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Article
Publication date: 3 January 2017

Fengchun Tang, Lijun Ruan and Ling Yang

The practice of management having control over auditor appointment and compensation is believed to be a fundamental cause for the lack of auditor independence. While researchers…

1452

Abstract

Purpose

The practice of management having control over auditor appointment and compensation is believed to be a fundamental cause for the lack of auditor independence. While researchers propose alternative auditor appointment procedures to improve auditor independence, there are a few settings that allow researchers to examine alternative auditor appointment procedures such as regulator designation of auditors. This research aims to investigate the effects of regulator designation of auditors and litigation risk on auditor independence in a Chinese setting

Design/methodology/approach

This study adopts a 2 × 2 between-subjects experimental design. A total of 110 surveys were sent out and 81 were collected from eastern China.

Findings

The results of an experiment with 81 Chinese auditors indicate that regulator designation of auditors improves auditor independence. In particular, auditors designated by the regulator feel less pressure from the audited company, perceive themselves to be more independent and are more willing to challenge the audited company’s aggressive financial reporting compared with those directly hired by the company. In addition, litigation risk moderates the effect of regulator designation of auditors on auditor independence such that regulator designation of auditors has a stronger impact on auditor independence when the litigation risk is low.

Research limitations/implications

This study is also subject to limitations. First, regulator designation of auditors in China was examined. While regulator designation of auditors seems to improve auditor independence in the Chinese context, it is unclear if the same results will be observed in other economies, as China is a unique setting. For example, the majority of listed companies in China are under the control of government-related agencies. Consequently, the government has significant power in influencing auditor appointment policy. In contrast, the majority of other economies are more market-oriented with less government influence. Future studies in other markets will further enrich the understanding on regulator designation of auditors. Second, only regulator designation of auditors for state-owned enterprises was examined. It is unclear how regulator designation of auditors would affect non-state-owned enterprises. Moreover, future research could investigate the designation of auditors in other forms such as the designation of auditors by investors. Third, auditor appointment procedure may affect perceived risk of loss of client which in turn influences auditor independence. Future research could further investigate the mechanism through which regulator designation of auditors affect auditor independence.

Originality/value

Results of an experiment with 81 Chinese auditors show that regulator designation of auditors can improve auditor independence. In a decision context where auditors must provide judgments relating to a proposed audit adjustment that is quantitatively material and will affect the client’s ability to meet debt covenants, auditors designated by the State-Owned Assets Management Bureaus are more resistant to management pressure and are less willing to accept the management’s aggressive financial reporting practice than those directly hired by the company.

Details

Managerial Auditing Journal, vol. 32 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

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Article
Publication date: 19 June 2020

Ling Yang, Lijun Ruan and Fengchun Tang

The purpose of this study is to present the results of an experiment that examines the effects of client management’s increased disclosure of related party transactions (RPTs) on…

431

Abstract

Purpose

The purpose of this study is to present the results of an experiment that examines the effects of client management’s increased disclosure of related party transactions (RPTs) on auditors’ judgments of financial reports that contain RPTs.

Design/methodology/approach

This study used a 2 × 2 between-subjects experiment to investigate auditors’ judgments in response to questionable RPTs in a Chinese context.

Findings

The results show that the auditor participants assessed a lower likelihood that the client’s financial statements were intentionally misstated and that they were less likely to request additional evidence when the client management chose to disclose more, as opposed to less, detailed RPT information in their disclosure. Moreover, there was a significant interaction between disclosure level and client incentive to manipulate earnings on the likelihood of the auditor requesting additional evidence.

Practical implications

This study should be of interest to regulatory agencies that have expressed concerns over auditing practices related to RPTs.

Originality/value

The findings from this study help to provide a more in-depth understanding of disclosure literature by investigating voluntary RPT disclosure and the moderation role of clients’ incentives to manipulate earnings.

Details

International Journal of Accounting & Information Management, vol. 28 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

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Book part
Publication date: 23 August 2022

Jiening Ruan and Lijun Jin

This qualitative descriptive study seeks to understand how the reading motivation of three Chinese students from different reading achievement groups evolved as they moved from…

Abstract

This qualitative descriptive study seeks to understand how the reading motivation of three Chinese students from different reading achievement groups evolved as they moved from the fourth to the sixth grade. This study is informed both by Tierney's framework of global meaning making and Chinese relational epistemology. We recruited these students from a representative K-9 public school located in a metropolitan city in China and conducted two semistructured interviews, the first in fourth grade with a follow-up in sixth grade, during which we asked the same three students to share their stories about their reading experiences and what motivated them to read. Using the constant comparison method and thematic analysis, we analyzed the data and identified critical themes related to the factors that shaped the students' attitudes and motivation toward reading and literacy. This study uncovers several unique patterns of motivation development among Chinese early adolescent students in different achievement groups. Our findings also resulted in a new relational model of reading motivation development within the Chinese sociocultural context.

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Article
Publication date: 17 February 2020

Na Li, Lijun Fu and Kecheng Jiang

Gas evolution within lithium-ion batteries (LIBs) gives rise to safety concerns that question their applicability. The gas evolution is not only the result but also the inducement…

241

Abstract

Purpose

Gas evolution within lithium-ion batteries (LIBs) gives rise to safety concerns that question their applicability. The gas evolution is not only the result but also the inducement of performance deterioration of LIBs. In this paper, the growth characteristics and dynamic behavior of gas bubble on the electrode surface are studied, and the interference mechanism of gas evolution on Li-ion diffusion or Li-ion conduction within LIBs is discussed and validated by the numerical simulations.

Design/methodology/approach

First, the mathematical models and simulation method are established. The growth and flow of gas bubble in the serpentine channel on electrode surface, which results from the gas-liquid flow and the effects of surface tension, is modeled by using the multi-phase Navier-Stokes and the volume of fluid method. Integrating Butler–Volmer and Fick’s law, the mathematical model of ions transport in the electrochemical cell is set-up. Second, the motion of gas bubble is tracked, and the variations of bubble shape and characteristic parameters with time are obtained by the computed fluid dynamics (CFD) method.

Findings

Based on the CFD results, the battery models and electrochemical simulations are carried out to analyze the ionic transport characteristics. The results show that the microstructural morphology such as the serpentine channel shape and size on electrode surface are important aspects for the gas bubble growth and the local ionic transport. Li ions significantly accumulate at one side of the gas obstacle, hindering the ionic diffusion normally. When the gas bubble blocks the electrolyte, the passage of ions from the positive to the negative is interrupted, and the open circuit zone of the electrochemical cell is formed.

Originality/value

The gas evolution within LIBs is not only a result but also an inducement of its performance deterioration. The primary issues in this study are the growth characteristics and dynamic behavior of gas bubble on the electrode surface, providing the knowledge for the interference mechanism of gas evolution on ionic transport and ultimately leads to significant increase of battery resistance.

Details

Engineering Computations, vol. 37 no. 4
Type: Research Article
ISSN: 0264-4401

Keywords

Available. Content available
Book part
Publication date: 23 August 2022

Free Access. Free Access

Abstract

Details

Global Meaning Making
Type: Book
ISBN: 978-1-80117-933-1

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