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This study examines the effect of stock liquidity on corporate risk-taking behavior. We find that stock liquidity has a positive and significant effect on corporate risk-taking. We find consistent results when we use the split share structure reform (SSSR) in China as an exogenous shock to stock liquidity. We also investigate the channels through which stock liquidity affects risk-taking and find that increases in stock liquidity lower the cost of capital and increase the pay-for-performance sensitivity of managers. Finally, we conduct cross-sectional tests to rule out privatization as an alternative explanation for our results. Our study sheds light on the real effects of stock liquidity and contributes to the understanding of capital market development. [ABSTRACT FROM AUTHOR]

Over the past decade, the interactions between accounting (and auditing) and corporate governance have been an important topic of academic research. They use audit hours to measure audit effort and find that audit effort alleviates stock market crash risk. The traditional audit quality indicators used in past research cannot accurately separate the respective roles of companies and auditors, which makes it difficult for researchers to draw effective causal inferences when studying the association between company characteristics and audit quality. [Extracted from the article]

We examine how stock price crash risk is affected by audit effort, as measured by audit hours. Using a unique dataset of audit hours in China, we find that audit effort is negatively related to crash risk. The negative impact of audit effort on crash risk is more pronounced for listed firms that have higher inherent risks and weaker external monitoring of their information environment. Our findings are robust to various tests, including a two‐stage regression analysis, controlling for listed firm‐fixed effects and audit firm‐fixed effects, and using alternative measures of crash risk. In addition to audit output measures, audit effort has an incremental influence on crash risk. The effects of audit effort on crash risk continue to hold after controlling for auditor industry expertise and auditor tenure. [ABSTRACT FROM AUTHOR]

In this paper, we review the empirical research on the value of auditing, audit independence, and audit fees published in Accounting Research and Auditing Research, the two premier accounting and auditing journals in China. We identify the main themes in the three areas and assess the consistency of the available empirical evidence on the topics we review. We also highlight the innovativeness of auditing studies published in Chinese language journals to English language readers of the global accounting academic community, before introducing the papers included in this Special Issue on Auditing in China. Finally, we identify gaps in the literature and suggest avenues to help promote further research in this area. [ABSTRACT FROM AUTHOR]

Management ownership has ethical consequences because it has an interest alignment effect or an entrenchment effect. In this paper, we investigate the ethical consequences of management ownership in China using accounting conservatism as the direct measure of entrenchment and alignment between shareholders and managers. We argue and find that the ethical effect of management ownership differs significantly in firms with different ultimate controlling shareholders. Specifically, management ownership in non-state-owned enterprises (NSOEs) has an alignment effect, while management ownership has less of an alignment effect in state-owned enterprises than in NSOEs. These results show that the ethical consequences of management ownership are moderated by the nature of ultimate controlling ownership. [ABSTRACT FROM AUTHOR]

This paper investigates the consequences of increasing the scope of managerial judgement (ISMJ) in accounting standards via a difference-in-differences approach in the unique setting of China. A substantial increase in accruals-based earnings management is found after ISMJ, in addition to a decline in real activities-based earnings management resulting from temporarily increased sales, boosted inventory, and expense deferrals. In contrast, we find a significant increase in the relevance of accounting information. Further analysis reveals significant negative cumulative abnormal returns related to the announcement of accounting standards change over the short term. We also find a larger long-term increase in the crash risk of the stock prices of firms that engage in more accruals-based earnings management after ISMJ. All of these effects are more pronounced in non-state-owned enterprises than in state-owned enterprises. [ABSTRACT FROM AUTHOR]

We use the occasion of a change in tax policy that raised the tax rate for many of the listed companies in China to examine tax-induced earnings management (TEM) from the perspective of political connections. We find that when the tax rate increased, only those affected firms with politically connected management engaged in TEM. This suggests that, in addition to motivation for managing earnings, capability of influencing tax authorities is also an important determinant of TEM. We also find that TEM helped the firms with politically connected management to reduce their tax burden. [ABSTRACT FROM AUTHOR]

In this paper we investigate whether independent directors' attendance at board meetings enhances investor protection using a difference-in-difference approach. We find that independent directors' attendance alleviates tunneling. This effect is more pronounced in non-state-owned enterprises (non-SOEs) than in state-owned enterprises. The reinforcement of external supervision substitutes for the role of independent directors' attendance and this substitution effect is more significant in non-SOEs. Together, these results imply that independent directors' attendance at board meetings can play an important role in protecting investors, especially in non-SOEs and when external supervision is weak. This paper sheds new light on independent directors' function in corporate governance, and has implications for institutional improvements. [ABSTRACT FROM AUTHOR]

