomes of improving the transparency and comparability of accounting information in Chinese firms. In this chapter, we discuss the motivation for and the significance of the study; describe the issues associated with the adoption of internationally acceptable standards and principles in China; explain the theoretical framework used to inform the study and research methodology; and present the aim and objectives of the monograph.

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Adoption of Anglo-American Models of Corporate Governance and Financial Reporting in China
Type: Book
ISBN: 978-1-78350-898-3

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Article
Publication date: 15 December 2003

Lloyd Yang, Alan Dunk, Alan Kilgore, Qingliang Tang and Z.Jun Lin

China is conducting an open market policy and Chinese firms are seeking independent audit services. As a result, the Chinese accounting profession is expanding at a…

Abstract

China is conducting an open market policy and Chinese firms are seeking independent audit services. As a result, the Chinese accounting profession is expanding at a tremendous speed, and has played an important role in economic reform. However, Chinese auditing operates in a very different environment from those experienced in Western countries. Consequently, there is considerable concern about auditor independence in China. The purpose of this paper is to examine some reasons for a lack of independence in the Chinese audit profession. We critically review empirical evidence regarding auditor practice in China. We then make some suggestions that might improve auditor independence.

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Managerial Finance, vol. 29 no. 12
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 20 June 2008

Z. Jun Lin, Jason Z. Xiao and Qingliang Tang

The purpose of this paper is to investigate the perceptions of the roles, responsibilities and basic characteristics of audit committees (ACs) in the current business…

Abstract

Purpose

The purpose of this paper is to investigate the perceptions of the roles, responsibilities and basic characteristics of audit committees (ACs) in the current business environment in China, from the perspectives of investors/creditors, independent directors (AC members), company officers and auditors.

Design/methodology/approach

The study is conducted through a questionnaire survey of the four groups of stakeholders with two forms of survey instruments being distributed to randomly selected survey subjects. The data collected from the returned questionnaires are analyzed at both the aggregate and sub‐sample levels.

Findings

The study finds that various groups of stakeholders have generally accepted the ceremonial roles and responsibilities of ACs in terms of lifting the image of good corporate governance, enhancing communication between board of directors (BoD) and auditors, and mediating conflict between management and auditors. However, the more concrete AC oversight roles and responsibilities for improving internal control, rules compliance, sound corporate financial reporting and auditing processes have not been fully recognized at present, particularly by company management and independent directors. In addition, the study reveals that actual AC operations in practice are ineffective even though a large portion of Chinese listed companies have set up ACs.

Originality/value

The paper should assist readers to understand the recent development of corporate governance and stock market reforms in China and generate some policy implications that can be applied to other countries as well, emerging economies in particular.

Details

Accounting, Auditing & Accountability Journal, vol. 21 no. 5
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 March 1998

Z. Jun Lin

The main objective of this paper is to examine the development of public accounting in China. While a brief review of the historical evolution of Chinese public accounting…

Abstract

The main objective of this paper is to examine the development of public accounting in China. While a brief review of the historical evolution of Chinese public accounting is presented in the first section, the paper focuses on the major progress of internationalization of public accounting in China in the most recent years, that is, improving qualification standards for professional accountants; unifying the professional associations of public practitioners; establishing Chinese Independent Auditing Standards; enforcing professional ethics and continuous education programs; reforming the administration of CPA firms; and opening the domestic accounting market up to foreign professionals. Both the motivation and impedance to those developments are analyzed. It is concluded that, to date, the gap between Chinese public accounting and the practices in the rest of the world has been narrowed down remarkably, which will benefit both Chinese and international business communities.

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Managerial Auditing Journal, vol. 13 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 July 2001

Z. Jun Lin and Liyan Wang

This paper presents a comparative study of the financial reporting practices of three Chinese companies listed simultaneously in Mainland China (A‐shares) and Hong Kong…

Abstract

This paper presents a comparative study of the financial reporting practices of three Chinese companies listed simultaneously in Mainland China (A‐shares) and Hong Kong (H‐shares). Their financial statements, prepared based on the accounting and disclosure regulations in China and Hong Kong (or International Accounting Standards, IASs) over the period of 1995‐1998 were studied, including an examination of their corporate structures, and vertical and horizontal comparisons of their primary accounting numbers and key financial ratios. This study demonstrates that significant discrepancies exist for financial information disclosed in terms of Chinese GAAP, Hong Kong GAAP or IASs. In addition, there are notable deviations in financial disclosures among the three companies. The study findings confirm the existence of a substantial gap between the Chinese practices of corporate accounting and financial reporting and the internationally accepted norms. It is suggested that there is an urgent need to promote internationalization of Chinese accounting and improve the understandability and comparability of financial statements released by Chinese listed companies in order to enhance their relevance and usefulness for decision‐making by domestic and overseas investors.

