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How do institutional investors influence accounting conservatism in China?

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  • Dan Zhang
  • Shiguang Ma
  • Xiaofei Pan

Abstract

Using a sample of Chinese listed firms from 2003 to 2015, we find that domestic mutual funds have negative effects while qualified foreign institutional investors (QFIIs) have positive effects on firm accounting conservatism. These effects become stronger when their ownerships are closer to that of the controlling shareholder, respectively. Furthermore, these results are more pronounced when institutional investors are more able to monitor managers and compete with controlling shareholders. Our findings suggest that the influence of institutional investors on accounting conservatism in China is subject to their identities as well as the control contestability against the controlling shareholders.

Suggested Citation

  • Dan Zhang & Shiguang Ma & Xiaofei Pan, 2023. "How do institutional investors influence accounting conservatism in China?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(S2), pages 2719-2754, June.
    • Handle: RePEc:bla:acctfi:v:63:y:2023:i:s2:p:2719-2754
    DOI: 10.1111/acfi.12994
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