In order to examine the effects of avoiding reputation damage by investor relations management under certain corporate governance structures and mechanisms, samples of 1120 listed companies are used to research the in...In order to examine the effects of avoiding reputation damage by investor relations management under certain corporate governance structures and mechanisms, samples of 1120 listed companies are used to research the influence on financial restatements by corporate governance. Then the moderating effects of investor relations management on financial restatements are analyzed. The result is that the more dispersed the equity, the higher the probability of financial restatements will be (This includes the government-controlled companies). Also the higher the proportion of independent directors and the higher the level of investor relations management, the lower the probability of financial restatements will be. Furthermore, as a moderating variable, investor relations management can eliminate the negative effects of corporate governance, enhance the effect of independent directors and reduce the probability of financial restatement.展开更多
This study examines the relationship between earnings quality and insider trading. Using downward earnings restatement firms to identify low-quality earnings, we find that insiders outsell non-earnings restatement fir...This study examines the relationship between earnings quality and insider trading. Using downward earnings restatement firms to identify low-quality earnings, we find that insiders outsell non-earnings restatement firms of their holdings over the period from two years before to one year after the beginning of the restatement period. In addition, the amounts of restatement are positively associated with the excess insider selling. We also provide evidence that excess insider selling predicts excessive earnings manipulations that eventually lead to GAAP （Generally Accepted Accounting Principles） violation. Some researchers argued that insider trading can be an efficient way of transferring insider information to the capital markets. Our evidence of intensive insider selling in the context of earnings restatements implies that insiders disregard their fiduciary duties to the shareholders during the periods of deteriorating financial performance.展开更多
This study uses restatements to reveal the poor quality of past accounting information reported within China's capital market.We show that up to a quarter of listed firms in China's Mainland explicitly admitte...This study uses restatements to reveal the poor quality of past accounting information reported within China's capital market.We show that up to a quarter of listed firms in China's Mainland explicitly admitted the poor quality of their financial information by restating their previous financial reports between 1999 and 2005.Many of these firms managed their earnings mainly via below-the-line items to avoid losses and promote survival,rather than to support refinancing goals.Such poor-quality financial reporting is more likely among firms that have weaker profitability and a shareholder base that is state-controlled,with diffused ownership and a relatively low proportion of shares held by institutional investors.Furthermore,we find the market to be relatively insensitive to such admissions.Investors' reactions capture only the earnings information of the current reported year,rather than also reflecting the concurrently revealed correction of past financial reporting.However,the equity market does not completely ignore the earnings information.Investors' reliance on earnings is merely low relative to the mature US market.These findings demonstrate that accounting credibility in China has low value;providing poor-quality financial information bears little cost because various market mechanisms fail to deter such behavior.Nevertheless,regulators' ongoing efforts to enhance the quality of financial information and disclosure among listed firms are still fruitful.The frequency of restatements decreased over our sample period,which reinforces the current regulatory prospects and strategies for further improving China's capital markets.展开更多
This study investigates the relationship between earnings management and financial statements frauds.We examine how earnings management practices;done in the two years before the fraud,impact the likelihood of fraud o...This study investigates the relationship between earnings management and financial statements frauds.We examine how earnings management practices;done in the two years before the fraud,impact the likelihood of fraud occurrence.Moreover,we introduce a new measure for the fraud intensity.Using a sample of 70 fraud and 70 no-fraud firms,we find that firms committing fraud of higher intensity have managed earnings in the two years before the fraud occurrence.This paper contributes to the literature about fraud antecedents because it is the first study measuring the relationship between earnings management and the intensity of the fraud,and it can be also useful for practitioners,because using the analysis of earnings management practices,analysts can foresee and prevent financial statements frauds.展开更多
This paper explores the positive governance effects of the Procuratorate’s Public Interest Litigation System in China,which combines the powers of litigationand administrative supervision,on the quality of informatio...This paper explores the positive governance effects of the Procuratorate’s Public Interest Litigation System in China,which combines the powers of litigationand administrative supervision,on the quality of information disclosure bylisted state-owned enterprises.We report several findings.(1)The likelihoodthat listed state-owned enterprises would issue financial restatements and participate in financial fraud decreased significantly in areas selected for pilotimplementation.(2)The governance effect is stronger in regulated industriesthan in unregulated industries.After the pilot implementation,the agencycosts decreased,and the increase in legal litigation risks related to false statements faced by enterprises played a deterrent effect.(3)The significance of theabove results is stronger when a company’s external and internal governanceare weaker.This study provides both new evidence of the effectiveness of theintegrated governance mechanism and inspiration for future efforts to widelyimplement this mechanism in the capital market.展开更多
基金The Key Project of the National Natural Science Foundation of China (No.70532001)Project of Humanities and Social Sciences Research Base of Ministry of Education (No.06JJD630008)
文摘In order to examine the effects of avoiding reputation damage by investor relations management under certain corporate governance structures and mechanisms, samples of 1120 listed companies are used to research the influence on financial restatements by corporate governance. Then the moderating effects of investor relations management on financial restatements are analyzed. The result is that the more dispersed the equity, the higher the probability of financial restatements will be (This includes the government-controlled companies). Also the higher the proportion of independent directors and the higher the level of investor relations management, the lower the probability of financial restatements will be. Furthermore, as a moderating variable, investor relations management can eliminate the negative effects of corporate governance, enhance the effect of independent directors and reduce the probability of financial restatement.
