Open Access Article SciPap-1272
Do Converged to IFRS National Standards and Corporate Governance Attributes Affect Accounting Conservatism? Evidence from China
by Oleh Pasko 1,* iD icon, Fuli Chen 2 iD icon, Yarmila Tkal 3 iD icon, Mykola Hordiyenko 4 iD icon, Oleksandr Nakisko 5 iD icon and Inna Horkovenko 6 iD icon

1 Accounting and taxation, Sumy National Agrarian University, Gerasym Kondratyev Str. 160, Sumy 40021, Ukraine

2 Department of Publicity Office, Henan Institute of Science and Technology, Eastern HuaLan Avenue, Xinxiang 453003, China

3 Accounting and Taxation, Sumy National Agrarian University, Herasyma Kondratiievа str. 160, Sumy 40021, Ukraine

4 Accounting and Taxation, Sumy National Agrarian University, Herasyma Kondratiievа str. 160, Sumy 40021, Ukraine

5 Accounting and Audit, Kharkiv Petro Vasylenko National Technical University of Agriculture, Alchevskikh str., 44, Kharkiv 61002, Ukraine

6 Accounting and Audit, Kharkiv National Agrarian University named after V.V. Dokuchaieva, Kharkiv district, p / v “Dokuchaevske - 2”, Kharkiv 62483, Ukraine

* Authors to whom correspondence should be addressed.

Abstract: The purpose of this paper is to examine the effect of the adoption of converged to IFRS national standards on accounting conservatism (AC) and to investigate the effect of corporate governance (CG) attributes (government ownership, management ownership, concentration of ownership, board size, board independence, CEO duality) on АС in China. The large sample of A-share Chinese listed companies, comprising 26,004 firm-year observations form 2925 companies spanning from 2003 to 2019 collected from CSMAR database and analysed using multivariate regression techniques. The study provides empirical evidence testifying to the decrease in AC level after converged to IFRS national standards in China became mandatory. The findings indicate that government ownership, management ownership, concentration of ownership and CEO duality are all negatively associated with AC. By contrast, board size, board independence, has no significant relationship with AC in Chinese institutional settings. Whereas prior studies investigate the IFRS adoption per se, our study examines how national standards converged to IFRS affect AC indicating that converged national standards produce the analogous effect expected from adoption of the genuine IFRS. Moreover, it means that accounting conservatism is inherent also in the standards as opposed to the conceptual framework. Next, our study is also instrumental in identifying the relationship between AC and CG attributes in an underexplored jurisdiction with a significant impact on the world economy - China. These findings can be utilized and be heeded to by managers in the design of companies’ supreme governing body, as well as regulators while proposing legislation/regulations concerning the composition of the board of directors. The results subject to the limitation for a limited range of CG variables and measurement of accounting conservatism applied. Next, the endogeneity problem is not solved as yet, therefore which direction the causality runs from CG to AC or from AC to CG is disputable.

Keywords: IFRS, China, Accounting Standards, Cg, Accounting Conservatism

JEL classification:   G34 - Mergers • Acquisitions • Restructuring • Corporate Governance,   M14 - Corporate Culture • Diversity • Social Responsibility,   M41 - Accounting

SciPap 2021, 29(2), 1272;

Received: 13 March 2021 / Revised: 22 May 2021 / Accepted: 23 May 2021 / Published: 10 June 2021