Corruption culture and accounting quality

Chen, Yunsen; Che, Limei; Zheng, Dengjin; Hong, Yuwen

doi:10.1016/j.jaccpubpol.2019.106698

Cited by 37 publications

(18 citation statements)

References 68 publications

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“…Local trustworthiness plays a critical role when foreign companies' select investment locations, ownership type, and R&D investment (Ang et al, 2015). Chen, Han, et al (2020), Chen, Che, et al (2020) document a negative association between social trust and tunnelling in China.…”

Section: Review Of the Literature On Social Capital And Social Trustmentioning

confidence: 99%

“…A firm in the 25th percentile of corruption pays 2.0%-7.96% less audit fees than a firm in the 75th percentileWang and Song (2021) Local corruption and IPO underpricing China: 1373 IPO firms from 2010 to 2017 Firms located in highly corrupt regions suffer from IPO underpricing. However, reputable underwriters and auditors weaken the IPO underpricingChen, Che, et al (2020) quality has improved significantly after the arrest of corrupt top officials. This association is more pronounced when the arrested corrupt officials had greater power over the firm, and when the affiliated firms were more dependent on local corrupt officials.Firms with improved accounting quality issued more seasoned equity offerings (SEO) and had lower cost of capital Ellis et al (2020) Local corruption and corporate innovation US: 103,191 observations during 1978-2006 A negative relation between corruption and the quantity and quality of corporate innovation.…”

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confidence: 99%

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Consequences of local social norms: A review of the literature in accounting, finance, and corporate governance

Habib

Costa

Al‐Hadi

2022

Accounting & Finance

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We synthesise the empirical archival research on the consequences of local social norms on accounting, finance, and corporate governance outcomes in an international setting. The literature reviewed is premised on the theory that corporations do not make decisions, but managers do, and managers are likely to be influenced by the socioeconomic environment of the region in which they operate and/or by the people with whom they interact. To provide a structure to our review, we identify social capital, religiosity, gambling norms, and corruption culture, as four constructs of local social norms and link these with financial reporting and external auditing, financial, investment, and dividend decisions, capital market consequences and finally, corporate governance and corporate social responsibility behaviour of firms. We highlight some limitations of the existing research and offer some suggestions for future research.

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Section: Review Of the Literature On Social Capital And Social Trustmentioning

confidence: 99%

mentioning

confidence: 99%

Consequences of local social norms: A review of the literature in accounting, finance, and corporate governance

Habib

Costa

Al‐Hadi

2022

Accounting & Finance

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“…Accounting can play a significant role in the allocation of resources, in the risk calculation, in the management models, and in defining the terms of the debt contracts, since, these elements directly or indirectly end up interfering in the economic development of a country. Thus, an analysis of what can affect the generated QAI becomes relevant in any context (Chen et al, 2020).…”

Section: Quality Of Accounting Information Corruption and The Timely Loss Recognitionmentioning

confidence: 99%

Timely loss recognition in Brazilian firms under corruption investigation

Rocha

Bezerra

2021

Rev. contab. finanç.

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This article evaluates the impact of the disclosure of the participation of Brazilian firms listed on the Bolsa Brasil Balcão (B3) in corruption scandals through media scrutiny and by disclosure of independent auditors on the quality of accounting information, measured from the perspective of accounting conservatism. We examine the possible theoretical link between the disclosure of corruption scandals and the quality of accounting information in the Brazilian context. Brazil has gone through successive corruption scandals involving firms and government entities in different levels. Accounting can be an important tool to mitigate said risks based on the artifacts it has to inform key stakeholders. However, it is necessary to identify the extent to which these artifacts can be influenced by the actors involved in these scandals. The research places accounting as an instrument subject to pressures from different interests and that may be shaped to them. Although accounting is an instrument that must aim to reduce information asymmetry, preventing the harmful effects of corruption, in specific contexts, it can be used in the opposite direction, such as in cases of corruption and economic crises. We used the model based on Ball and Shivakumar (2005) with specific modeling characteristics for corruption and crisis. The models were estimated using the Stata 13 software using the pooled approach using the Ordinary Least Squares (OLS) estimation method, clustered by year and economic sector, and the Generalized Least Squares (GSL) estimator. The results point to the presence of conservatism when disclosing involvement in investigations of corruption crimes in Brazil. This behavior was less intense in firms effectively mentioned in these events. These results highlight the relevance of studies aimed at clarifying the connections between corruption and accounting reports, enabling the development of measures to curb corruption in the business environment.

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“…A Modern Enterprise System requires the separation of government functions from enterprise management. However, because local governments have a substantial amount of scarce resources, including land, bank loans, government contracts, and initial public offerings, which greatly affects the incentives and behaviors of various players in the region [8], both state-owned firms and non-state-owned firms tend to establish a good relationship with local governments via the equity and political connections to obtain the scarce resources. At the same time, local governments also require firms to help achieve local government goals, such as economic development, employment, and air quality.…”

Section: The Relationship Between Government and Firms In Chinamentioning

confidence: 99%

Air Quality Uncertainty and Earnings Management

Yao

Liu

2020

Sustainability

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We empirically examine the influence of rising political costs from the air quality uncertainty caused by regional air quality fluctuations on firms′ earnings management. The results indicate that when air quality uncertainty increases, firms tend to increase their degree of earnings management and are more willing to carry out downward earnings management. We also find that the relationship is more obvious in the bottom-ten cities according to air quality ranking. Further evidence shows that the effect is most pronounced for less market-oriented regions, northern regions, manufacturing industries and firms with high asset-liability ratio and high media attention. In addition, we find that air quality uncertainty affects earnings management through the intermediary effect of government environmental investment. We explore the influence of the external environmental uncertainty on earnings management decisions, and the results have significant reference value for improving firms’ earnings quality level.

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Corruption culture and accounting quality

Cited by 37 publications

References 68 publications

Consequences of local social norms: A review of the literature in accounting, finance, and corporate governance

Consequences of local social norms: A review of the literature in accounting, finance, and corporate governance

Timely loss recognition in Brazilian firms under corruption investigation

Air Quality Uncertainty and Earnings Management

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