文摘This study examines the relationship between earnings quality and insider trading. Using downward earnings restatement firms to identify low-quality earnings, we find that insiders outsell non-earnings restatement firms of their holdings over the period from two years before to one year after the beginning of the restatement period. In addition, the amounts of restatement are positively associated with the excess insider selling. We also provide evidence that excess insider selling predicts excessive earnings manipulations that eventually lead to GAAP （Generally Accepted Accounting Principles） violation. Some researchers argued that insider trading can be an efficient way of transferring insider information to the capital markets. Our evidence of intensive insider selling in the context of earnings restatements implies that insiders disregard their fiduciary duties to the shareholders during the periods of deteriorating financial performance.
基金China's National Science Foundation(Project Number:70872107)for their financial support of this work
文摘This study uses restatements to reveal the poor quality of past accounting information reported within China's capital market.We show that up to a quarter of listed firms in China's Mainland explicitly admitted the poor quality of their financial information by restating their previous financial reports between 1999 and 2005.Many of these firms managed their earnings mainly via below-the-line items to avoid losses and promote survival,rather than to support refinancing goals.Such poor-quality financial reporting is more likely among firms that have weaker profitability and a shareholder base that is state-controlled,with diffused ownership and a relatively low proportion of shares held by institutional investors.Furthermore,we find the market to be relatively insensitive to such admissions.Investors' reactions capture only the earnings information of the current reported year,rather than also reflecting the concurrently revealed correction of past financial reporting.However,the equity market does not completely ignore the earnings information.Investors' reliance on earnings is merely low relative to the mature US market.These findings demonstrate that accounting credibility in China has low value;providing poor-quality financial information bears little cost because various market mechanisms fail to deter such behavior.Nevertheless,regulators' ongoing efforts to enhance the quality of financial information and disclosure among listed firms are still fruitful.The frequency of restatements decreased over our sample period,which reinforces the current regulatory prospects and strategies for further improving China's capital markets.
文摘This study investigates the relationship between earnings management and financial statements frauds.We examine how earnings management practices;done in the two years before the fraud,impact the likelihood of fraud occurrence.Moreover,we introduce a new measure for the fraud intensity.Using a sample of 70 fraud and 70 no-fraud firms,we find that firms committing fraud of higher intensity have managed earnings in the two years before the fraud occurrence.This paper contributes to the literature about fraud antecedents because it is the first study measuring the relationship between earnings management and the intensity of the fraud,and it can be also useful for practitioners,because using the analysis of earnings management practices,analysts can foresee and prevent financial statements frauds.
基金We appreciate the comments from seminar participants at the Deloitte Touche Tohmatsu-Fudan Accounting Forum(2022).We are also grateful for the helpful comments and suggestions from Zhifeng Tong.The authors acknowledge financial support from the National Natural Science Foundation of China(grant numbers:72272132,71872048)the Natural Science Foundation of Guangdong Province(grant number:2024A1515011061)the Funding by Science and Technology Projects in Guangzhou(project number:2024A04J3765).Professional English language editing support provided by AsiaEdit(asiaedit.com).
文摘This paper explores the positive governance effects of the Procuratorate’s Public Interest Litigation System in China,which combines the powers of litigationand administrative supervision,on the quality of information disclosure bylisted state-owned enterprises.We report several findings.(1)The likelihoodthat listed state-owned enterprises would issue financial restatements and participate in financial fraud decreased significantly in areas selected for pilotimplementation.(2)The governance effect is stronger in regulated industriesthan in unregulated industries.After the pilot implementation,the agencycosts decreased,and the increase in legal litigation risks related to false statements faced by enterprises played a deterrent effect.(3)The significance of theabove results is stronger when a company’s external and internal governanceare weaker.This study provides both new evidence of the effectiveness of theintegrated governance mechanism and inspiration for future efforts to widelyimplement this mechanism in the capital market.
