The role of corporate governance in convergence with IFRS: evidence from China
Purpose – The purpose of this paper is to examine the important role played by corporate governance in de facto International Financial Reporting Standards (IFRS) convergence, and to provide empirical evidence that audit quality mediates the degree of IFRS convergence. Design/methodology/approach – The paper develops a model showing the role of corporate governance in converging national accounting standards with the IFRS, and empirically tests the model using a sample of Chinese listed companies with B-shares. Both analysis of variance and multiple regressions are employed to test the hypotheses. Findings – Effective internal corporate governance helps companies to be more aligned with IFRS and thus provide high quality financial information. Furthermore, audit quality as an external governance factor mediates the relationship between internal corporate governance and IFRS convergence. Research limitations/implications – The paper extends research findings, as shown in the literature, by showing the role of corporate governance in the IFRS convergence, especially the mediating effect of audit quality. In addition to accounting standards, global convergence of auditing standards and corporate governance is imperative if de facto convergence of accounting standards is to be achieved. Originality/value – The paper highlights the effect of corporate governance and the interaction between internal and external corporate governance in achieving IFRS convergence, which has been largely ignored in the literature. Based on the results, the paper proposes an explanation for the mixed results shown in the literature.
Volume (Year): 20 (2012)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.emeraldinsight.com|
|Order Information:|| Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK|
Web: http://emeraldgrouppublishing.com/products/journals/journals.htm?id=ijaim Email:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Xie, Biao & Davidson, Wallace III & DaDalt, Peter J., 2003. "Earnings management and corporate governance: the role of the board and the audit committee," Journal of Corporate Finance, Elsevier, vol. 9(3), pages 295-316, June.
- Fama, Eugene F & Jensen, Michael C, 1983. "Agency Problems and Residual Claims," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 327-49, June.
- Juan Manuel Garcia Lara & Beatriz Garcia Osma & Fernando Penalva, 2007. "Board of Directors' Characteristics and Conditional Accounting Conservatism: Spanish Evidence," European Accounting Review, Taylor & Francis Journals, vol. 16(4), pages 727-755.
- Kanagaretnam, Kiridaran & Lobo, Gerald J. & Whalen, Dennis J., 2007. "Does good corporate governance reduce information asymmetry around quarterly earnings announcements?," Journal of Accounting and Public Policy, Elsevier, vol. 26(4), pages 497-522.
- Hichem Khlif & Mohsen Souissi, 2010. "The determinants of corporate disclosure: a meta-analysis," International Journal of Accounting and Information Management, Emerald Group Publishing, vol. 18(3), pages 198-219, September.
- Gillan, Stuart L., 2006. "Recent Developments in Corporate Governance: An Overview," Journal of Corporate Finance, Elsevier, vol. 12(3), pages 381-402, June.
- Chen, Charles J. P. & Jaggi, Bikki, 2000. "Association between independent non-executive directors, family control and financial disclosures in Hong Kong," Journal of Accounting and Public Policy, Elsevier, vol. 19(4-5), pages 285-310.
- Peng, Songlan & Tondkar, Rasoul H. & van der Laan Smith, Joyce & Harless, David W., 2008. "Does Convergence of Accounting Standards Lead to the Convergence of Accounting Practices?: A Study from China," The International Journal of Accounting, Elsevier, vol. 43(4), pages 448-468, December.
- Cornett, Marcia Millon & Marcus, Alan J. & Tehranian, Hassan, 2008. "Corporate governance and pay-for-performance: The impact of earnings management," Journal of Financial Economics, Elsevier, vol. 87(2), pages 357-373, February.
- Pamela Kent & Jenny Stewart, 2008. "Corporate governance and disclosures on the transition to International Financial Reporting Standards," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(4), pages 649-671.
- Nobes, Christopher W., 2009. "Observations on measuring the differences between domestic accounting standards and IAS," Journal of Accounting and Public Policy, Elsevier, vol. 28(2), pages 148-153.
- Beatriz Garcia Osma, 2008. "Board Independence and Real Earnings Management: The Case of R&D Expenditure," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(2), pages 116-131, 03.
- Jean Jinghan Chen & Peng Cheng, 2007. "Corporate Governance and the Harmonisation of Chinese Accounting Practices with IFRS Practices," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 284-293, 03.
- Mary E. Barth & Wayne R. Landsman & Mark H. Lang, 2008. "International Accounting Standards and Accounting Quality," Journal of Accounting Research, Wiley Blackwell, vol. 46(3), pages 467-498, 06.
- Jay Dahya & Orlin Dimitrov & John J. McConnell, 2009. "Does Board Independence Matter in Companies with a Controlling Shareholder?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 21(1), pages 67-78.
- C.S. Agnes Cheng & Austin Reitenga, 2009. "Characteristics of institutional investors and discretionary accruals," International Journal of Accounting and Information Management, Emerald Group Publishing, vol. 17(1), pages 5-26, March.
- S. Lim & Z. Matolcsy & D. Chow, 2007. "The Association between Board Composition and Different Types of Voluntary Disclosure," European Accounting Review, Taylor & Francis Journals, vol. 16(3), pages 555-583.
- Philip Brown & Wendy Beekes & Peter Verhoeven, 2011. "Corporate governance, accounting and finance: A review," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 51(1), pages 96-172, 03.
- Christie, Andrew A., 1987. "On cross-sectional analysis in accounting research," Journal of Accounting and Economics, Elsevier, vol. 9(3), pages 231-258, December.
When requesting a correction, please mention this item's handle: RePEc:eme:ijaipp:v:20:y:2012:i:2:p:171-168. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Lister)
If references are entirely missing, you can add them using this form.