China's anti‐corruption campaign and financial reporting quality

We examine the impact of China’s anti-corruption campaign on firm-level financial reporting quality (FRQ). As an important component of the anti-corruption campaign, in October 2013, “Rule 18” was issued to prohibit party and government officials from serving as directors for publicly listed firms....

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Main Authors: HOPE, Ole-Kristian, YUE, Heng, ZHONG, Qinlin
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2020
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Online Access:https://ink.library.smu.edu.sg/soa_research/1818
https://ink.library.smu.edu.sg/context/soa_research/article/2845/viewcontent/Hope_2019_Chinas_anticorruption_campaign_and_AV.pdf
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spelling sg-smu-ink.soa_research-28452021-09-23T01:40:46Z China's anti‐corruption campaign and financial reporting quality HOPE, Ole-Kristian YUE, Heng ZHONG, Qinlin We examine the impact of China’s anti-corruption campaign on firm-level financial reporting quality (FRQ). As an important component of the anti-corruption campaign, in October 2013, “Rule 18” was issued to prohibit party and government officials from serving as directors for publicly listed firms. The regulation led to a large number of official directors resigning from their roles as directors involuntarily. As such, Rule 18 has effectively weakened, if not fullydiscontinued, the political connections of the firms that previously hired officials as directors. Our empirical analyses employ a difference-in-differences research design with firm fixed effects and PSM to examine the pre- and post- period FRQ around the enactment of Rule 18. We find that, compared to propensity-score-matched control firms, FRQ of firms with resigned officialdirector increases after Rule 18. Further evidence suggests that the impact is stronger when firms are located in regions with more developed financial markets and in regions with higher judiciary efficiency. We also find that the effect is more pronounced when firms are non-state-owned, received preferential credits, and face refinancing pressure. 2020-06-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1818 info:doi/10.1111/1911-3846.12557 https://ink.library.smu.edu.sg/context/soa_research/article/2845/viewcontent/Hope_2019_Chinas_anticorruption_campaign_and_AV.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Anti-Corruption Campaign Financial Reporting Quality Political Connections China Quasi Experiment Accounting Asian Studies Finance and Financial Management
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Anti-Corruption Campaign
Financial Reporting Quality
Political Connections
China
Quasi Experiment
Accounting
Asian Studies
Finance and Financial Management
spellingShingle Anti-Corruption Campaign
Financial Reporting Quality
Political Connections
China
Quasi Experiment
Accounting
Asian Studies
Finance and Financial Management
HOPE, Ole-Kristian
YUE, Heng
ZHONG, Qinlin
China's anti‐corruption campaign and financial reporting quality
description We examine the impact of China’s anti-corruption campaign on firm-level financial reporting quality (FRQ). As an important component of the anti-corruption campaign, in October 2013, “Rule 18” was issued to prohibit party and government officials from serving as directors for publicly listed firms. The regulation led to a large number of official directors resigning from their roles as directors involuntarily. As such, Rule 18 has effectively weakened, if not fullydiscontinued, the political connections of the firms that previously hired officials as directors. Our empirical analyses employ a difference-in-differences research design with firm fixed effects and PSM to examine the pre- and post- period FRQ around the enactment of Rule 18. We find that, compared to propensity-score-matched control firms, FRQ of firms with resigned officialdirector increases after Rule 18. Further evidence suggests that the impact is stronger when firms are located in regions with more developed financial markets and in regions with higher judiciary efficiency. We also find that the effect is more pronounced when firms are non-state-owned, received preferential credits, and face refinancing pressure.
format text
author HOPE, Ole-Kristian
YUE, Heng
ZHONG, Qinlin
author_facet HOPE, Ole-Kristian
YUE, Heng
ZHONG, Qinlin
author_sort HOPE, Ole-Kristian
title China's anti‐corruption campaign and financial reporting quality
title_short China's anti‐corruption campaign and financial reporting quality
title_full China's anti‐corruption campaign and financial reporting quality
title_fullStr China's anti‐corruption campaign and financial reporting quality
title_full_unstemmed China's anti‐corruption campaign and financial reporting quality
title_sort china's anti‐corruption campaign and financial reporting quality
publisher Institutional Knowledge at Singapore Management University
publishDate 2020
url https://ink.library.smu.edu.sg/soa_research/1818
https://ink.library.smu.edu.sg/context/soa_research/article/2845/viewcontent/Hope_2019_Chinas_anticorruption_campaign_and_AV.pdf
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