Political uncertainty, institutions and accounting conservatism: evidence from the provincial leader turnover in China

Bu, Danlu; Zhang, Chenyu; Lin, Philip T.; Hu, Fang

doi:10.1080/02102412.2019.1657551

Cited by 12 publications

(13 citation statements)

References 54 publications

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“…The first expanded regression model, which assesses the relationship between accounting conservatism and uncertainty based on types of strategy, showed a positive correlation between the variables. This means that by increasing uncertainty, the level of conservatism in accounting and financial reporting increases, which is consistent with previous studies (Bu et al , 2019; Dai and Ngo, 2020; Kanagaretnam et al , 2014; Lobo and Zhou, 2006). Further, the positive relationship between the level of conservatism and prospector strategy is in line with Hsieh et al (2019) study.…”

Section: Discussionsupporting

confidence: 92%

“…Wang (2019) showed that firms reporting risk factor disclosure with a tone of greater uncertainty apply less conservative accounting in their reports. Bu et al (2019) observed that political uncertainty is considerably related to reducing conservatism in accounting. Hsieh et al (2019) examined whether conservatism in accounting and financial reporting can be interpreted as a logical answer to uncertainty.…”

Section: Literature Reviewmentioning

confidence: 99%

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Accounting conservatism and uncertainty in business environments; using financial data of listed companies in the Tehran stock exchange

Hejranijamil

Shekarkhah

2020

AJAR

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PurposeApplying conservatism to the preparation of financial statements has been considered not only as a natural mechanism to protect the interests of the stockholders but also as a practical way to assist managers to deal with uncertainty in business environments. This study aimed to determine if increasing uncertainty can lead to raising the level of conservatism used in preparing financial statements. The result of the study could provide a better understanding of the factors that influence the level of applying conservative methods in accounting and financial reporting.Design/methodology/approachThe model introduced by Basu (1997) was used to measure accounting conservatism. Business strategy and alertness were considered as two proxies for classifying companies according to their level of uncertainty. By adding each proxy of uncertainty to the model and using the financial data of 183 companies for five years (from 2013 to 2018), the multiple regression models were estimated through EViews. It was assumed that inert companies and those with prospector strategy face a higher level of uncertainty. Consequently, they were expected to report their financial status conservatively.FindingsFindings revealed that companies, which adopted a prospector strategy, applied more conservative methods in their financial reports. This indicated that facing wider uncertainty results in reporting more conservatively, which could not be said about inert companies.Originality/valueThe current research is the first research undertaken in a developing country such as Iran, and the study's results may benefit other developing countries.

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Section: Discussionsupporting

confidence: 92%

Section: Literature Reviewmentioning

confidence: 99%

Accounting conservatism and uncertainty in business environments; using financial data of listed companies in the Tehran stock exchange

Hejranijamil

Shekarkhah

2020

AJAR

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“…Dai and Ngo found that political uncertainty leads to greater information asymmetry among the contracting parties to the firm, resulting in an increased demand for accounting conservatism [ 24 ]. Bu et al found that political uncertainty can lead to a significant decrease in accounting conservatism [ 25 ].…”

Section: Literature Review Theoretical Analysis and Research Hypothesismentioning

confidence: 99%

The Impact of the “Belt and Road” Initiative on Accounting Conservatism of Energy‐Intensive Enterprises under the Low‐Carbon Background

Liu

Gao

Anwar

2022

Journal of Environmental and Public Health

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In recent years, the “Belt and Road” Initiative (BRI) has paid more and more attention to practicing the concept of green development. The concept of green development in the BRI will help promote the active response to climate change in the regions along the route and maintain global ecological security and is of great significance to the green transformation and development of energy-intensive enterprises. Using company-level data from China over the 2011–2020 period, we provide a comprehensive analysis of the impact of the BRI on energy-intensive enterprise accounting conservatism. We find that BRI has decreased the energy-intensive enterprise accounting conservatism, and this result continues to hold after a series of robustness tests. We also examine the effect of the RBI on accounting conservatism across company types and ages and find that the BRI is beneficial to energy-intensive state-owned enterprises (SOEs) and young companies. Furthermore, analysis reveals that BRI changes the accounting conservatism of energy-intensive enterprises mainly through debt financing, tax burden, and legal environment channels.

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“…While in developed markets empirical evidence is consistent with a positive impact of managerial ability on earnings quality, there is scarce evidence in the context of emerging markets, particularly small markets, and the direction of the association between managerial ability and earnings quality is an empirical quandary. This is at least partly due to the high level of uncertainty in emerging markets (Bu et al, 2020), which can affect the relationship between managerial ability and earnings quality. El Ghoul et al (2020) suggest that economic policy uncertainty (i.e., uncertainty about future government actions) may influence financial reporting choices through its impact on investors' attention to firmspecific information.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Managerial ability, earnings quality and ISIS: evidence from Iraq

Bazrafshan

Makarem

Hesarzadeh

et al. 2021

IJOEM

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PurposeThis study investigates the association between managerial ability and earnings quality in firms listed on the Iraq Stock Exchange and how the emergence of the Islamic State of Iraq and Syria (ISIS) influences the association.Design/methodology/approachThis study uses a sample of firms listed on the Iraq Stock Exchange over the period 2012–2018. Managerial ability is quantified using data envelopment analysis, and earnings quality is measured by earnings restatement, earnings persistence, accruals quality and earnings response coefficient. Panel regression analysis is used to examine the research hypotheses.FindingsThe findings indicate that managerial ability positively affects earnings quality of Iraqi firms and that ISIS weakens the relationship between managerial ability and earnings quality. These findings are robust to the alternative measures of managerial ability, as well as to various approaches used to address endogeneity including propensity-score matching and a difference-in-differences analysis.Originality/valueThis study provides insight into the impact of managerial ability on earnings quality in an under-studied emerging market. Furthermore, this study broadens the existing literature about the financial consequences of a modern terrorist group, ISIS.

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Political uncertainty, institutions and accounting conservatism: evidence from the provincial leader turnover in China

Cited by 12 publications

References 54 publications

Accounting conservatism and uncertainty in business environments; using financial data of listed companies in the Tehran stock exchange

Accounting conservatism and uncertainty in business environments; using financial data of listed companies in the Tehran stock exchange

The Impact of the “Belt and Road” Initiative on Accounting Conservatism of Energy‐Intensive Enterprises under the Low‐Carbon Background

Managerial ability, earnings quality and ISIS: evidence from Iraq

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