Qingliang Tang, Huifa Chen and Zhijun Lin
The purpose of this study is to measure the financial reporting quality of 38 main countries (regions) in the world from 2000 to 2014.
Abstract
Purpose
The purpose of this study is to measure the financial reporting quality of 38 main countries (regions) in the world from 2000 to 2014.
Design/methodology/approach
This paper uses six accounting and auditing indicators to construct a comprehensive index for the measurement of country-level financial reporting quality. To test the validity of the methodology, the index to test institutional impacts on national financial reporting quality is used.
Findings
It was found that the results are consistent with the predictions and previous studies. The evidence suggests that the quality measure in this paper is innovative and appropriate and can provide a useful tool for researchers who are concerned with financial reporting quality at the country level.
Originality/value
The study is the first in the literature to use both accounting and auditing data to construct financial reporting quality indicators. The study should help international investors assess investment risks in foreign financial markets so as to make an informed decision. In addition, the diversity of financial reporting practices documented in the paper should prompt market regulators, accounting standard setters and professional accounting bodies to reinforce the efforts on international convergence of accounting and financial reporting standards and practices.
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Keywords
Neal Arthur, Huifa Chen and Qingliang Tang
The purpose of this study is to investigate whether a country’s ownership concentration affects the financial reporting quality in a cross-country setting.
Abstract
Purpose
The purpose of this study is to investigate whether a country’s ownership concentration affects the financial reporting quality in a cross-country setting.
Design/methodology/approach
This paper uses six accounting and auditing indicators to construct a comprehensive index to measure the country-level financial reporting quality.
Findings
The authors find a non-linear nature of the relationship between the national financial reporting quality and national ownership structure. Specifically, the relation is negative in a relatively spread ownership structure with no controlling shareholders, implying the entrenchment effects dominate. When ownership is highly concentrated, particularly with controlling shareholders whose interest is aligned with that of the firm, the relation turns to positive and alignment effects dominate.
Originality/value
The study is an important extension of prior research examining the financial reporting quality effect of ownership concentration. It enhances the understanding of the role of ownership concentration in determining a country’s financial reporting quality and has potential important policy implications for countries’ reformers and regulators who are concerned with the transparency of financial reporting and the quality of corporate governance.
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Huifa Chen, Yuan George Shan, Qingliang Tang and Junru Zhang
This study aims to investigate why companies use the internal price of carbon (IPC) for carbon management.
Abstract
Purpose
This study aims to investigate why companies use the internal price of carbon (IPC) for carbon management.
Design/methodology/approach
The authors adopt sustainable transition management theory to design the research and explain the findings of empirical models. The sample includes companies that participated in the Carbon Disclosure Project (CDP) questionnaire survey, derived from 37 countries and regions for the period 2015–2018.
Findings
The results first reveal that transition management facilitates an upward adoption trend annually during the study period. Second, the authors find that the proxies for transition management are all correlated with the adoption of the IPC in the predicted direction. Third, the authors identify spatial patterns and driving factors for adoption of the IPC.
Originality/value
This study provides additional insight beyond the limited prior literature in this area. In particular, the findings regarding the influence of physical environment on climate-related decisions have not been documented in extant literature. IPC is expected to interact with and complement external price of carbon for climate change governance. Thus, the exploring results of the paper fill an important gap and pave the way for future study to examine emerging issues in the burgeoning field of carbon accounting for climate change.