 The role of Confucianism in audit firms in mitigating corporate financial restatementsYuanling Li, Xuetong Hu, Xudong Liu, Zhongliang Dai and Zhongyi Xiao Journal of Asian Economics, 2025, vol. 100, issue C Abstract: This study explores the relationship between the integration of Confucian ethical norms into audit firm culture and the incidence of corporate financial restatements. By proposing two competing theoretical frameworks, we analyze the differing impacts of the five core Confucian virtues on the probability of restatements. Using panel data from Chinese listed companies between 2009 and 2021, we find a significant negative correlation between the Confucian ethical values of audit firms and the frequency of financial restatements by their clients. After addressing endogeneity issues through an instrumental variable approach and conducting sensitivity analysis with alternative variable specifications, this relationship remains robust. Mechanism analysis reveals that Confucian philosophy effectively mitigates financial restatement behavior in audit firms through three key channels: corporate transparency, audit quality, and organizational resilience. Keywords: Confucianism; Financial restatements; Audit firms (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:100:y:2025:i:c:s1049007825001496 DOI: 10.1016/j.asieco.2025.102025 Access Statistics for this article Journal of Asian Economics is currently edited by C. Wiemer More articles in Journal of Asian Economics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.