On Informal Institutions and Accounting Behavior

ISBN-13: 9789813344648 / Angielski / Miękka / 2022 / 516 str.

Xingqiang Du

Spis treści

1 Informal Institution and Accounting: Introduction and Outline

1.1 The Aim of this Book

1.2 Core Concepts

1.2.1 Accounting Behavior

1.2.2 Formal Institutions and Informal Institutions

1.3 The Coexistence between Formal and Informal Institutions: A Diagram

1.4 The Relation between Formal Institutions and Informal Institutions

1.5 Layout and Content of This Book

1.6 The Potential Theoretical Contributions

1.7 Extended Readings

1.8 Conclusion

Reference

2 Auditor-CEO Surname Sharing and Financial Misstatement

2.1 Introduction

2.2 Institutional Background, Literature Review, and Hypotheses Development

2.2.1 Surname and Its Influence in Contemporary China

2.2.2 The Chinese Audit Market and Auditor Independence

2.2.3 Literature Review

2.2.4Auditor-CEO Surname Sharing and Financial Misstatement

2.2.5 Rare Surname versus Common Surname

2.3 Research Design

2.3.1Empirical Model Specification for Hypothesis 1

2.3.2 Empirical Model Specification for Hypothesis 2

2.3.3 Sample

2.3.4 Data Source

2.4 Results

2.4.1 Descriptive Statistics

2.4.2 Pearson Correlation Analysis

2.4.3 Regression Results of Hypothesis 1

2.4.4 Regression Results of Hypothesis 2

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2.4.5 Robustness Checks Using the Number of Signing Auditors Sharing the Same Surname with the

CEO

2.4.6 Robustness Checks Using Other Measures of Financial Misstatement

2.4.7 Robustness Checks Using the Expanded Samples

2.5 Endogeneity and Additional Tests

2.5.1 Time-Series Tests Using an Exogenous Regulatory Event

2.5.2 Subsample Tests Using an Exogenous Regulatory Event

2.5.3 Additional Tests Using both Time and Individual Effects under an Exogenous Regulatory Event

2.5.4 Endogeneity Tests Using the Propensity Score Matching Approach

2.5.5 The Effects of Auditor-CEO Surname Sharing on MAO and Abnormal Audit Fees

2.5.6 Cross-Sectional Analysis Considering Institutional Environment

2.5.7 Additional Tests Considering Auditor-CEO Hometown Relationship and School Ties

2.5.8 Additional Tests Based on the Integrated Variables Combining Surname Sharing and Hometown

Relationship

2.6 Conclusion, Managerial Implications, and Limitations

Reference

3 CEO-Director Surname Connectedness and Corporate Misconduct

3.1 Introduction

3.2 Institutional Background, Literature Review, Hypotheses Development

3.2.1 Surname in the Chinese Context

3.2.2 Prior Literature on Surname Distribution and Surname Connectedness

3.2.3 Prior Literature on Corporate Misconduct

3.2.4 The Influence of CEO-Director Surname Connectedness on Corporate Misconduct

3.2.5 The Moderating Effect of the popularity of the CEO’s surname

3.3 Research Design

3.3.1 Empirical Model Specification for H1

3.3.2 Empirical Model Specification for H2

3.3.3 Research Sample Identification

3.3.4 Data Source

3.4 Empirical Findings

3.4.1 Descriptive Statistics

3.4.2 Pearson Correlation Analysis

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3.4.3Multivariate Test of H1 and H2 (Main Findings)

