Revisiting conditional accounting conservatism in state-controlled firms

Wilson Li, Tina He, Andrew Marshall, Gordon Tang

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

This study explores the demand for conditional accounting conservatism from equity shareholders in state-controlled firms. An investigation of state-controlled firms listed on Hong Kong Stock Exchange from 1997 to 2013 shows that the extent of conditional conservatism in state-controlled firms increases when the leverage ratio decreases. It is also found that the high control rights held by the government in state-controlled firms are associated with high conditional conservatism. In addition, further analyses document an offsetting effect between high control rights and firm leverage; a reinforcing effect between high control rights and year of incorporation after 1992; and a substituting effect between high control rights and dividend payments. These findings suggest that the demand from equity shareholders, in addition to the debt demand, can be an important determinant of conditional conservatism and examination of these differing sources of demand can enhance the understanding on accounting conservatism in state-controlled firms.
LanguageEnglish
Pages486-501
Number of pages16
JournalAsian Review of Accounting
Volume25
Issue number4
Early online date30 Sep 2017
DOIs
Publication statusPublished - 21 Nov 2017

Fingerprint

Accounting conservatism
Control rights
Conservatism
Shareholders
Equity
Hong Kong
Stock exchange
Government
Leverage ratio
Leverage
Debt
Payment
Dividends

Keywords

  • conditional accounting
  • Hong Kong Stock Exchange
  • shareholders

Cite this

Li, Wilson ; He, Tina ; Marshall, Andrew ; Tang, Gordon. / Revisiting conditional accounting conservatism in state-controlled firms. In: Asian Review of Accounting. 2017 ; Vol. 25, No. 4. pp. 486-501.
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Revisiting conditional accounting conservatism in state-controlled firms. / Li, Wilson ; He, Tina; Marshall, Andrew; Tang, Gordon.

In: Asian Review of Accounting, Vol. 25, No. 4, 21.11.2017, p. 486-501.

Research output: Contribution to journalArticle

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