Audit collusion: A joint effort of bureaucrats, SOE managers, and local auditors

K. Hung CHAN, Kenny LIN, R. Ray WANG

Research output: Other Conference ContributionsAbstractpeer-review


Positive accounting theory posits that when government regulation is based on accounting numbers, management has an incentive to manipulate those numbers to serve its interest. This study examines how managers of Chinese state-owned enterprises (SOEs) controlled by local governments colludes with local auditors to circumvent accounting-based regulation of rights offering and delisting. We infer collusion from an “improvement” in the actual audit opinions companies received as opposed to the opinions they would have received had they used reputable auditors. Our results suggest that audit collusion in China is a joint effort of the bureaucrat, the SOE manager, and the local auditor.
Original languageEnglish
Publication statusPublished - 2 Aug 2010
Event2010 American Accounting Association Annual Meeting - United States, San Francisco, United States
Duration: 31 Jul 20104 Aug 2010


Conference2010 American Accounting Association Annual Meeting
Country/TerritoryUnited States
CitySan Francisco
OtherAmerican Accounting Association
Internet address

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