Shu Lin, Lizhong Hao and Shengqiang Liu
The purpose of this study is to examine the audit efficiency and timeliness of Big 4 auditors relative to non-Big 4 auditors, where audit efficiency is defined as the auditor’s…
Abstract
Purpose
The purpose of this study is to examine the audit efficiency and timeliness of Big 4 auditors relative to non-Big 4 auditors, where audit efficiency is defined as the auditor’s ability to conduct an audit more quickly or with fewer resources while still achieving effective outcomes.
Design/methodology/approach
The authors use audit report lags (also referred to as audit delay) as a proxy for audit timeliness and efficiency, controlling for audit quality and audit fees (audit input). The authors use a propensity-score matching (PSM) approach to construct a pseudorandom sample in which each non-Big 4 client is matched with a similar Big 4 client based on their characteristics and audit quality, to control for potential endogeneity related to self-selection bias in this setting.
Findings
The authors find that non-Big 4 auditors are associated with shorter audit delays than Big 4 auditors. Additional analysis of the matched sample reveals that non-Big 4 auditors charge lower fees than Big 4 auditors do after controlling for the Big 4 premium. These findings do not support the notion that Big 4 auditors conduct audits more efficiently than non-Big 4 auditors do.
Originality/value
These results could be of interest to the management of public firms, audit committees, investors and regulators; provide valuable insights into the performance of audit firms in varying client environments; and contribute to a better understanding of audit timeliness and efficiency.
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Qiang Cao, Nanwei Hu and Lizhong Hao
The purpose of this paper is to examine whether client industry importance affects auditor independence.
Abstract
Purpose
The purpose of this paper is to examine whether client industry importance affects auditor independence.
Design/methodology/approach
This study analyzes audit firm merger data from China Stock Market and Accounting Research and uses a difference-in-difference model to find whether client industry importance is associated with auditor independence. This study uses discretionary accruals and propensity to issue modified audit opinions as proxies for auditor independence.
Findings
Results show that the greater the decline in client industry importance, the more significant the increase in auditor independence. In addition, the magnitude of decline in client overall importance is also positively associated with the extent of increase in auditor independence; however, this result disappears after controlling for client industry importance.
Research limitations/implications
The authors acknowledge that this study has limitations. First, audit firm mergers provide a unique research setting. However, the findings of this study in such setting may not be generalizable to other situations. Second, this study has a limited sample size because of data availability, which could impact the robustness of the results.
Originality/value
Results from this study are important because investors and regulators have increasing concerns over auditor independence since the Enron scandal. To the best of the authors’ knowledge, this study is the first to examine the impact of client industry importance on auditor independence and in a unique setting of audit firm merger to separate auditor independence from auditor competence, and hence controlling for self-selection bias. Results of this study provide evidence that client industry importance has significant influence over auditor independence.
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Tingli Liu, Ying Jiang and Lizhong Hao
Although short selling has been legalized in China for nearly 10 years, due to the existence of short-sale constraints, its impact on corporate governance of listed companies…
Abstract
Purpose
Although short selling has been legalized in China for nearly 10 years, due to the existence of short-sale constraints, its impact on corporate governance of listed companies remains unclear. This paper aims to examine the impact of short-sale refinancing on earnings quality after the short-selling constraints have been released. The authors further explore whether this impact is subject to the nature of property rights and shareholding structures.
Design/methodology/approach
This study is based on a sample of A-share firms in China for the period 2014–2016. The authors use earnings response coefficients (ERC) as a proxy for earnings quality. To empirically examine this issue, a matching sample is generated by using propensity score matching method (PSM) to reduce sample selection bias.
Findings
This study provides evidence that deregulation of short selling has positive external effect on corporate governance. The results indicate that the potential short-selling opportunities can effectively suppress earnings manipulation and improve earnings quality. However, the impact of short selling on earnings quality varies for companies with different nature of property rights and shareholding structure.
Originality/value
To the best of the authors’ knowledge, this is the first study to investigate the relationship between short selling and earnings quality in the unique setting of short-sale refinancing. This study provides new evidence on the impact of short selling at the micro level and calls for further deregulation of short selling. In addition, this study contributes to existing studies on short-sale refinancing by examining an emerging market.
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Lizhong Hao, Joseph H. Zhang and Jing (Bob) Fang
The paper aims to examine whether or not firms voluntarily filing in XBRL (eXtensible Business Reporting Language) format enjoy a lower cost of capital. XBRL, or “interactive…
Abstract
Purpose
The paper aims to examine whether or not firms voluntarily filing in XBRL (eXtensible Business Reporting Language) format enjoy a lower cost of capital. XBRL, or “interactive data” as the US Securities and Exchange Commission refers to it, is an information format that enables electronic exchange of standardized business and financial information.
Design/methodology/approach
The authors investigate whether voluntary adoption of XBRL impacts cost of equity capital using a sample of US firms participated in the SEC Voluntary Filer Program, each matched with a pair of non-XBRL filers (matched by two-digit SIC code, same fiscal yearend, and close total assets in the same year). The authors measure firm-specific cost of equity capital at the fiscal year of last voluntary XBRL filing, using the PEG ratio model proposed by Easton, Gode and Mohanram, and Hou et al.