3.4.4 Robustness Checks Using the Ratio of CEO-Director Surname Connectedness

3.4.5Robustness Checks Using the Number of Corporate Misconduct

3.5 Endogeneity and Additional Tests

3.5.1 Endogeneity Tests Using the Propensity Score Matching Approach

3.5.2 Additional Tests

3.6 Conclusions, Managerial Implications, and Limitations

Reference

4 CEO-Auditor Hometown Complex and Pre-IPO Earnings Management

4.1 Introduction

4.2 Institutional Background, Literature Review, and Hypotheses Development

4.2.1 Hometown Complex in China

4.2.2 Literature Review

4.2.3 Hometown Complex and Pre-IPO Earnings Management (Hypothesis 1)

4.2.4 The Moderating Effect of Non-Hometown-Worked CEO-Auditor Combination (Hypothesis 2)

4.3 Research Design

4.3.1 Empirical Model Specification for Hypothesis 1

4.3.2 Empirical Model Specification for Hypothesis 2

4.3.3 Hometown Complex between the CEO and the Signing Auditors

4.3.4 Pre-IPO Earnings Management

4.3.5 Sample

4.3.6 Data Source

4.4 Empirical Results

4.4.1 Descriptive Statistics

4.4.2 Pearson Correlation Analysis

4.4.3 Regression Results of Hypothesis 1

4.4.4 Regression Results of Hypothesis 2

4.4.5 Robustness Checks Using Other Measures of CEO-Auditor Hometown Complex

4.4.6 Robustness Checks Using Other Measures of Pre-IPO Discretionary Accruals

4.5 The Endogeneity Discussions and Additional Tests

4.5.1 The Endogeneity Tests Using the Propensity Score Matching (PSM) Approach

4.5.2 The Endogeneity Tests Using the Traditionally Matched Sample

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4.5.3 Additional Tests Using Yearly pre-IPO Discretionary Accruals

4.6 Conclusions, Managerial Implications, and Limitations

4.6.1 Managerial Implications

4.6.2 Limitations and Future Research

Reference

5 Does Honorific Usage in Audit Reports Signal the Impairment of Auditor Independence? Evidence from

Chinese Special Treatment Firms

5.1 Introduction

5.2 Institutional Background, Literature Review, and Hypotheses Development

5.2.1 China’s Special Treatment Regulations

5.2.2 Honorifics and Real Names in Audit Reports

5.2.3 Literature Review

5.2.4 The Effect of Honorific Usage in Audit Reports of Chinese ST Firms and Audit Independence

(Hypotheses 1and 2)

5.2.5 The Asymmetric Impacts between Habitual and Discretionary Honorifics on Auditor

Independence (Hypotheses 3 and 4)

