The impact of ownership structure on conditional and unconditional conservatism in China: Some new evidence

Sun Liu

Journal of International Accounting, Auditing and Taxation, 2019, vol. 34, issue C, 49-68

Abstract: This study investigates the relationship between ownership structure and conditional and unconditional conservatism in China's unique corporate setting. It finds an inverted U-shaped association between state ownership and unconditional conservatism, with an inflection point of 31%. However, the results provide mixed support for a U-shaped relationship between state ownership and conditional conservatism. Moreover, the level of unconditional conservatism tends to be higher in listed firms with a more complex pyramidal ownership structure, but lower in listed firms with greater foreign ownership. In addition, in line with the incentive alignment view of LaFond and Roychowdhury (2008), this study finds that managerial ownership is negatively correlated with both conditional and unconditional conservatism. Overall, I provide new evidence on how accounting conservatism can be affected by certain ownership and control features in the context of concentrated state ownership and complex pyramidal ownership structure.

Keywords: Ownership structure; Information asymmetry; Conditional conservatism; Unconditional conservatism; China (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:34:y:2019:i:c:p:49-68

DOI: 10.1016/j.intaccaudtax.2019.02.003

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