Table of Content

15 July 2015, Volume 0 Issue 07

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Special General Partnership, Clients’ Latent Litigation Risks and Earnings Management

ZHANG Xue-hua1, CHEN Xiao-lin2

2015, 0(07):  542. 

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Based on the natural experiment of accounting firms transferring into the organizational form of“special general partnership”which is promoted by the Ministry of Finance, this paper gives a further consideration about the risks of clients’ latent litigation and studies the attitudes of auditors towards the clients’ earnings management with different latent litigation risks before and after the transfer of accounting firms on the basis of the past researches on the basic effects of firm transfer. The result indicates that when transferred into the special general partnership, the firms have a much lower tolerance to the earnings manipulation of clients with higher risks; the degree of earnings management of high risk clients is significantly decreased. This shows that the risk awareness of the audits has been enhanced and the prudence of the auditors has also been improved significantly after the transfer of the firms.

Can Abnormal Audit Fees be Used to Measure Earnings Quality? Empirical Evidences from China’s A-Share Markets

YUAN Dong-ren, WANG Wei

2015, 0(07):  543. 

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Taking China’s A-share listed companies from 2007 to 2012 as the objects, this paper conducts an empirical test of the relationship between the abnormal audit fees and the dimensions of each earnings quality and the response coefficient of future earnings. The empirical results show that the absolute value of abnormal audit fees has a significant negative correlation with the dimensions of each earnings quality and the response coefficient of future earnings, while the correlation coefficient of the level value of abnormal audit fees has changed significantly in the two kinds of samples: excessive audit fees and insufficient audit fees. The companies with excessive or insufficient audit fees have worse earnings quality. This result suggests that the abnormal audit fees can be used as an indirect measurement for earnings quality, and the absolute value, rather than the level value, of the abnormal audit fees should be adopted in China’s capital markets.

Research on the Sustainable Development Path for China’s Manufacturing Industry under New Normalcy: From the Perspective of Global Factory Theory

YU Pei1，WANG Jun-jie2

2015, 0(07):  544. 

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In the context of the manufacturing industry facing the“hollowing out”threat and the economic development having the new normalcy characteristics, and on the basis of the“Global Factory”theoretical framework, this study conducts a quantitative analysis of the sustainable development path for China’s manufacturing industry with the qualitative method and adopting the agglomeration index, industrial specialization index and industrial gradient index. Shanghai has the capacity to be upgraded to become the center of Asia-Pacific regional headquarters of multinational corporations in the manufacturing industry, the Yangtze River Delta area has the technology of traditional manufacturing industry and the scale economic advantages, which can help the area to undertake the international industry transfer, while the capital-intensive industry in the central region and the resource-intensive industry in the western region have the capabilities to undertake the industry transfer from the eastern region. This new spatial distribution of the manufacturing industry can lay a foundation for China’s construction of “one belt and one road” following the economic development mode of all-round opening type.

A Study of Scope Expansion and Boundary Effect of Economic Integration in Yangtze River Delta

WU Jun1，2，YANG Qing3

2015, 0(07):  545. 

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The range of Yangtze River Delta economic integration has extended from the original 16 cities to the whole areas of Jiangsu province, Zhejiang province and Shanghai city since 2008, which provides useful cases for the exploration of the boundary effect of domestic regional economic integration and the policy effectiveness. By making use of the data of prefecture-level cities in Yangtze River Delta during 2001-2012 and with the help of Barro’ convergence regression equation, this paper tries to test the boundary effect of the regional economic integration, the scope expansion effect of the integration, the policy effectiveness of the scope expansion and the regional economic growth convergence respectively. The results show that there is significant boundary effect between the core of the Delta and its periphery. After the expansion, from the viewpoint of economic scale changes, there is significant negative boundary effect; from the viewpoint of labor productivity changes, there remains significant positive boundary effect, so the boundary effect does not disappear. The regional economic integration in Yangtze River Delta is earlier than the time of policy promulgation of the scope expansion, so that, the policy has the characteristics of adaptive policy adjustment. Thus it can be seen that the industrial agglomeration and diffusion in the process of the unbalanced development of regional economy is one of the causes of the regional boundary effect, the regional coordinated development policy cannot completely eliminate the boundary effect.

