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Confucian culture and accounting conservatism: evidence from China

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  • Xingqiang Du
  • Yuhui Xie
  • Shaojuan Lai
  • Quan Zeng

Abstract

This study investigates the influence of Confucian culture on accounting conservatism. Using a sample of Chinese-listed firms during the period of 2001–2017, our findings reveal that Confucian culture, measured as the number of Confucian temples (schools) within a specific radius around a firm, is significantly positively associated with accounting conservatism, suggesting that Confucian ethics and culture promote accounting conservatism. Moreover, litigation risk attenuates the positive effect of Confucian culture on accounting conservatism. The above findings are robust to a variety of sensitivity tests using alternative proxies for Confucian culture and accounting conservatism. Furthermore, our main conclusions still stand after using the instrumental variable (IV) two-stage regression method and the differential model approach to address the endogeneity issue. Lastly, the positive effect of Confucian culture on accounting conservatism is only valid for non-BIG4-audited firms, firms with lower managerial ownership and firms in highly competitive industries.

Suggested Citation

  • Xingqiang Du & Yuhui Xie & Shaojuan Lai & Quan Zeng, 2022. "Confucian culture and accounting conservatism: evidence from China," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 10(4), pages 549-589, October.
    • Handle: RePEc:taf:rcjaxx:v:10:y:2022:i:4:p:549-589
    DOI: 10.1080/21697213.2022.2143688
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    Cited by:

    1. Guanwei Liu, 2024. "Accounting Conservatism and Corporate Governance: An Examination of the Influence on Financial Reporting Quality and Stakeholder Trust," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 2158-2175, March.
    2. Chen, Pengyu & Chu, Zhongzhu & Zhao, Miao, 2024. "The Road to corporate sustainability: The importance of artificial intelligence," Technology in Society, Elsevier, vol. 76(C).

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