Does confucianism influence corporate earnings management?

Yu, Wei; Zhu, Keying; Huang, Huiqin; Teklay, Belaynesh

doi:10.1016/j.ribaf.2021.101390

Cited by 23 publications

(21 citation statements)

References 60 publications

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“…Furthermore, traffic regulation pressure, as a formal institution, intensifies the positive effect of Confucianism on the MLMRA, implying that Confucianism's positive impact on accident risk governance is asymmetric among provinces with different regulation development levels. Our findings are inconsistent with some studies showing that Confucianism and formal system are substitutes in affecting corporate behaviors (S. Chen et al., 2020; Yu et al., 2021), but echoes the arguments and provides empirical evidence to the conjectures that complementary effect exists between the cultural norm and formal institution (Greif, 1994; North, 1990).…”

Section: Discussioncontrasting

confidence: 99%

“…The vertical axis denotes the marginal effect of Confucianism on the MLMRA, and the horizontal axis denotes traffic regulation pressure (centered). behaviors (S. Chen et al, 2020;Yu et al, 2021), but echoes the arguments and provides empirical evidence to the conjectures that complementary effect exists between the cultural norm and formal institution (Greif, 1994;North, 1990).…”

Section: F I G U R Esupporting

confidence: 52%

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Do Confucian values and working experience matter? The impact of provincial governors’ characteristics on the management level of major road accidents in China

2023

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Upper echelons theory (UET) proposes that organizational outcomes are directly affected by the experiences, personalities, and values of individuals who occupy critical managerial roles within an organization. Using the lens of UET, this study investigates how governors’ characteristics affect the management level of major road accidents (MLMRA). The empirical work is based on fixed effects regression models that are applied to Chinese provincial panel data from 2008 to 2017. This study uncovers that the MLMRA is associated with governors’ tenure, central background, and Confucian values. We further document that the effect of Confucianism on the MLMRA is stronger when traffic regulation pressure is high. This study has the potential to advance our understanding of the impact of leaders’ characteristics on organizational outcomes in the public sector.

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Section: Discussioncontrasting

confidence: 99%

Section: F I G U R Esupporting

confidence: 52%

Do Confucian values and working experience matter? The impact of provincial governors’ characteristics on the management level of major road accidents in China

2023

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“…However, high-quality internal control might effectively reduce short-sighted decisions ( Cheng et al, 2013 ) and promote better social responsibility ( Bierbaum et al, 2019 ), thereby increasing the scale of corporate environmental investment. Meanwhile, corporate culture is closely related to the quality of internal control ( Yu et al, 2021 ). Therefore, the quality of a firm’s internal control might transmit the positive impact of corporate competing culture onto its environmental investment.…”

Section: Resultsmentioning

confidence: 99%

Corporate Competing Culture and Environmental Investment

et al. 2022

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Using Chinese listed companies as research setting, this paper constructs a measure of corporate competing culture through textual analysis on firms’ management discussion and analysis (MD&A) disclosures, and examines the impact of corporate competing culture on environmental investment. The results show that competing culture has a significant and positive impact on firms’ environmental investment, and the results remain robust to a battery of robustness tests. Moreover, the mediating analysis indicates that competing culture promotes corporate environmental investment through enhancing firms’ internal control quality. Furthermore, the heterogeneity results show that the positive impact of corporate competing culture on environmental investment is more pronounced in firms with larger size, stronger corporate governance, in high-polluting industry, and located in less developed regions. Our findings shed light on the importance of corporate competing culture and provide practical implications for corporate sustainable development.

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“…The literature verifies this point (Bushman et al, 2004; Cohen et al, 2008). At the same time, in a strong legal environment and mature market, enterprises are motivated to disclose more information and improve information quality to alleviate information asymmetries, thereby reducing financing costs (Yu et al, 2021). There is a substitution effect between the two governance mechanisms of higher external marketization and external auditing (Li et al, 2020).…”

Section: Theoretical Analysis and Research Hypothesismentioning

confidence: 99%

“…There is a substitution effect between the two governance mechanisms of higher external marketization and external auditing (Li et al, 2020). The higher marketization limits the company's earnings management behaviour (Yu et al, 2021). Therefore, the impact of the new policy on the behaviour of external auditors is more obvious in areas with low marketization (Chen et al, 2020).…”

Section: Theoretical Analysis and Research Hypothesismentioning

confidence: 99%

Audit report information improvement and earnings management

Qian

Zhao

et al. 2022

Int. J Fin Econ

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Increasing the disclosure of key audit matters (KAMs) has been an important change in audit reports in recent years. After the implementation of this policy, what changes have taken place in the behaviour of auditors after the implementation of this policy? What impact has it had on the audit report? A series of problems deserve systematic analysis and empirical testing. This paper examines the relationship between the communication of KAMs and earnings management. We examined quasi‐natural experimental data shaped by new auditing standards issued by the Ministry of Finance of China on 23 December 2016. The new auditing standards have been implemented in phases for the listed companies. We find that (1) communicating KAMs in audit reports restrains the auditor's motivational reasoning behaviour by triggering rationality constraints and improves the auditor's professional scepticism, thus improving audit quality and significantly reducing the company's accrued earnings management level. (2) The influence of communicating KAMs on earnings management is more significant for sampled firms with high external financing dependence and low marketization, revealing its supplementary role in the existing corporate governance mechanism. The findings of this paper enrich existing research on KAMs and supplement important empirical evidence from the Chinese market for assessing the effects of audit reporting reforms worldwide.

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Does confucianism influence corporate earnings management?

Cited by 23 publications

References 60 publications

Do Confucian values and working experience matter? The impact of provincial governors’ characteristics on the management level of major road accidents in China

Do Confucian values and working experience matter? The impact of provincial governors’ characteristics on the management level of major road accidents in China

Corporate Competing Culture and Environmental Investment

Audit report information improvement and earnings management

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