5.3 Research Design

5.3.1 Model Specification for H1

5.3.2 Model Specification for H2

5.3.3 Model Specification for H3

5.3.4 Model Specification for H4

5.3.5 Identification of Sample

5.3.6 Data Source

5.4 Empirical Results

5.4.1 Descriptive Statistics and t/z Tests

5.4.2 Pearson Correlation Analysis

5.4.3 Multivariate Tests of H1 and H2

5.4.4 Multivariate Tests of H3 and H4

5.4.5 Robustness Checks Using the Degree of Listing Status Improvement

5.4.6 Robustness Checks Using Other Measures of Audit Quality

5.4.7 Endogeneity Tests Using the Propensity Score Matching Approach

5.5 Conclusion

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Reference

6 Religious Entrepreneurs and Corporate R&D Investment

6.1 Introduction

6.2 Institutional Background, Theory, and Hypotheses Development

6.2.1 Religion and Religious Belief in Contemporary China

6.2.2 A Framework about the Impacts of Entrepreneur-Specific Characteristics on Corporate Decisions

6.2.3 The Inhibiting Effect of an Entrepreneur’s Religious Belief on Risk-Taking

6.2.4 The Competitive Influence of Different Religious Beliefs on R&D Investment

6.2.5 The Moderating Effect of Political Connections on the Relation between Religious Belief and

R&D

6.3 Methodology

6.3.1 Research Setting

6.3.2 Data

6.3.3 Sample

6.3.4 R&D (Dependent variable)

6.3.5 Religious Belief (Independent Variable)

6.3.6 Political Connections (Moderating Variable)

6.3.7 Control Variables

6.4 Results

6.4.1 Descriptive Statistics, Univariate Tests, and Pearson Correlation Analysis

6.4.2 Main Findings

6.4.3 Robustness Checks using Alternative Measures of R&D Investment

6.4.4 The Endogeneity Issue between Religious Belief and R&D

6.4.5 Additional Tests of the Association between Religion Belief and R&D Considering Firm Size

6.4.6 Additional Tests with the Distinction between Start-ups and Non-Start-Ups

6.5 Discussion

6.5.1 Theoretical Contributions

6.5.2 Managerial Implications

6.5.3 Limitations and Future Directions

6.6 Conclusion

Reference

7 Religion and Corporate Diversification: The Case of Tourism Industry

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7.1 Introduction

7.2 Literature Review, Institutional Background and Hypotheses Development

7.2.1 Literature Review on Corporate Diversification

7.2.2 Literature Review on Religion and Tourism

7.2.3 Institutional Background

7.2.4 Religion and Corporate Diversification into Tourism Industry (H1)

7.2.5 The Moderating Role of Internal Control (H2)

7.3 Empirical Model and the Measures of religion

7.3.1 Empirical Model Specification for H1

7.3.2 Empirical Model Specification for H2

7.3.3 Geographic-Proximity-Based Religion Variables and Their Rationale

7.4 Sample, Descriptive Statistics, and Empirical Results

7.4.1 Sample

7.4.2 Data Sources

7.4.3 Descriptive Statistics

7.4.4 Pearson Correlation Analysis

7.4.5 Multivariate Test of H1

7.5 Robustness Checks

7.5.1 Robustness Checks Using Different Religion variables

7.5.2 Robustness Checks Using the Likelihood of Corporate Diversification into Tourism Industry

7.5.3 Using the Two-Stage OLS-Tobit Regression Procedure to Control for the Endogeneity

7.5.4 Using Different Samples to Control for the Potential Endogeneity

7.6 Discussion

7.6.1 Theoretical Contributions

7.6.2 Managerial Implications

7.6.3 Limitation and Future Research

7.7 Conclusions

Reference

8 Auditor-Client Religiosity Convergence and Financial Misstatement

8.1 Introduction

8.2 Institutional Background, Literature Review, and Hypotheses Development

8.2.1 The Increasingly Religious Influence in Contemporary Chinese Society

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8.2.2 Auditor Independence in the Chinese Audit Market

8.2.3 Literature Review

8.2.4 The Effect of Auditor-Client Religiosity Convergence on Financial Misstatement in China

8.3 Research Design

8.3.1 The Measure of Auditor-Client Religiosity Convergence

8.3.2 Discussions on the Rationality of Auditor-Client Religiosity Convergence

8.3.3 Baseline Model Specification for H1

8.3.4 Model Specification for H2

8.3.5 Sample

8.3.6 Data Sources

8.4 Empirical Results

8.4.1 Descriptive Statistics

8.4.2 Pearson Correlation Analysis

8.4.3 Multivariate Test of H1

8.4.4 The Incremental Explanatory Power of Auditor-Client Religiosity Convergence

8.4.5 Multivariate Test of H2

8.4.6 Robustness Checks Using Alternative Measures of Financial Misstatement

8.4.7 Robustness Checks Using Alternative Measures of Auditor-Client Religiosity Convergence

8.5. Endogeneity and Additional Tests

8.5.1 Endogeneity Tests Using the Change Model Approach

8.5.2 Endogeneity Tests Using a Quasi-Natural Experiment Setting of Urban Redevelopment in

Chinese Metropolitan Cities

8.5.3 Endogeneity Tests Using the Instrumental Variable (IV) Two-Stage OLS-Logistic Regression

8.5.4 Additional Tests Including Auditor-Client Geographic Proximity and Audit Firm Fixed Effects

8.5.5 Additional Tests of H1 and H2 after Distinguishing Buddhism from Taoism

8.5.6 Additional Tests Excluding Firms in Ethnic Minority Autonomous Regions

8.6 Conclusions

Reference

9 Political Connections, Law Enforcement, and Corporate Environmental Performance

9.1 Introduction

9.2 Institutional Background, Literature Review, and Hypotheses Development

9.2.1 Literature Review

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9.2.2 Environmental Conservation and Political Embeddedness in Chinese Family Firms

9.2.3 Hypotheses Development

9.3 Model Specifications and Variables

9.3.1 Multivariate Test Model for Hypothesis 1

9.3.2 Multivariate Test Model for Hypothesis 2

9.3.3 Corporate Environmental Performance

9.3.4 Political Connections

9.4 Sample Selection and Descriptive Statistics

9.4.1 Sample Selection

9.4.2 Data Source

9.4.3 Descriptive Statistics

9.4.4 Pearson Correlation Analysis

9.5 Empirical Results

9.5.1 Multivariate Tests of Hypothesis 1

9.5.2 Multivariate Tests of Hypothesis 2

9.6 Robustness Checks

9.6.1 Robustness Checks Using the Rank of Political Connections

9.6.2 Robustness Checks Using Alternative Dependent Variables

9.7 Discussion on the Potential Endogeneity between Political Connections and CEP

9.8 Discussions

9.8.1 Theoretical Contributions

9.8.2 Managerial Implications

9.8.3 Limitations and Future Research

9.9 Conclusion

Reference

10 The Preference of Signing Auditors toward Spicy Cuisine and Financial Reporting Quality

10.1 Introduction

10.2 Background, Literature Review, and Hypotheses Development

10.2.1 Diversified Cuisines in China

10.2.2 Literature on Food (Cuisine) Preference and Personality

10.2.3 Financial Reporting Quality and Auditor Independence in the Chinese Stock Market

10.2.4 The Preference of Signing Auditor toward Spicy Cuisines and Financial Reporting Quality

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10.2.5 The Moderating Effect of Ownership Nature

