Toward the Effect of Audit Quality on Earnings Management——Empirical Evidence from Manufacturing Enterprises Listed in Shanghai Stock Market

Nowadays, earnings management is a hot issue, but most of the researches focus on the incentives of earnings management and few of them refer to the effect of audit quality on earnings management. In this study, we directly examine the effect of external audit quality on earnings management by using discretionary accruals. We find that the discretionary accruals of non-dual audit companies are significantly greater than those of dual audit companies. We also find that clients of non-First Ten auditors intend to report greater discretionary accruals than those of First Ten auditors.     

Mutual Fund＇s Behavior on Stock Liquidity： Empirical Results from Chinese Security Market

This paper studies the relationship between fund investment and market liquidity by using Chinese security market data. The results show that, among several measures of market liquidity, the indexes based on volume, such as turnover and market depth, have a deeper impact on fund investment decision. Furthermore, the relationship between security liquidity and fund investment varies when market status is taken into account. On the other hand, fund investments have a negative effect on security liquidity measured by market width, while have a positive effect on other liquidity measures. The authors attribute the results to herding behavior of fund investment.     

The Relationship between the Firm Size and the Quantity of Accountants Employed by the Firm： An Analysis of the 436 Listed Firms in the Chinese Shenzhen Stock Exchange

There are 9.56 million accountants in China, who are working in different size firms and nonprofit organizations. The objective of this article is to examine the quantitative relationship between the firm size and the quantity of accountants working for the firm. In this paper, the employees, sales revenues, and total assets in a firm are employed to measure firm size. The authors collect and analyze the data of 436 listed firms from the Chinese Shenzhen Stock Exchange. The result of this study indicates there is a positive relationship between the firm size and the quantity of accountants employed by the firm. The study also establishes the multiple regression equation, which can be used to predict the quantity of accountants of listed firms. And it provides a way to predict the quantity of accountants of legal organizations.     

Intraday Volatility Spillover between the Shanghai and Hong Kong Stock Markets—Evidence from A+H Shares after the Launch of the Shanghai-Hong Kong Stock Connect

Using minute data of eligible A+H stocks under the Shanghai-Hong Kong Stock Connect (SHHKSC), we investigate the volatility spillover between the Shanghai and Hong Kong stock markets based on a generalized autoregressive conditional heteroskedasticity-X (GARCH-X) model with four exogenous variables, namely, volatilities of the corresponding stocks on the other market, volatilities of the indexes of both stock markets, and volatilities of the correlated stocks, which are selected using the dynamic conditional correlation model and bootstrap approach. Results show that after the launch of the SHHKSC, volatility spillovers are significant in both directions almost all the time, and the volatility spillover between the two stock markets tends to be larger when bidirectional capital flows under the SHHKSC increase or when important financial events occur. We also analyze the influences of the volatilities of correlated stocks and industries on the volatility spillover and volatilities of A+H stocks. The bidirectional volatility spillovers between Shanghai and Hong Kong stock markets do not change qualitatively after incorporating the volatilities of correlated stocks and industries in the GARCH-X model. Moreover, the average volatilities of the correlated stocks are shown to have significant influences on the volatilities of individual A+H stocks, and the influences increase when the local stock market shows a sharp rise or fall. Compared with the market indexes, the correlated stocks could be regarded as a more important and indispensable factor for individual A+H stocks’ volatilities modeling, which may carry more information than the industry.     

Good Corporate Governance （GCG） Mechanism and Audit Delay： An Empirical Study on Companies Listed on the Indonesia Stock Exchange （IDX） in the Period of 2009-2011

Audit delay is a delay in reporting audit to the Indonesia Stock Exchange （IDX） after the allotted time of 90 days after closing the book. Delay to publish audit report will affect the value of infromation, causing a bad sign for the company. As good corporate governance （GCG） is one way to solve the different interests, practices, and culture, companies implement GCG in an attempt to get more value. This study aims to measure the impact of corporate governance mechanisms on audit delay in companies listed on the IDX in the period of 2009-2011. Variables of GCG mechanism consist of institutional ownership, number of audit committee members, and the percentage of independent commissioners. Purposive sampling method is used in sample selection procedure. Samples comprise 42 companies listed on the IDX. The simultaneous test results show that all the variables have a significant influence on audit delay. By the partial test, number of audit committee members has significantly affected audit delay, while institutional ownership and independent commissioners have no significant effect on audit delay. This study is limited to use only three variables to study their influence on audit delay in the reseach period of only three years.     

Does the establishment of the Ministry of Environmental Protection matter for addressing China’s pollution problems? Empirical evidence from listed companies

This paper uses an event study methodology to examine the stock price reactions of polluting companies traded on stock exchanges in mainland China to an exogenous environmental event, i.e., the establishment of the Ministry of Environmental Protection in 2008, which demonstrates the Chinese government’s ambition to enforce environmental protection rules more strictly. We find that, on average, these listed companies experienced a statistically and economically significant abnormal return (AR) of ??3.6% on the event date, indicating an anticipation that these companies would face a harsher regulatory environment as a result of the administrative reform. The market apparently placed great expectations on the administrative reform in regard to addressing China’s environmental pollution problems. In addition, we find that compared to their counterparts in the private sector, state-owned enterprises (SOEs) experienced a smaller price decline during the event window, which suggests that SOEs are more likely to enjoy favourable treatment from regulatory agencies. Our empirical evidence, therefore, shows that the selective enforcement of environmental law is a significant concern that tends to undermine the effects of such reforms.     

Analysis of China’s policy effect on poverty alleviation: evidence from Chongqing in the Three Gorges Reservoir Region

Quality & Quantity - With the continuous socio-economic development, the Chinese government has readjusted its poverty alleviation and development strategies, and established the targeted...