The adsorption of Cu(II) on oxidized multi-walled carbon nanotubes (oMWCNTs) as a function of contact time, pH, ionic strength, temperature, and hydroxylated fullerene (C60(OH)n) and carboxylated fullerene (C60(C(COOH)2)n) were studied under ambient conditions using batch techniques. The results showed that the adsorption of Cu(II) had rapidly reached equilibrium and the kinetic process was well described by a pseudo-second-order rate model. Cu(II) adsorption on oMWCNTs was dependent on pH but independent of ionic strength. Compared with the Freundlich model, the Langmuir model was more suitable for analyzing the adsorption isotherms. The thermodynamic parameters calculated from temperature-dependent adsorption isotherms suggested that Cu(II) adsorption on oMWCNTs was spontaneous and endothermic. The effect of C60(OH)n on Cu(II) adsorption of oMWCNTs was not significant at low C60(OH)n concentration, whereas a negative effect was observed at higher concentration. The adsorption of Cu(II) on oMWCNTs was enhanced with increasing pH values at pH < 5, but decreased at pH ≥ 5. The presence of C60(C(COOH)2)n inhibited the adsorption of Cu(II) onto oMWCNTs at pH 4–6. The double sorption site model was applied to simulate the adsorption isotherms of Cu(II) in the presence of C60(OH)n and fitted the experimental data well. [ABSTRACT FROM AUTHOR]

The existing literature provides conflicting results on the association between firm performance and corporate social responsibility ( CSR) disclosure. This paper empirically examines the effect of firm performance on CSR disclosure in terms of disclosure frequency and quality among Chinese listed firms and the possible mediating effect of corporate ownership on the relationship between firm performance and CSR disclosure. Our findings show that better-performing firms are more likely than worse-performing ones to disclose CSR information and to produce higher quality CSR reports. In addition, the link between firm performance and CSR disclosure is found to be weaker among state-owned enterprises compared with non-state-owned ones. [ABSTRACT FROM AUTHOR]

Political cost theory and political power theory are two views on the effect of firm size on effective tax rate (ETR) in extant literature. The size effect of ETR can be investigated further by focusing on the relationship between firms and the government. This paper uses state ownership and tax status to capture this relationship and examines how firm size, state ownership and tax status jointly affect effective tax rates. It is found that, when firms do not enjoy a preferential tax status, firm size is positively associated with effective tax rates for privately controlled firms and negatively associated for state-controlled firms. The results show that political cost theory explains the relationship between size and effective tax rate for privately controlled firms, whereas political power theory explains this relationship for state-controlled firms. For those firms that already enjoy a preferential tax status, there is no significant relationship between their size and their tax burdens. [ABSTRACT FROM AUTHOR]

Two types of guanxi have a close association with auditor independence in China: firm-level connections derived from state ownership and personal connections developed through management affiliations with external auditors. This article examines the effects of these two types of connection and their joint effect on audit quality. We find that state ownership and management affiliations with the external auditor both increase the probability of receiving a clean audit opinion in China. Furthermore, the probability increment brought by management affiliations for non-state-owned enterprises (NSOEs) is greater than that for state-owned enterprises (SOEs). These results suggest that state ownership and management affiliations are two important types of connection that impair auditor independence, and that management affiliations are of greater importance to private-sector firms than to SOEs. [ABSTRACT FROM AUTHOR]

A simple, efficient and expeditious method for synthesis of 2-arylbenzo[b]furans and 2-ferrocenylbenzo[b]furans from readily prepared propargylic alcohols, o-iodophenols and silica gel with the catalyst of PdCl(PPh) (2 mol%)/CuI (2 mol%) and microwave-promoted Sonogashira coupling/cyclization reaction is developed. The methodology can produce good to excellent yields. In addition, this method can also be completed in one-pot with iodobenzene, 2-methyl-3-butyn-2-ol and 2-iodo-4-methylphenol as reactants. [Figure not available: see fulltext.] [ABSTRACT FROM AUTHOR]

Earnings management is an indicator of the corporate governance quality and investor protection standard. We study the frequencies and magnitudes of earnings management under two different thresholds, zero earnings and prior earnings, in the Chinese market from 1997 to 2004. We model earnings as a mixed-normal distribution and obtain parameter estimators that measure the frequency and magnitude of earnings management. We show that the practice of earnings management has gone up both in frequency and magnitude during the post-2000 period. We also find that the frequency and magnitude of earnings management are higher when firms try to avoid negative earnings than when firms try to report earnings increase. Our findings reflect the current economic environment in China and caution investors on the low-disclosure quality in the Chinese stock market. [ABSTRACT FROM AUTHOR]

A one-step synthesis of dibenzo-fused seven-membered nitrogen heterocycles from acetophenones/benzophenones and 2-haloanilines, via a copper-catalyzed amination, was developed. The reaction involves amination followed by intramolecular cyclization. [ABSTRACT FROM AUTHOR]