Public Sector Transparency and Corporate Accounting Practices in Asia

TRANSFORMING ASIAN GOVERNANCE: RETHINKING ASSUMPTIONS, CHALLENGING PRACTICES, M. Ramesh, S. Fritzen, eds., Routledge, 2008

31 Pages Posted: 17 May 2009 Last revised: 26 Feb 2014

See all articles by Xun Wu

Xun Wu

Division of Social Science and Division of Environment, Hong Kong University of Science and Technology

Abstract

This article examines the impacts of firms' political environment on the quality of their accounting practices. In specific, we hypothesize that the quality of political institutions is among the determinants of firms' decisions regarding accounting practices, and test the hypothesis with a unique cross-country firm-level data set. Our results show that quality of corporate accounting practices is positively related to the quality of political institutions as measured by predictability of rules, laws, and regulations and of their interpretations in implementation. In political environments characterized by opaque public sector, it may be advantageous for firms to adopt shady accounting practices to cope with various risks arising from information asymmetry between government and business.

Keywords: Financial Disclosure, Transparency, Corruption

Suggested Citation

Wu, Xun, Public Sector Transparency and Corporate Accounting Practices in Asia. TRANSFORMING ASIAN GOVERNANCE: RETHINKING ASSUMPTIONS, CHALLENGING PRACTICES, M. Ramesh, S. Fritzen, eds., Routledge, 2008, Available at SSRN: https://ssrn.com/abstract=1404016

Xun Wu (Contact Author)

Division of Social Science and Division of Environment, Hong Kong University of Science and Technology ( email )

4054 LSK, HKUST
Clear Water Bay
Hong Kong, 999999

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