Table of Content

15 April 2015, Volume 0 Issue 04

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Compensation Regulation and Accounting Conservatism in State-Owned Enterprises

ZHANG Hong-hui, ZHANG Lin-yi

2015, 0(04):  577. 

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By making use of the empirical data of A-share state-owned listed companies from 2001 to 2013, this paper studies the influence of compensation regulation on accounting conservatism in state-owned enterprises and the differences of such influence between local state-owned enterprises and the enterprises run by the central government. The results indicate that the top managers’ compensation regulation of SOEs can really improve the accounting conservatism; compensation regulation can reduce the impulse of the top managers to seek better accounting performance. Compared with the top managers in local SOEs, the compensation regulation for the enterprises run by the central government is more able to help improving accounting conservatism. The shareholdings of the top managers do not affect corporate accounting conservatism. The adoption of the new corporate accounting standards from 2007 has lowered the corporate accounting conservatism; the corporate growth is negatively correlated with accounting conservatism. In addition, the study finds that the level of accounting conservatism in local SOEs is higher than that in the enterprises run by the central government; the compensation level of the top managers in local SOEs is lower than that in the enterprises run by the central government.

Relationship-Based Transaction, Institutional Environment and Demand for External Auditing: Based on the Empirical Evidences of China’s Manufacturing Listed Companies

LIN Zhong-gao,

2015, 0(04):  579. 

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From the perspective of the interaction between relationship contracts and institutional environment, this paper investigates the impact of the relationship-based transactions, the institutional environment and their interaction on the corporate demands for external auditing and corporate values. The results show that the enterprises depending more on relationship-based transactions would prefer to hire the small local audit firms for their auditing work, and the auditing fee is much lower; along with the improvement of the institutional environment, this kind of preference will be weakened. When we further control the endogenous issues, the conclusion of this study still remains to be true. This paper has further enriched the literatures on the demands for external auditing and auditing charges in the society of transition economy with relationship-based transactions as the major characteristics, it also contributes increment information to the understanding of the corporate governance effect and the transmission mechanism from external auditing.

The Impact of Institutional Distance on Disadvantages of Outsiders: Adjusting Effect of Simulated Isomorphism

ZHANG Yu-ting1,2，WANG Zeng-tao1

2015, 0(04):  580. 

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Based on the institutional theory, this paper takes the foreign banks operating in China from 2007 to 2013 as the samples to discuss the impact of institutional distance on the disadvantages of outsiders. It also analyzes the adjusting effect of the isomorphism, with which subsidiaries are imitating the host enterprises, on the relationship between the institutional distance and the disadvantages of outsider. The results show that there is a significant positive correlation between the institutional distance (including regulating distance, cultural distance and economic distance) and the disadvantages of outsiders. The simulated isomorphism is negatively adjusting the positive relationship between regulating distance, cultural distance and disadvantages of outsiders, but its adjusting effect is not significant on the relationship between economic distance and disadvantages of outsiders.

Special Free Trade Zone, International Direct Investment and Industry Location Transfer: A Study of the Construction Strategy of China’s Pilot Free Trade Zone Based on FC Model

WEI Dan, XU Pei-yuan

2015, 0(04):  581. 

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This paper constructs a free capital model of 2 countries and 3 regions with regional characteristics to analyze the transfer effect between the domestic and foreign direct investments and the industry location in the special free trade zone with the method of numerical simulation. Then it looses the symmetry hypothesis on the economic scale and the trade cost in the model to discuss the construction strategy for China’s pilot free trade zones. The results show that due to the local market effect, the establishment of Shanghai Free Trade Zone would give rise to the industry transfer from regions both at home and abroad with no free trade zones to Shanghai Free Trade Zone; its degree depends on the economic scale and trade freedom of each region. As for the Shanghai Free Trade Zone, the reform strength is the key point in the short term and the risk control is the crucial one in the long term. To set up free trade zones in a number of regions will result in welfare competition among the regions. Considering the different conditions, among the cities that have applied for setting up the free trade zones, Shenzhen or Tianjin is the best choice accordingly.

A Chinese Management Mode Based on Gentleman Culture: A Case Study of Tecsun

HU Hai-bo, WU Zhao-yun

2015, 0(04):  582. 

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Currently, how to make full use of the traditional culture to carry out management practices in the context of specific management situations has become the focus of the researches of management scholars. By applying the case study method and on the theoretical basis of Confucian gentlemanship, this paper takes Tecsun Company Ltd. as a case to explore how Tecsun Company Ltd. can comprehensively and systematically establish the gentleman cultural management practice from the five aspects of “the benevolent administration, the relation between righteousness and profit, integrity, intelligence and ritual system” on the basis of “virtue”. Meanwhile, based on further studies and analysis of the Tecsun case, it tries to explore the general pattern of Chinese management thinking in practical application, which can have the value of theoretical reference for the improvement of the application system of Chinese management and enhancing the practicalness and operability of Chinese management.

On the Financing Problems, Advantages and Countermeasures of Small and Micro Businesses from the Perspective of Industrial Clusters

LI Jun-jiang, YU Zhong

2015, 0(04):  583. 

