Corporate governance mechanisms and earnings management in transitional countries – evidence from Chinese listed firms

The objective of this thesis is to investigate whether the corporate governance practices adopted by Chinese listed firms are associated with the quality of earnings information. Based on a review of agency and institutional theory, this study develops hypotheses that predict the monitoring effectiveness of the board and the audit committee. Using a combination of univariate and multivariate analyses, the association between corporate governance mechanisms and earnings management are tested from 2004 to 2008. Through analysing the empirical results, a number of findings are summarised as below. First, board independence is weakened by the introduction of government officials as independent directors on the boards. Government officials acting as independent directors, claim that they meet the definition of independent director set by the regulation. However, they have some connection with the State, which is the controlling shareholder in listed SOEs affiliated companies. Consequently, the effect of the independent director’s expertise in constraining earnings management is mitigated as demonstrated by an insignificant association between board expertise and earnings management. An alternative explanation for the inefficiency of board independence may point to the pre-selection of independent directors by the powerful CEO. It is argued that a CEO can manipulate the board composition and choose the "desirable" independent directors to monitor themselves. Second, a number of internal mechanisms, such as board size, board activities, and the separation of the roles of the CEO and chair are found to be significantly associated with discretionary accruals. This result suggests that there are advantages in having a large and active board in the Chinese setting. This can offset the disadvantages associated with large boards, such as increased bureaucracy, and hence, increase the constraining effects of a large and resourceful board. Third, factor analysis identifies two factors: CEO power and board power. CEO power is the factor which consists of CEO duality and turnover, and board power is composed of board size and board activity. The results of CEO power show that if a Chinese listed company has CEO duality and turnover at the same time, it is more likely to have a high level of earnings management. The significant and negative relationship between board power and accruals indicate that large boards with frequent meetings can be associated with low level of earnings management. Overall, the factor analysis suggests that certain governance mechanisms complement each other to become more efficient monitors of opportunistic earnings management. A combination of board characteristics can increase the negative association with earnings management. Fourth, the insignificant results between audit committees and earnings management in Chinese listed firms suggests that the Chinese regulator should strengthen the audit committee functions. This thesis calls for listed firms to disclose more information on audit committee composition and activities, which can facilitate future research on the Chinese audit committee’s monitoring role. Fifth, the interactive results between State ownership and board characteristics show that dominant State ownership has a moderating effect on board monitoring power as the State totally controls 42% of the issued shares. The high percentage of State ownership makes it difficult for the non-controlling institutional shareholders to challenge the State’s dominant status. As a result, the association between non-controlling institutional ownership and earnings management is insignificant in most situations. Lastly, firms audited by the international Big4 have lower abnormal accruals than firms audited by domestic Chinese audit firms. In addition, the inverse U-shape relationship between audit tenure and earnings quality demonstrates the changing effects of audit quality after a certain period of appointment. Furthermore, this thesis finds that listing in Hong Kong Stock Exchanges can be an alternative governance mechanism to discipline Chinese firms to follow strict Hong Kong listing requirements. Management of Hong Kong listed companies are exposed to the scrutiny of international investors and Hong Kong regulators. This in turn reduces their chances of conducting self-interested earnings manipulation. This study is designed to fill the gap in governance literature in China that is related to earnings management. Previous research on corporate governance mechanisms and earnings management in China is not conclusive. The current research builds on previous literature and provides some meaningful implications for practitioners, regulators, academic, and international investors who have investment interests in a transitional country. The findings of this study contribute to corporate governance and earnings management literature in the context of the transitional economy of China. The use of alternative measures for earnings management yields similar results compared with the accruals models and produces additional findings.

Actions for declaratory or injunctive relief by the Corporate Regulator under s 471B of the Corporations Act

This article by Ben McEniery discusses the matters a court will consider when leave to commence or proceed against a company in liquidation is sought not by a creditor seeking to prove a debt, but by the corporate regulator pursuing declaratory or injunctive relief.