10.3 Research Design

10.3.1 Sample

10.3.2 Data Source

10.3.3 Financial Reporting Quality (Discretionary Accruals)

10.3.4 The Spicy Index of Signing Auditors

10.3.5 Model Specification for Hypothesis 1

10.3.6 Model Specification for Hypothesis 2

10.4 Results

10.4.1 Descriptive Statistics and Pearson Correlation Analysis

10.4.2 Regression Results of Hypothesis 1

10.4.3 Regression Results of Hypothesis 2

10.4.4 Robustness Checks of Hypotheses 1 and 2 Using Other Measures of Spicy Indexes

10.4.5 Robustness Checks of Hypotheses 1 and 2 Using Other Measures of Discretionary Accruals

10.5 Endogeneity and Additional Tests

10.5.1 Endogeneity Tests

10.5.2 Additional Tests Using the Reduced Sample Only Including Signing Auditors Born Before

1978

10.5.3 Additional Tests Considering Economic Development in Native Places of Signing Auditors

10.5.4 Other Additional Tests

10.6 Conclusions, Managerial Implications, Limitations, and Future Directions

Reference

11 One Thorn of Experience, Corruption Atmosphere, and Corporate Philanthropy

11.1 Introduction

11.2 Literature Review, Theory, and Hypotheses Development

11.2.1 The Cultural Revolution and Its Influence on the Chinese Society

11.2.2 Literature Review

11.2.3 The Cultural Revolution Experiences of Directors and Corporate Philanthropy

11.2.4 The Moderating Effect of Provincial Corruption Atmosphere

11.3 Methodology

11.3.1 Sample

11.3.2 Data

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11.3.3 Corporate Philanthropy (Dependent Variable)

11.3.4 The Cultural Revolution Experiences of Directors (Independent Variable)

11.3.5 Provincial Corruption Atmosphere (Moderating Variable)

11.3.6 Control Variables

11.4 Results

11.4.1 Descriptive Statistics and Pearson Correlation Analysis

11.4.2 Main Findings

11.4.3 Robustness Checks Using Alternative Measures of Corporate Philanthropy

11.4.4 Robustness Checks Using Alternative Measures of the Cultural Revolution Experiences of

Directors

11.4.5 The Endogeneity Issue

11.4.6 Additional Tests Excluding the Influence of Other Big Events in China

11.5 Discussions

11.5.1 Theoretical Contributions

11.5.2 Managerial Implications

11.5.3 Limitations and Future Research

11.6 Conclusions

Reference

12 Conclusions, Managerial Implication, and Future Directions

12.1 Main Conclusions

12.2 Managerial Implications

12.3 Limitations and Future Directions

Reference

O autorze

Xingqiang Du is Full Professor of Accounting at Xiamen University (2004–), Head of Accounting Department, Editorial Members at the Journal of Business Ethics (FT50 Journal) and Editor-in-Chief of Contemporary Accounting Research (in Chinese; CSSCI). His research focuses on how religion, Confucianism and different cultural dimensions affect accounting and auditing behavior, corporate governance and CSR. His studies have been supported by more than 10 scientific research projects including key NSFC project in China, and he has awarded the First Prize of Excellent Achievements in Humanities and Social Sciences of Chinese Universities by the Ministry of Education and the First Prize of Excellent Achievements in Social Sciences by Fujian Province. He has published more than 20 papers in Journal of Business Ethics, Journal of Accounting and Public Policy, International Journal of Accounting, Management and Organization Review, Asia Pacific Journal of Management, etc.

Blurb

This book focuses on the Chinese context to investigate how informal institutions (Confucian culture and its dimensions, religion, political connections) in China affect accounting behaviors. This book tries to show that cultural influence and religious impacts in China are not trivial and increasingly important, and specifically, informal institutions have its bright and dark sides with regard to its effects on accounting behaviors. This book aims to investigate whether and how informal institutions (Confucian culture and its dimensions, religion, political connections) affect micro-level accounting behaviors, including but not limited to audit quality, financial misstatement, R&D, corporate misconducts, corporate philanthropy and corporate environmental responsibility.

This book provides graduate students, scholars and practitioners in the fields of accounting, business administration and religion with an in-depth understanding about how informal institutions as a set of social norms affect micro-level accounting behaviors.

First, this book is the first to focus on the Chinese context and investigate the effects of informal institutions on accounting behavior.

Second, this book documents systematic evidence to show the bright and dark sides with regard to the relation between informal institutions and accounting behavior in China.

Lastly, this book reveals informal institutions can serve as an important mechanism to affect accounting behaviors.