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voluntary corporate social responsibility reporting and financial statement auditing in China
journal contribution
posted on 2017-12-01, 00:00 authored by Wen Qu, Peter CareyPeter Carey, Li LiuLi LiuThis study finds a positive association between voluntary corporate social responsibility (CSR) reporting and audit fees in China. In contrast to prior research from the US, CSR reporting in China is associated with greater earnings management. Results suggest that Chinese firms use CSR reporting as a strategic device for window dressing, and that auditors charge higher fees in response to heightened audit risk and greater audit effort. Further, the positive effects of CSR reporting on audit fees and earnings management are more significant for non-state-owned enterprises (non-SOEs) than for state-owned enterprises, which suggests that non-SOEs have not fully embraced the principles of CSR and essentially use CSR reporting to create the appearance of legitimacy. In additional tests, we find that non-SOEs with more highly rated CSR performance or longer CSR reports are associated with lower audit fees and less earnings management.
History
Journal
Journal of Contemporary Accounting & EconomicsVolume
13Issue
3Pagination
244 - 262Publisher
ElsevierLocation
London, Eng.Publisher DOI
ISSN
1815-5669eISSN
2352-3298Language
EnglishNotes
JEL classification: D21 D8 M42 O1Publication classification
C1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2017, ElsevierUsage metrics
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