Local Political Corruption and Financial Reporting Conservatism

• 成果类型: Article
• 署名作者: Chang, Xin; Li, Shanmin; Liu, Chun; Sun, Liang; Zhang, Wenrui
• 署名单位: Nanyang Technological University; Sun Yat Sen University; Sun Yat Sen University; Colorado State University System; Colorado State University Fort Collins
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2021-0061
• 发表日期: 2025
• 页码: 45-70
• 关键词: earnings management; asymmetric timeliness; corporate; FIRMS; COMPETITION; GOVERNMENT; accruals

摘要

We document that firms in more politically corrupt regions of China adopt more conservative accounting. The relation between local political corruption and accounting conservatism weakens after China's anticorruption campaign launched in 2012 and in firms with a lower risk of expropriation by corrupt officials, stronger incentives to report earnings aggressively, or greater gains from corruption. Further analysis shows that accounting conservatism and alternative corporate strategies complement each other in shielding firms against corrupt officials' expropriation of corporate resources. Our study provides novel evidence about an accounting approach used by firms in response to perceived political costs.