Findings
The results show that cost of equity capital is significantly and negatively associated with XBRL adoption. The magnitude of the coefficient on XBRL suggests that firms voluntarily adopting XBRL are associated with an average reduction in cost of equity capital by 17-20 basis points (conditional on different cost of capital measures).
Research limitations/implications
There is a research limitation due to the sample of voluntary XBRL adopters as of self-selection bias. The authors address this issue by using the Heckman two-stage regression procedure.
Practical implications
The study provides evidence on the economic consequence of XBRL adoption in that it benefits shareholders by reducing the cost of equity capital. The evidence should provide regulators like the SEC more incentives to mandate the XBRL standard and motivate companies to adopt the standard as well.
Originality/value
By showing that voluntary XBRL adopters are associated with lower cost of equity capital, the study provides timely and relevant empirical evidence to the economic consequences of voluntary adoption of XBRL. It also contributes to the limited empirical research on the economic consequences of new information technology and highlights the importance of institutional regulation in shaping the outcomes of new financial reporting format.
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Lizhong Duan, Gu-man Duan, Qi Lu, Jun Duan, Li-yun XIE and Yuan MU
The purpose of this paper is to improve the development of the Chinese traditional medicine (included the ethnic minority's medicine in China), it can raise the level of health…
Abstract
Purpose
The purpose of this paper is to improve the development of the Chinese traditional medicine (included the ethnic minority's medicine in China), it can raise the level of health for people, carry forward the culture of our nation, accelerate the economic development, promote social harmony and is very significant.
Design/methodology/approach
In this paper, the factor which influences the development of the Chinese traditional medicine in these areas of China is analysed by the method called the grey relational analysis and grey clustering analysis.
Findings
It is known that the comparative situation of each otherof the development of the Chinese traditional medicine in these areas. The causation is analysed.
Practical implications
The behavioural mechanisms information which is effected by the traditional Chinese medicine (included ethnic minority medicine) is incomplete. Its inherent meaning is not clear. So it is reasonable to use the method called the grey relational analysis grey clustering analysis to study. Analysing the causes and giving countermeasures according to the results could propose some suggestions for the further development of Chinese medicine (including the national medicine) industry.
Originality/value
The grey system theory was applied in medical management. The application of study results, the development of the Chinese traditional medicine (included the ethnic minority's medicine in China) is improved.
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Hangyu Liu, Saina Liu, Lizhong Duan, Chongxu Zhang, Lili Yin, Yinran Zhang and Qi Lu
The purpose of this paper is to explore the rationality differences of cognition of non-technical medical services in different groups, and to provide countermeasures for…
Abstract
Purpose
The purpose of this paper is to explore the rationality differences of cognition of non-technical medical services in different groups, and to provide countermeasures for improving non-technical medical services.
Design/methodology/approach
Literature analysis, expert interviews, questionnaire survey and frequency analysis were taken to reveal the influencing factors of non-technical medical services. Grey correlation methods were taken to compare the rationality differences of cognition of non-technical medical services by analysis influencing factors’ scores marked by different groups.
Findings
A total of 12 influencing factors of non-technical medical services were obtained, including “doctor’s working career”, “doctor’s strict implementation of medical treatment norms and medication guidelines”, “doctor’s service awareness”, etc. And rationality differences of cognition of non-technical medical services were confirmed as follows: the doctors’ cognition was more reasonable compared with patients; the women’s cognition was more reasonable compared with men; the lower aged groups’ cognition was more reasonable compared with higher aged groups; and people with doctoral degree had a less reasonable cognition compared with others.
Originality/value
The authors systematically discussed the cognition differences of non-technical medical services among different people, and provided some countermeasures reasonably.
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Xiangquan Wu, Qin Lian, Dichen Li and Zhongmin Jin
This study aims to develop a multi-material stereolithography (MMSL) technique to directly fabricate a biphasic osteochondral scaffold.
Abstract
Purpose
This study aims to develop a multi-material stereolithography (MMSL) technique to directly fabricate a biphasic osteochondral scaffold.
Design/methodology/approach
A bespoke prototype MMSL system was developed based on a bottom-up mask projection approach. The system was controlled by a multi-material fabrication algorithm with minimum number of switching cycles during fabrication. A variable-power light source was used to fabricate materials with significantly different curing characteristics. The light-curable poly(ethylene glycol) diacrylate (PEGDA) hydrogel and beta-tricalcium phosphate (β-TCP) ceramic suspension were used for fabricating the biphasic osteochondral scaffold.
Findings
The bonding strength of the multi-material interface is shown to be mainly affected by the type of photopolymer, rather than the switching of the materials in MMSL. Lighting power densities of 2.64 and 14.98 mW/cm2 were used for curing the PEGDA hydrogel and the ß-TCP ceramic suspension, respectively. A biphasic osteochondral scaffold with complex interface was successfully fabricated.
Originality/value
This study proposes a potential technical method (MMSL) for manufacturing a complex biphasic osteochondral scaffold composing a PEGDA hydrogel/ß-TCP ceramic composite in a time-efficient and precise manner. The designed bone-cartilage scaffold interface and the surface of the cartilage scaffold can be precisely manufactured.