Accounting Quality and Alliance Contract Provisions

• 成果类型: Article
• 署名作者: Ge, Rui; Ji, Yuan; Louis, Henock
• 署名单位: Shenzhen University; Audencia; University of Texas System; University of Texas Arlington; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2017-0623
• 发表日期: 2021
• 页码: 261-287
• 关键词: strategic alliances; earnings quality; INTERNAL CONTROL; RELATIONAL GOVERNANCE; corporate suppliers; mechanisms evidence; dispute-resolution; FORMAL CONTRACTS; trust; cost

摘要

We show that the number of governance provisions imposed on a firm by a strategic alliance partner decreases with the firm's accounting quality. This effect is weaker when the firm has greater bargaining power and stronger when the alliance project is riskier. Moreover, the net benefit to an alliance partner of imposing an additional governance provision on its counterparty apparently increases when the counterparty accounting quality is low, resulting in an enhancement of the partner's market value and a reduction in its bankruptcy risk. Furthermore, alliance partners adopt fewer provisions based on their counterparties' accounting numbers when the counterparties' accounting quality is poor.