Buy, Lie, or Die: An Investigation of Chinese ST Firms’ Voluntary Interim Audit Motive and Auditor Independence

Chu, Alex G. H.; Du, Xingqiang; Jiang, Guohua

doi:10.1007/s10551-011-0804-2

Cited by 48 publications

(16 citation statements)

References 36 publications

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“…For example, the first couple of issues of the Journal of Business Ethics in 2011 had articles on business culture in Iceland (Vaiman et al 2011), corporate social responsibility in Indonesia (Waagstein 2011), auditor independence in China (Chu et al 2011), and corporate social responsibility in Kenya (Mathuri and Gilbert 2011). Over the years, we have learnt that Western management practices do not uniformly apply to the rest of the world (Oumlil and Balloun 2009;Tsalikis and Lassar 2009).…”

Section: Introductionmentioning

confidence: 99%

Factors Impacting Ethical Behavior in a Chinese State-Owned Steel Company

Deshpande

2011

J Bus Ethics

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Section: Introductionmentioning

confidence: 99%

Factors Impacting Ethical Behavior in a Chinese State-Owned Steel Company

Deshpande

2011

J Bus Ethics

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“…For example, in 2008, the Big 4 had a 33 percent market share in the Chinese audit market (Chu et al ).…”

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confidence: 99%

The Role of Auditor Narcissism in Auditor‐Client Negotiations: Evidence from China

Church

Dai

Kuang

et al. 2020

Contemporary Accting Res

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This paper reports the results of three studies (archival, experimental, and qualitative) designed to examine the effects of auditor narcissism on auditor‐client negotiations in China. We contend that narcissistic characteristics fuel auditors' competitiveness and embolden them to stand firm in negotiations, potentially lengthening the negotiation process but leading to more conservative negotiation outcomes. As predicted, our archival results suggest that auditor narcissism is positively associated with audit delay and negatively associated with clients' absolute and positive discretionary accruals. Our experimental results document that narcissistic auditors are more likely to be involved in negotiations that reach an impasse or take longer to resolve and that narcissistic auditors negotiate reported asset values that reflect less aggressive reporting choices. Our qualitative results from field interviews with practicing audit partners corroborate our archival and experimental findings. Overall, the data collected using three different research methods yield consistent results in support of our theory. Our findings shed light on factors that influence audit efficiency and quality in China. We discuss the key cultural and contextual differences between China and the West as well as the implications of these differences for future research.

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“…In this regard, Li et al (2020) suggest that a disastrous financial situation can also raise the firms' costs to issue debts and render debt financing more difficult. Various research has been done so far that shows that firms with financial problems in capital markets can have strong incentives to manipulate their earnings (Jiang and Wang 2008;Chu et al 2011;Du and Lai 2018). What is worth mentioning is that the Iranian market has faced the most severe economic sanctions during recent years.…”

Section: Earnings Management and Corporate Performancementioning

confidence: 99%

“…Given that financial problems double the motivation of managers to carry out profit management activities (Jiang and Wang 2008;Chu et al 2011;Du and Lai 2018), this study first seeks to examine the effect of such activities on the corporate financial performance in Iran's market during the economic sanctions. Furthermore, according to the efficient transaction hypothesis, related party transactions (RPT) meet the economic needs of a firm; however, the agency theory suggests RPTs are sometimes used opportunistically by managers (Marchini et al 2018).…”

Section: Research Models and Variablesmentioning

confidence: 99%

Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control

Zimon

Appolloni

Tarighi

et al. 2021

Risks

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The primary purpose of this study is to investigate the impacts of earnings management (EM) and related party transactions (RPTs) on corporate financial performance in an emerging market, Iran. This paper also aims to examine the moderating role of internal control weakness (ICW) in the relationship between them. The study sample includes 108 Iranian manufacturing companies listed on the Tehran Stock Exchange (TSE) between 2013 and 2018, and panel data with random effects are used to test the hypotheses. When an accounting-based measure called ROA is defined as a proxy for corporate performance, the results show that there is a negative association between real earnings management (REM) and corporate financial situation, while accrual-based earnings management (AEM) and firm value are correlated positively. However, when Tobin’s Q index is defined as a proxy for corporate performance, we do not find any significant association between them. Consistent with the tunneling hypothesis or agency theory, our findings confirm RPTs damage corporate value (ROA and Tobin’s Q) because managers probably consider it a mechanism to exploit enterprise resources owing to existing conflictual interests. Moreover, purchase-related party transactions lead to lower ROA, whereas sale-related party transactions and Tobin’s Q are correlated negatively. Moreover, weak internal control has a positive moderating influence on the linkage between AEM and Tobin’s Q index. Finally, we provide robust evidence that there is a positive association between sale growth and institutional owners with ROA and Tobin’s Q, although financial leverage and mergers and acquisitions (M&A) have a destructive effect on corporate value.

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Buy, Lie, or Die: An Investigation of Chinese ST Firms’ Voluntary Interim Audit Motive and Auditor Independence

Abstract: business ethics, auditor independence, voluntary interim audit, earnings manipulation, special treatment, delisting, China,

Cited by 48 publications

References 36 publications

Factors Impacting Ethical Behavior in a Chinese State-Owned Steel Company

Factors Impacting Ethical Behavior in a Chinese State-Owned Steel Company

The Role of Auditor Narcissism in Auditor‐Client Negotiations: Evidence from China

Earnings Management, Related Party Transactions and Corporate Performance: The Moderating Role of Internal Control

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