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Prior evidence suggests that board independence may enhance financial performance, but this relationship has been tested almost exclusively for Anglo-American countries. To explore the boundary conditions of this prominent governance mechanism, we examine the impact of the formal and information institutions of 18 national business systems on the board independence-financial performance relationship. Our results show that while the direct effect of independence is weak, national-level institutions significantly moderate the independence-performance relationship. Our findings suggest that the efficacy of board structures is likely to be contingent on the specific national context, but the type of legal system is insignificant

In this article, we contribute to the earnings management literature by addressing the issue of Related Party Transactions (RPTs) during a firm's Initial Public Offering (IPO) process. We regard RPT-based earnings management as a kind of agency problem in the context of Chinese IPOs, and argue that the conflicts of interests between the controlling shareholders and the minority shareholders are the root of RPT-based earnings management in Chinese IPOs. We provide empirical evidence to demonstrate that RPT-based earnings management in a portfolio of earnings management tools including accruals management, and how it affects the firm's post-IPO long-term performance in China. Using 257 Chinese A and B shares IPOs during 1999 and 2000, our empirical findings suggest that controlling shareholders structure operating RPTs in pre-IPO period and these RPTs are positively associated with firm's operating performance. The decline in operating RPTs after IPO contributes to firm's post-IPO long-term underperformance and negatively affects firms' stock return.

The development of China's construction industry is presented by describing its current status and highlighting its achievements, identifying the main constraints preventing the industry from playing a more effective and efficient role in the country's economic development. Fundamental changes occurred in the construction industry after the economic reform, and the industry has been playing a very important role in the national economy, having made impressive progress and been developed at an amazing speed. However, reforms in the construction industry are difficult since this industry is not a single sector. The reform process by its very nature is not systematic. The challenges ahead are serious, and deeper reforms of the economic system are required.China, Construction Industry, Economic Reform, Business Environment,

Prior studies of IPO underpricing, mostly using agency theory and single-country samples, have generally fallen short. In this study, we employ the knowledge-based view (KBV) to explore underpricing across 17 countries. We find that agency indicators are insignificant predictors, that board of director knowledge limits underpricing, and external knowledge both substitutes for and complements internal board knowledge. This third finding suggests that future KBV studies should consider how internal and external knowledge states interact with each other. Our study offers new insights into the antecedents of underpricing and extends our understanding of comparative governance and the KBV of the firm

This study contributes to the accounting literature by providing empirical evidence from China that adopting IFRS does not necessarily lead to IFRS-type accounting practices. We examine the impact of regulatory enforcement, in particular, an important Chinese government compulsory compliance policy implemented in 2001, and audit upon the convergence of Chinese accounting practices. Using a sample of 103 Chinese B-share companies between 1999 and 2004, we reveal that the decline in earnings difference between firms' financial statements under Chinese GAAP and IFRS is the result of the implementation of the 2001 policy and the audit committee which effectively control the firm's application of standards rather than the differences between the standards. The effect of audit committee leads us further to argue that the convergence of accounting practices may be affected by not only the lack of insufficient understanding of IFRS by local accounting professionals, but also the management opportunistic behaviour during the application of different standards. It implies that corporate governance may affect the convergence of accounting practice. However, we do not find evidence for international audit firms outperforming their Chinese local CPAs with regard to IFRS compliance. Therefore, the Chinese government should be cautious in promoting the participation of international audit firms in China for achieving IFRS compliance.

This paper discusses the development of real estate industry in China in recent years. It argues that Hayek's theory of economic fluctuations can help to explain the contraction of the real estate market in 1994 in China as a whole. However, as a theory of the closed economy, Hayek's theory is found to be no longer robust when applied to cities where there is heavy foreign direct investment, such as Shanghai. We believe that it is the foreign direct investment that is making the real estate industry in Shanghai perform well, despite the government's tight monetary policy and the contraction of the industry in other parts of the country over the same period. The paper also argues that, while most foreign investment in real estate is classified as direct investment, it is very different from 'typical' foreign direct investment except in form and in fact shares most of the characteristics of portfolio investment. Foreign direct investment in real estate reflects the imperfections of China's capital markets.

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