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Managerial Auditing Journal, vol. 16 no. 5
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 December 2006

Pran Krishansing Boolaky

This paper uses content analysis to compare International Financial Reporting Standards (IFRS)1 with the Local Accounting Standards (LAS) of South Africa (SA), Mauritius…

Abstract

This paper uses content analysis to compare International Financial Reporting Standards (IFRS)1 with the Local Accounting Standards (LAS) of South Africa (SA), Mauritius and Tanzania. It begins by identifying the equivalence of the local accounting standards of these three countries with IFRS and follows with a content analysis of the definition of terms, accounting treatment and disclosure requirements in the standards. The contents of these three items in each of these countries’ standards are compared with those in the IFRS. A score card is used to record the level of harmony between the LAS and IFRS of each country and between the LAS of each country. The score is compared by running statistical test of significant difference using Wilcoxon Matched Paired test. The paper reports that, except for Tanzania, the local accounting standards of the two other countries are more or less similar to IFRS. As regards the level of harmony between the local accounting standards and IFRS, the score card reveals that the accounting standards of SA are more in harmony with IFRS, followed by Mauritius. A lead table is produced at the end.

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Journal of Applied Accounting Research, vol. 8 no. 2
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 7 March 2016

Ogan Yigitbasioglu

– This study aims to explore the relation between the qualities of the information system (IS), management accounting adaptability (MAA) and its effectiveness.

Abstract

Purpose

This study aims to explore the relation between the qualities of the information system (IS), management accounting adaptability (MAA) and its effectiveness.

Design/methodology/approach

This study involves the development and empirical testing of a model where the qualities of the IS and management accounting effectiveness (MAE) are mediated by MAA.

Findings

Information system flexibility (ISF) and shared knowledge had a significant and positive relation to MAA, which in turn had a positive and significant relation to MAE. There was also a moderation effect of ISF on the relation between IS integration and MAA.

Research limitations/implications

IS integration in itself may not lead to management accounting stability, but it is the lack of flexibility of the system and lack of cooperation between the stakeholders that might lead to its stagnation.

Practical implications

Organizations are advised to implement solutions that are relatively flexible and modular, as well as encourage cooperation between stakeholders to fully leverage and improve the existing system.

Originality/value

The study extends the discourse on the interaction between management accounting and ISs by exploring the role of a number of factors that drive MAA.

Details

International Journal of Accounting and Information Management, vol. 24 no. 1
Type: Research Article
ISSN: 1834-7649

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Content available
Article
Publication date: 28 June 2019

Waqas Bin Khidmat, Man Wang and Sadia Awan

The purpose of this paper is to investigate the value relevance of Research and development (R&D) and free cash flow (FCF) in an efficient investment setup. Most…

Abstract

Purpose

The purpose of this paper is to investigate the value relevance of Research and development (R&D) and free cash flow (FCF) in an efficient investment setup. Most importantly, this paper examines whether the value relevance of R&D and FCF is associated with life cycle stages. Furthermore, this paper reports whether the market response to R&D and FCF is different in competitive market as compared to the concentrated market.

Design/methodology/approach

The analysis is based on the Ohlson (1995) model for the determination of value relevance of earnings and book value. Capitalized R&D and FCF data comprising of the Chinese A-listed firms from the year 2008 to 2016 are selected for this study. Following Anthony and Ramesh (1992), the authors divided the firm life cycle into different stages. HHI index is used to measure the product market competition.

Findings

The main result shows that R&D and FCF are value relevant in Chinese A-listed firms. The impact of R&D and FCF on the value relevance of earnings and book value is also positive and significant. The findings of the effect of R&D and FCF on the value relevance of accounting information signify that the information content (R2=0.46) of the mature stage is higher than that of the growth and stagnant stage. The explanatory power measured by R2 value for competitive industries (0.47) is much higher than the concentrated industries (0.33).

Research limitations/implications

Despite taking into account all the possible available variables, there are few limitations of the study. This study only studies the effect of EPS, BPS, R&D and FCF on the value relevance of accounting information. Other determinant such as size, growth, leverage and firm age is ignored. Since the R&D expenditure is discretionary, therefore the findings cannot be generalized to all the sectors. A sector wise comparative study can be done in future, to understand the differences in the information contents of R&D and FCF. Also, the tax effect of R&D is ignored in this study. For future call, the value relevance of tax effect on R&D can be explored.

Practical implications

The investors can now determine the present value of all the future cash flows of investing activities. The results of the study are significant for the Chinese investors who should incorporate the R&D and FCF along with investment efficiency. The investors should keep in mind the life cycle stage while investing in a certain stock. The competitive markets have more information content than the concentrated markets. The corporate managers can benefit from this study while issuing new shares. The market responds positively to the stock having investment efficient R&D and FCF investment. For the policy implication perspective, the security market regulator should devise the effective pro-effective product market regulations.

Originality/value

The contribution of this study is manifold. First, according to the authors’ knowledge, this is the first study that incorporates investment efficiency with R&D and FCF and explores its effect on the value relevance of accounting information. Second, the impact of R&D on the value relevance is studied by numerous researchers (Lev and Sougiannis, 1996; Han and Manry, 2004). Similarly, FCF-agency cost effect has also been investigated by (Rahman and Mohd-Saleh, 2008; Chen et al., 2012) but the value relevance of R&D and FCF during different life cycle stages still needs to be answered. Finally, this study also tries to answers the question if the market response to R&D and FCF is different in a competitive market as compared to the concentrated market.

Details

Asian Journal of Accounting Research, vol. 4 no. 1
Type: Research Article
ISSN: 2443-4175

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