Chinese driver perceptions about speeding and traffic law enforcement

The World Health Organisation has highlighted the urgent need to address the escalating global public health crisis associated with road trauma. Low-income and middle-income countries bear the brunt of this, and rapid increases in private vehicle ownership in these nations present new challenges to authorities, citizens, and researchers alike. The role of human factors in the road safety equation is high. In China, human factors have been implicated in more than 90% of road crashes, with speeding identified as the primary cause (Wang, 2003). However, research investigating the factors that influence driving speeds in China is lacking (WHO, 2004). To help address this gap, we present qualitative findings from group interviews conducted with 35 Beijing car drivers in 2008. Some themes arising from data analysis showed strong similarities with findings from highly-motorised nations (e.g., UK, USA, and Australia) and include issues such as driver definitions of ‘speeding’ that appear to be aligned with legislative enforcement tolerances, factors relating to ease/difficulty of speed limit compliance, and the modifying influence of speed cameras. However, unique differences were evident, some of which, to our knowledge, are previously unreported in research literature. Themes included issues relating to an expressed lack of understanding about why speed limits are necessary and a perceived lack of transparency in traffic law enforcement and use of associated revenue. The perception of an unfair system seemed related to issues such as differential treatment of certain drivers and the large amount of individual discretion available to traffic police when administering sanctions. Additionally, a wide range of strategies to overtly avoid detection for speeding and/or the associated sanctions were reported. These strategies included the use of in-vehicle speed camera detectors, covering or removing vehicle licence number plates, and using personal networks of influential people to reduce or cancel a sanction. These findings have implications for traffic law, law enforcement, driver training, and public education in China. While not representative of all Beijing drivers, we believe that these research findings offer unique insights into driver behaviour in China.

Social influences on Chinese drivers : cultural context and traffic law enforcement

Reducing road crashes and associated trauma is a critical focus as the Decade of Action for Road Safety commences. China is one of many rapidly-motorizing nations to experience recent increases in private-vehicle ownership and an associated escalation in novice drivers. Unfortunately, however, China also experiences a high rate of death and injury from road crashes. Several key pieces of legislation have been introduced in recent decades in China to deal with these changes. While managing the legal aspects of road use is important, social influences on driver behaviour may offer additional avenues for promoting safe driving, particularly in a culture where such factors carry high importance. To date, there is limited research on the role of social influence factors on driver behaviour in China, yet we know that Chinese society is strongly based on social rules, customs, and relationships. There is reason to assume therefore, that road use and driving-related issues may also be strongly influenced by social relationships. One previous study that has investigated such issues highlighted the need to consider culturally-specific issues such as interpersonal networks and social hierarchy when examining driver behaviour in China (Xie & Parker, 2002). Those authors suggested that there are some concepts relating to Chinese driving culture that may not necessarily have been identified from research conducted in western contexts and that research conducted in China must be considered in light of such concepts. The current paper reports qualitative research conducted with Beijing drivers to investigate such social influence factors. Findings indicated that family members, friends, and driving instructors appear influential on driver behaviour and that some novice drivers seek additional assistance after obtaining their licence. The finding relating to the influence of driving instructors was not surprising, given the substantial number of new drivers in China. In Beijing, driving instruction is conducted off-road in purpose-specific driving facilities rather than on the road network. Once licensed, it is common for new drivers to have little or no experience driving in complex traffic situations. This learning situation is unlikely to provide all the skills necessary to successfully negotiate crowded city streets and assess the related risk associated with such driving. Therefore, it was not surprising to find that one reported strategy to assist new drivers was to employ the services of an ‘accompanying driver’ to provide ongoing driving instruction once licensed. In more highly motorised countries supervised practice is part of a graduated licensing system where it is compulsory for new drivers to be supervised by a more experienced driver for a requisite period of time before progressing to solo driving. However, as this system is not in place in China, it appears that some drivers seek out and pay for additional support once they commence on-road driving. Additionally, strategies to avoid detection and penalties for inappropriate road use were discussed, many of which involve the use of a third person. These findings indicate potential barriers to implementing effective traffic enforcement and highlight the importance of understanding culturally-specific social factors relating to driver behaviour.

Iron biogeochemistry and associated greenhouse gas evolution in a forested subtropical Australian coastal catchment : Poona Creek, Southeast Queensland

