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.
|Publication status||Published - 2 Aug 2010|
|Event||2010 American Accounting Association Annual Meeting - United States, San Francisco, United States|
Duration: 31 Jul 2010 → 4 Aug 2010
|Conference||2010 American Accounting Association Annual Meeting|
|Period||31/07/10 → 4/08/10|
|Other||American Accounting Association|