Ownership effects on audit-detected error characteristics : an empirical study in an emerging economy

Koon Hung CHAN, Lai Lan, Phyllis MO

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

3 Citations (Scopus)

Abstract

The presence of foreign subsidiaries and local companies, each playing a significant role in the local economy is a typical phenomenon in the business environment of emerging economies. The objective of this study is to extend the research concerning the relationship between environmental factors and error occurrence by examining the impact of organizational ownership (foreign subsidiaries in Hong Kong vs. local Chinese companies) on error characteristics. The second objective of this study is to examine the empirical characteristics of errors in an emerging economy, Hong Kong, with references to relevant U.S. studies. Hong Kong is part of the Chinese Economic Area, a Big Emerging Market identified by the U.S. Department of Commerce. In the past two decades, while there have been numerous empirical studies on error characteristics for U.S. audit data, there is a scarcity of such studies using non-U.S. data. Due to differences in organizational culture, nature of business transactions as well as accounting practices, the error characteristics detected in audit populations in emerging economies may be significantly different from those discovered in the U.S. Results of this study should facilitate audit efficiency and effectiveness through improved audit risk assessment for each ownership type company and should also alert management of multinational corporations to incorporate the potential differences in error patterns in designing and implementing effective accounting controls for companies outside the U.S.
Original languageEnglish
Pages (from-to)235-261
Number of pages27
JournalThe International Journal of Accounting
Volume33
Issue number2
DOIs
Publication statusPublished - 1 Jan 1998

Fingerprint

Ownership
Emerging economies
Audit
Empirical study
Hong Kong
Foreign subsidiaries
Local economy
Scarcity
Audit risk
Organizational culture
Environmental factors
Accounting practices
Economics
Risk assessment
Commerce
Business environment
Emerging markets
Multinational corporations

Keywords

  • Audit planning; emerging economy; error characteristics; ownership effects

Cite this

@article{4694c46cf95c4262b4bb56fc7c2314f9,
title = "Ownership effects on audit-detected error characteristics : an empirical study in an emerging economy",
abstract = "The presence of foreign subsidiaries and local companies, each playing a significant role in the local economy is a typical phenomenon in the business environment of emerging economies. The objective of this study is to extend the research concerning the relationship between environmental factors and error occurrence by examining the impact of organizational ownership (foreign subsidiaries in Hong Kong vs. local Chinese companies) on error characteristics. The second objective of this study is to examine the empirical characteristics of errors in an emerging economy, Hong Kong, with references to relevant U.S. studies. Hong Kong is part of the Chinese Economic Area, a Big Emerging Market identified by the U.S. Department of Commerce. In the past two decades, while there have been numerous empirical studies on error characteristics for U.S. audit data, there is a scarcity of such studies using non-U.S. data. Due to differences in organizational culture, nature of business transactions as well as accounting practices, the error characteristics detected in audit populations in emerging economies may be significantly different from those discovered in the U.S. Results of this study should facilitate audit efficiency and effectiveness through improved audit risk assessment for each ownership type company and should also alert management of multinational corporations to incorporate the potential differences in error patterns in designing and implementing effective accounting controls for companies outside the U.S.",
keywords = "Audit planning; emerging economy; error characteristics; ownership effects",
author = "CHAN, {Koon Hung} and MO, {Lai Lan, Phyllis}",
year = "1998",
month = "1",
day = "1",
doi = "10.1016/S0020-7063(98)90028-0",
language = "English",
volume = "33",
pages = "235--261",
journal = "International Journal of Accounting",
issn = "1094-4060",
publisher = "Elsevier BV",
number = "2",

}

Ownership effects on audit-detected error characteristics : an empirical study in an emerging economy. / CHAN, Koon Hung; MO, Lai Lan, Phyllis.

In: The International Journal of Accounting, Vol. 33, No. 2, 01.01.1998, p. 235-261.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

TY - JOUR

T1 - Ownership effects on audit-detected error characteristics : an empirical study in an emerging economy

AU - CHAN, Koon Hung

AU - MO, Lai Lan, Phyllis

PY - 1998/1/1

Y1 - 1998/1/1

N2 - The presence of foreign subsidiaries and local companies, each playing a significant role in the local economy is a typical phenomenon in the business environment of emerging economies. The objective of this study is to extend the research concerning the relationship between environmental factors and error occurrence by examining the impact of organizational ownership (foreign subsidiaries in Hong Kong vs. local Chinese companies) on error characteristics. The second objective of this study is to examine the empirical characteristics of errors in an emerging economy, Hong Kong, with references to relevant U.S. studies. Hong Kong is part of the Chinese Economic Area, a Big Emerging Market identified by the U.S. Department of Commerce. In the past two decades, while there have been numerous empirical studies on error characteristics for U.S. audit data, there is a scarcity of such studies using non-U.S. data. Due to differences in organizational culture, nature of business transactions as well as accounting practices, the error characteristics detected in audit populations in emerging economies may be significantly different from those discovered in the U.S. Results of this study should facilitate audit efficiency and effectiveness through improved audit risk assessment for each ownership type company and should also alert management of multinational corporations to incorporate the potential differences in error patterns in designing and implementing effective accounting controls for companies outside the U.S.

AB - The presence of foreign subsidiaries and local companies, each playing a significant role in the local economy is a typical phenomenon in the business environment of emerging economies. The objective of this study is to extend the research concerning the relationship between environmental factors and error occurrence by examining the impact of organizational ownership (foreign subsidiaries in Hong Kong vs. local Chinese companies) on error characteristics. The second objective of this study is to examine the empirical characteristics of errors in an emerging economy, Hong Kong, with references to relevant U.S. studies. Hong Kong is part of the Chinese Economic Area, a Big Emerging Market identified by the U.S. Department of Commerce. In the past two decades, while there have been numerous empirical studies on error characteristics for U.S. audit data, there is a scarcity of such studies using non-U.S. data. Due to differences in organizational culture, nature of business transactions as well as accounting practices, the error characteristics detected in audit populations in emerging economies may be significantly different from those discovered in the U.S. Results of this study should facilitate audit efficiency and effectiveness through improved audit risk assessment for each ownership type company and should also alert management of multinational corporations to incorporate the potential differences in error patterns in designing and implementing effective accounting controls for companies outside the U.S.

KW - Audit planning; emerging economy; error characteristics; ownership effects

UR - http://commons.ln.edu.hk/sw_master/1568

U2 - 10.1016/S0020-7063(98)90028-0

DO - 10.1016/S0020-7063(98)90028-0

M3 - Journal Article (refereed)

VL - 33

SP - 235

EP - 261

JO - International Journal of Accounting

JF - International Journal of Accounting

SN - 1094-4060

IS - 2

ER -