Demarketing Persuasion and Face Need: the Role of Construction Level of Appeal

WANG Xin-zhu, NIU Yong-ge, LI Wei

2015, 0(07):  546. 

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One of the purposes of Demarketing is to reduce excessive consumption and wasting activities, for which face need is one of the significant reasons. By manipulating the construction level of demarketing appeals, this study finds that compared with concrete appeals or no appeal of any kind, abstract appeals can better persuade those with high face need to avoid excessive consumption. Compared with abstract appeals or no appeal of any kind, concrete appeals have no significant advantage to persuade those with low face need to avoid excessive consumption. On the whole, abstract appeals can have the best result in persuading consumers to reduce excessive consumption. During the course of demarketing, organizations should make more use of the appeals of abstract construction to cube the enhancing role of face need for excessive consumption.

Are Equator Principles Conductive to the Operational Efficiency of China’s commercial Banks? With Industrial Bank as a Case

MA Yu-fei1, DU Chao-yun2

2015, 0(07):  547. 

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The Equator Principles are designed as the financial industry standards to determine, assess and manage environmental and social risks in project financing. By analyzing the strengths and weaknesses of commercial banks joining the Equator Principles, as well as the quantitative study conducted on the Industrial Bank and the similar comparable banks with the method of global principal component analysis, it is found that after joining the Equator Principles, the financial conditions of the Industrial Bank has been improved greatly compared with similar comparable banks, the scores every year are better than the mean value of similar comparable banks; however, a slight decline of the scores is also found during that period. In the short term, the Equator Principles would generate a slightly negative impact on the operating efficiency of commercial banks (mainly liquidity), but in the medium and long term, the commercial banks which have joined the Equator Principles will experience more rapid development than the similar comparable banks.

Does Substitution Effect Exist between Long-Term Incentive Mechanisms? An Empirical Analysis from the Perspective of Top Executives’ Stock Rights and Enterprise Annuity Decision-Making

YU Xin-liang, CHENG Yuan, ZHU Ming-lai

2015, 0(07):  548. 

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Because enterprise annuity can be seen as a kind of managerial subsidy, which can therefore reduce the future possible debt financing risks, those top executives with no shares of their companies will consequently have incentives to establish enterprise annuity in order to maintain financial slack. The enterprise annuity decision may increase the value of single human capital, so as to deal with the harm to the top executives’ interests caused by the maximized shareholders equity. Along with the increase of managerial share holdings, the incentives to establish such enterprise annuity will decrease since the interests of the top executives and the shareholders become more consistent. The results presented in this study can strongly support the proposition that substitution effect exists between the top executive stock rights and enterprise annuity. Enterprises can achieve effective incentives to human capital through the mixed equilibrium strategy between top executive stock rights and enterprise annuity.

Are“Sunshine”Private Funds more Beneficial than Publicly Offered Funds to the Fund Managers in their Investment Performance

YAN Wu, XIONG Hang

2015, 0(07):  549. 

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From the perspective of the comparison between the investment performances of the fund managers before and after investment shift from publicly offered funds to private funds, we can better explore the influences of the two institutional environments on the investment performances of the fund managers. This paper conducts a comparative analysis of the fund managers’ investment performances before and after their investment transfer with the help of a number of fund performance evaluation models. The results show that the overall investment ability of the fund managers have been improved significantly when they transfer from publically offered funds to sunshine private funds. If decomposing the overall investment ability into market-timing and security-selecting abilities, the improvement of the fund managers’ overall investment ability is mainly reflected in the significant improvement of their market-timing ability after the transfer, while their security-selecting ability would then decrease a little. At the same time, by studying the personal characteristics of the fund managers, it is found that those who had investment research experience can obtain better investment performances.