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Small and micro businesses are an important sector of China’s national economy and the main undertaker of social employment, but they are obsessively troubled by the financing problem. Industrial clusters have significant advantages in reducing the information asymmetry between banks and enterprises, making up the defects of small and micro businesses, and recovering those institutional defects of the single financial structure in the developing countries, etc.. Through establishing the supply chain financial system for the small and micro business clusters, introducing the Internet Finance and making use of the relational financing, the financing advantages of industrial clusters can be given full play, so as to effectively solve the financing problems of the small and micro businesses.

Corporate Charitable Donations and Financing Constraints

PENG Zhen, DAI Yi-yi

2015, 0(04):  584. 

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By making use of the data of China’s listed companies during the period of 2008-2013 on the mainboards of Shanghai and Shenzhen stock markets and the cash-cash flow sensitivity model put forward by Almeida, this study empirically examines the impact of corporate charitable donation on financing constraints. The results show that corporate charitable donations can significantly reduce the financing constraints. And the more the donations, the fewer the financing constraints. In addition, the charitable donations can help enterprises to obtain long-term credit. Compared to firms with lower level of financing constraints, such effects of donations are more significant among the enterprises with higher level of financing constraints. These evidences suggest that charitable donations may act as signals, which can improve corporate information environment and reduce their financing constraints.

A Test of China’s Commercial Banks under the Falling Housing Price Pressure Based on CGE Model

LV Jiang-lin

2015, 0(04):  585. 

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There exist apparent bubbles in Chinese housing markets at present. In order to prevent financial risks, it is truly necessary to squeeze some the bubbles by means of policy and market mechanism. From the perspective of general equilibrium, based on CGE model, this paper adopts the quarterly data from the first quarter of 2004 to the fourth quarter of 2013 together with the Wilson model to conduct a pressure test of the credit risks brought by China’s falling housing prices on the commercial bank system. The results indicate that if the falling housing prices exceed 30 percent, the commercial banks will suffer huge financial risks, even financial crisis may be triggered. The important implication for policy-making is that in order to prevent financial risks and avoid financial crisis, China’s macroscopic readjustment and control should not only inhibit the housing prices from rising excessively, but also avoid sharp dropping of housing prices.

A Study of the Sources of China’s VAT and the Inter-Provincial Tax Deviation

WANG Qun1, TANG Deng-shan2, ZHOU Quan-lin1

2015, 0(04):  586. 

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Because China’s VAT is mainly declared and paid to the tax authority in charge by the sellers during tax collection, the cross-provincial flow of dutiable goods and labor service (sources of tax) will lead to the deviation between the source region and the tax-bearing region of VAT, which goes against the inter-regional principle of tax equity and would result in inter-regional vicious competition. This paper applies the inter-regional input-output model to construct a mathematical model for this problem with relevant algorithm. The computation based on the data of 2007 shows that such economically developed provinces as Jiangsu, Zhejiang, Guangdong, Hebei, Shandong, etc. are generally the provinces with net in-flows of VAT, while such provinces as Xinjiang, Shanghai, Shanxi, Henan, Shaanxi, Yunnan, etc. are the provinces with net out-flows of VAT. Therefore, this paper proposes to establish a coordinative mechanism at the level of the central finance, so as to realize the inter-provincial fairness of VAT.

On the Income Distribution Effect of Replacing Business Tax with VAT: From the Double Perspectives of Income and Consumption

GE Yu-yu1, TIAN Zhi-wei2，HU Yi-jian2

2015, 0(04):  587. 

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As one of the most important tax reforms in recent years, “replacing business tax with VAT” can exert an impact on income distribution through both the income effect of the changed factor income and the consumption effect of the changed consumption spending. Both income effect and consumption effect can raise the income level of all the residents, urban and rural, and narrow the income-distribution gap between the urban and the rural areas. Viewing from the inside of both urban and rural areas, the extension of the areas has narrowed the income-distribution gap between urban and rural areas. But the urban depends mainly on the income effect, while the rural depends mainly on the consumption effect. And because the income effect is bigger than the consumption effect, the extension of the areas has a bigger income-distribution effect on urban households than on rural households. Therefore, we should comprehensively promote the policy of “replacing business tax with VAT”, give play to both of the income effect and the consumption effect, and win the double dividends of promoting economic growth and improving income distribution.

A Mathematical Economic Model: To Unite the Labor Theory of Value and the Theory of Marginal Utility in One Scheme

HE Zuo-xiu, QING Cheng-rui

2015, 0(04):  590. 

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The first major mistake of contemporary China’s political economics study is that it failed to introduce the theory of “Science and technology are the primary productive forces” into the researches of the quantifiable political economics in order to keep pace with the times. The second major mistake is that it failed to scientifically evaluate the rationality and scientificity of the effectiveness of the utility concept; of course, it also failed to introduce the concept of the magnitude of use-value into political economics. The third major mistake is being complacent and conservative, not making progress, theory being seriously divorced from reality; thus China’s study of Marxist political economics is staying at the 19th century level for quite a long time. The two theoretical systems of economics, Marxist political economics and the Western mainstream economics, have many similarities, and serious differences as well, especially serious differences in the values ??and ideals. But they can learn from each other and reach unification. The labor theory of value, the marginal utility theory, the limited demand theory, the scientific and technological progress theory and the transaction cost theory can all be unified in a supply and demand equilibrium model to discuss the relationship between the market price and the trading volume.