Abstract
Original language | English |
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Pages (from-to) | 235-261 |
Number of pages | 27 |
Journal | The International Journal of Accounting |
Volume | 33 |
Issue number | 2 |
DOIs | |
Publication status | Published - 1 Jan 1998 |
Funding
Hong Kong was chosen for this study becauseo f its unique characteristicsa s an emerging economy with a rapid growing audit market for international accounting firms (Lee, 1994),a nd becauseo f its long tradition as a meeting point betweenE ast and West. Hong Kong has emerged as an international finance and trade center over the past several decadesa nd is part of a Big Emerging Market identified by the U.S. Departmento f Commerce (1995). It is ranked the world’s 8th largest trading entity in terms of total trade values in 1995 (Economic Information and Agency, 1996). The number of companies listed in the Hong Kong Stock Exchange has grown by over 60% in the past decade(The Stock Exchange of Hong Kong, 1986, 1996). Total market capitalization has increased more than tenfold from US$35,769 million to US$445,636m illion during the samep eriod. Furthermore,s ince the adoption of open door policy by the People’s Republic of China (P.R.C.) in 1978,m any multinational companiesh ave establisheds ubsidiary companiesi n Hong Kong as a stepping stone for entering the China market.A mong the Big Emerging Markets, the Chinese Economic Area (China, Hong Kong and Taiwan) representsb y far the largesta nd one of the most important emergingm arketsb oth now and in the foreseeable future. According to a 1993 World Bank estimate,t he combined gross domestic product of this area in the year 2002 will total approximatelyU S$lO trillion. This figure would representt he largests ingle regional proportion,s urpassingt he U.S.’ projectedG DP of US$9.7 trillion (Garten, 1996).I n view of theses ignificant developments,B ig Six have rapidly expanded their operations in both Hong Kong and China to meet the surged demand. Five of the Big Six have more than 1,000 professional staff membersi n Hong Kong with the smallesto ne having about 700 (SCMP, 1997).
Keywords
- Audit planning; emerging economy; error characteristics; ownership effects