A Study of Neighborhood Competition, Fiscal Decentralization and Biased Expenditure of Government Finance: From the Perspective of the Three-Tier Power-Separation Framework

LIU Xiao-yong, DING Huan-feng

2015, 0(07):  550. 

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By adopting the spatial panel Durbin model, this paper conducts an empirical test of the effects of China’s fiscal decentralization on the biased policy for fiscal expenditures at the provincial and lower-provincial levels. The study finds that the provincial decentralization has generally urged the local governments to increase the proportion of capital construction expenditure while decrease the proportion of social development expenditure. However, the decentralization at lower-provincial level has the opposite effects on the expenditure structure. The rise of GDP growth rate at the neighboring regions would promote the local governments to increase the proportion of capital construction expenditures and reduce the proportion of social development expenditures. During the fiscal expenditure competition, the bandwagon effect and the race-to-the-bottom effect can be found in the behaviors of the local governments. Thus, in order to correct the local governments’ biased policy of expenditures, it is necessary to push the reform of the governmental performance evaluation system and the reform of fiscal system.

Research on the Convergence of China’s Regional Outward Foreign Direct Investment: An Empirical Analysis Based on Panel Data Model

ZHENG Zhan-peng

2015, 0(07):  551. 

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By referring to the ideas and methods of the convergence hypothesis in the classical economic growth theory, this article applies the provincial panel data model to study the convergence of China’s regional outward foreign direct investment. The results of the study show that the outward foreign direct investments of the whole country and all the clubs have demonstrated a dynamic evolvement rule of “general convergence and partial differentiation”. As for σ convergence, there is σ convergence on the national level and in the central region, the eastern region has no obvious trend of σ convergence, while in the western region it tends to diffuse. As for β convergence, the whole country and the eastern and central regions have shown an absolute convergence, while the western region has not. Generally speaking, the industrial level and the opening to the outside world have a significant impact on the β conditional convergence of the whole country and the three regions.

On the Relationship between Fiscal Decentralization System and Basic Public Services Supply at County-Level: A Case Study of Jiangxi Province

KUANG Xiao-ping, ZHAO Dan

2015, 0(07):  552. 

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By making use of the statistical data of Jiangxi province in recent 19 years and the statistical data at county-level in recent 7 years, this paper conducts an empirical analysis of the effects of fiscal decentralization system on the basic public services supply at county-level. It is found that under the conditions of lacking the so called “voting by hand” and “voting by foot”, the Chinese-style fiscal decentralization cannot create favorable conditions for the supply of basic public services by local governments, on the contrary, it has become an institutional factor hindering its reasonable growth and balanced development. Therefore, it is required to take such measures as improving the supply of the basic public services, transforming the government’s role, weakening the GDP assessment, emphasizing financial supervision, exploring multiple supplies and so on, so as to give full play to the protection role of the fiscal decentralization system in promoting the equilibrium supply of the basic public services.

Policy Incentives, Knowledge Accumulation and Biased Clean Technology: An Analysis Based on Provincial Panel Data of China’s Auto Industry

WANG Jun1,2, LIU Dan1

2015, 0(07):  554. 

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To explore the influential factors in promoting firms to develop clean technology, this paper tries to analyze the impacts of policy incentives and knowledge accumulation on the biased new energy automotive technology innovation by using the patent application data of China’s auto industry during 2001-2013. The results show that: (1) the market cultivation policy for clean products and the environmental governance policy have generated positive effects on the innovation of both traditional technology and clean technology, but the government’s R&D subsidy policy for automotive technology has no significant effect; (2) the policy incentives have not resulted in the substitution effects of clean technology for the traditional technology, the environmental governance policy has produced more influence on the clean technology innovation, while the policy effect of the biased clean technology on the auto industry remains to be seen; (3) technology innovation has significant characteristics of path dependence, the external technology has positive knowledge spillover effects on the internal technology innovation, and the two kinds of internal technologies have significant interactive effects, in which the traditional technology has spillover effects on the clean technology while the clean technology has inhibitory effects on the traditional technology.