Purpose
This paper aims to examine the relationship among corporate environmental disclosure (CED), earnings management (EM) practices and accounting conservatism in Chinese listed firms and determine how internal corporate governance (CG) mechanisms moderate these relationships.
Design/methodology/approach
This study uses two different EM practices, accrual-based EM (AEM) and real EM (REM), to analyze the relationship between CED and EM practices, as well as accounting conservatism. The final sample consisted of 1,619 observations, documented between 2015 and 2019. The panel data method was applied to estimate the relationship among CED, AEM and REM, as well as the moderating effect of CG on this relationship.
Findings
This study finds a negative relationship between CED and EM (both AEM and REM) and a positive relationship between CED and accounting conservatism. Further, CG, measured as the independent director ratio, institutional ownership and state-owned entities, was found to moderate these relationships.
Practical implications
Chinese policymakers should reinforce CED because it reduces corporate EM practices and improves accounting conservatism. Further, CED, as a mandatory requirement, may be expanded to all industries, that is, beyond the highly polluting industries listed on China’s stock exchanges.
Originality/value
This study is among the first to examine the relationship between CED and EM practices from both the AEM and REM perspectives and the one between CED and accounting conservatism. It also extends extant analyses by investigating the moderating effect of CG on these relationships in China.
This study investigates the relationship between institutional cross‐ownership and corporate tax avoidance in Chinese listed firms. Our findings indicate that the tax avoidance aggressiveness of Chinese listed firms could be significantly motivated by institutional cross‐ownership. This finding is robust to endogeneity tests, namely, propensity score matching estimation, two‐stage least squares regression, generalised method of moments test, and a falsification concern. Further, this positive relationship between institutional cross‐ownership and tax avoidance is more pronounced for listed firms with greater managerial ability and those with higher auditor industry expertise. Finally, such a relationship is more obvious for cross‐owners within the same industry, but only significant for independent cross‐owners, non‐state‐owned enterprises and firms within a less competitive industry. All main findings are robust to various robustness tests.
This study examines the impact from the COVID‐19 pandemic on the association between Chinese firms' SEO announcements and market reaction afterwards. Our findings indicate that market investors would respond more negatively to the SEO announcements and undergo more SEO underpricing for firms from regions significantly affected by the pandemic than those from the less‐affected regions. Furthermore, higher CSR scores and more involvements in accounting conservatism could mitigate these effects. The main mechanism of the moderating effect from CSR performance and accounting conservatism is that CSR investment and accounting conservatism could lessen information asymmetry between the SEO announced firms and outside investors. Finally, we document that the main motivation of SEO issuance during the pandemic is market timing.
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