The impact of top management team regulatory focus on accounting conservatism

Hui Chen, Huize Zhang and Chao Feng

Asian Review of Accounting, 2026, 1-31

Abstract: PurposeDrawing on regulatory focus theory, this study aims to examine how top management teams' (TMTs) motivational orientations (promotion versus prevention focus) influence accounting conservatism and further explores the internal and external situational conditions that shape this relationship.Design/methodology/approachUsing textual analysis to quantify TMT regulatory focus from management discussion and analysis (MD&A) across Chinese A-listed firms, this study applies multivariate regression analysis to assess the impact of regulatory focus on accounting conservatism.FindingsOur results show that promotion-focused TMTs are more likely to diminish accounting conservatism, whereas prevention-focused TMTs enhance it. TMT restricted stock (internal situational factor) attenuates both the negative effect of promotion focus and the positive effect of prevention focus on accounting conservatism. Analyst coverage (external situational factor) weakens the negative effect of promotion focus on conservatism while amplifying the positive effect of prevention focus. Further subgroup analyses reveal that the effects of TMT regulatory focus are more pronounced in non-SOEs and firms with lower ownership concentration and are significantly moderated by auditor industry expertise and product-market competition, highlighting the role of internal governance and external market factors as important boundary conditions.Originality/valueThis study introduces TMT regulatory focus as a novel psychological determinant of accounting conservatism, shifting the literature beyond observable demographic proxies to the motivational drivers of managerial reporting behavior. Furthermore, it identifies two actionable governance levers that interact with TMT motivational orientations, offering a more nuanced framework for corporate governance and compensation design.

Keywords: Regulatory focus; Accounting conservatism; Restricted stock; Analyst coverage (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/ara/article/doi/10.1108/AR ... eam-regulatory-focus (text/html)
https://www.emerald.com/ara/article-pdf/doi/10.110 ... a-09-2025-0327en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-09-2025-0327

DOI: 10.1108/ARA-09-2025-0327

Access Statistics for this article

Asian Review of Accounting is currently edited by Prof. Haiyan Zhou

More articles in Asian Review of Accounting from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().