Iron (Fe) is the fourth most abundant element in the Earth’s crust. Excess Fe mobilization from terrestrial into aquatic systems is of concern for deterioration of water quality via biofouling and nuisance algal blooms in coastal and marine systems. Substantial Fe dissolution and transport involve alternate Fe(II) oxidation followed by Fe(III) reduction, with a diversity of Bacteria and Archaea acting as the key catalyst. Microbially-mediated Fe cycling is of global significance with regard to cycles of carbon (C), sulfur (S) and manganese (Mn). However, knowledge regarding microbial Fe cycling in circumneutral-pH habitats that prevail on Earth has been lacking until recently. In particular, little is known regarding microbial function in Fe cycling and associated Fe mobilization and greenhouse (CO2 and CH4, GHG) evolution in subtropical Australian coastal systems where microbial response to ambient variations such as seasonal flooding and land use changes is of concern. Using the plantation-forested Poona Creek catchment on the Fraser Coast of Southeast Queensland (SEQ), this research aimed to 1) study Fe cycling-associated bacterial populations in diverse terrestrial and aquatic habitats of a representative subtropical coastal circumneutral-pH (4–7) ecosystem; and 2) assess potential impacts of Pinus plantation forestry practices on microbially-mediated Fe mobilization, organic C mineralization and associated GHG evolution in coastal SEQ. A combination of wet-chemical extraction, undisturbed core microcosm, laboratory bacterial cultivation, microscopy and 16S rRNA-based molecular phylogenetic techniques were employed. The study area consisted primarily of loamy sands, with low organic C and dissolved nutrients. Total reactive Fe was abundant and evenly distributed within soil 0–30 cm profiles. Organic complexation primarily controlled Fe bioavailability and forms in well-drained plantation soils and water-logged, native riparian soils, whereas tidal flushing exerted a strong “seawater effect” in estuarine locations and formed a large proportion of inorganic Fe(III) complexes. There was a lack of Fe(II) sources across the catchment terrestrial system. Mature, first-rotation plantation clear-felling and second-rotation replanting significantly decreased organic matter and poorly crystalline Fe in well-drained soils, although variations in labile soil organic C fractions (dissolved organic C, DOC; and microbial biomass C, MBC) were minor. Both well-drained plantation soils and water-logged, native-vegetation soils were inhabited by a variety of cultivable, chemotrophic bacterial populations capable of C, Fe, S and Mn metabolism via lithotrophic or heterotrophic, (micro)aerobic or anaerobic pathways. Neutrophilic Fe(III)-reducing bacteria (FeRB) were most abundant, followed by aerobic, heterotrophic bacteria (heterotrophic plate count, HPC). Despite an abundance of FeRB, cultivable Fe(II)-oxidizing bacteria (FeOB) were absent in associated soils. A lack of links between cultivable Fe, S or Mn bacterial densities and relevant chemical measurements (except for HPC correlated with DOC) was likely due to complex biogeochemical interactions. Neither did variations in cultivable bacterial densities correlate with plantation forestry practices, despite total cultivable bacterial densities being significantly lower in estuarine soils when compared with well-drained plantation soils and water-logged, riparian native-vegetation soils. Given that bacterial Fe(III) reduction is the primary mechanism of Fe oxide dissolution in soils upon saturation, associated Fe mobilization involved several abiotic and biological processes. Abiotic oxidation of dissolved Fe(II) by Mn appeared to control Fe transport and inhibit Fe dissolution from mature, first-rotation plantation soils post-saturation. Such an effect was not observed in clear-felled and replanted soils associated with low SOM and potentially low Mn reactivity. Associated GHG evolution post-saturation mainly involved variable CO2 emissions, with low, but consistently increasing CH4 effluxes in mature, first-rotation plantation soil only. In comparison, water-logged soils in the riparian native-vegetation buffer zone functioned as an important GHG source, with high potentials for Fe mobilization and GHG, particularly CH4 emissions in riparian loam soils associated with high clay and crystalline Fe fractions. Active Fe–C cycling was unlikely to occur in lower-catchment estuarine soils associated with low cultivable bacterial densities and GHG effluxes. As a key component of bacterial Fe cycling, neutrophilic FeOB widely occurred in diverse aquatic, but not terrestrial, habitats of the catchment study area. Stalked and sheathed FeOB resembling Gallionella and Leptothrix were limited to microbial mat material deposited in surface fresh waters associated with a circumneutral-pH seep, and clay-rich soil within riparian buffer zones. Unicellular, Sideroxydans-related FeOB (96% sequence identity) were ubiquitous in surface and subsurface freshwater environments, with highest abundance in estuary-adjacent shallow coastal groundwater water associated with redox transition. The abundance of dissolved C and Fe in the groundwater-dependent system was associated with high numbers of cultivable anaerobic, heterotrophic FeRB, microaerophilic, putatively lithotrophic FeOB and aerobic, heterotrophic bacteria. This research represents the first study of microbial Fe cycling in diverse circumneutral-pH environments (terrestrial–aquatic, freshwater–estuarine, surface–subsurface) of a subtropical coastal ecosystem. It also represents the first study of its kind in the southern hemisphere. This work highlights the significance of bacterial Fe(III) reduction in terrestrial, and bacterial Fe(II) oxidation in aquatic catchment Fe cycling. Results indicate the risk of promotion of Fe mobilization due to plantation clear-felling and replanting, and GHG emissions associated with seasonal water-logging. Additional significant outcomes were also achieved. The first direct evidence for multiple biomineralization patterns of neutrophilic, microaerophilic, unicellular FeOB was presented. A putatively pure culture, which represents the first cultivable neutrophilic FeOB from the southern hemisphere, was obtained as representative FeOB ubiquitous in diverse catchment aquatic habitats.

An investigation of unique challenges in National Historic relics and scenic sites (NHRSSs) in Chinese research literature 1982-2008 using co-word analysis

National Housing Relics and Scenic Sites (NHRSSs) in China are the equivalent of National Parks in the West but have contrasting features and broader roles when compared to their Western counterparts. By reviewing and analysing more than 370 academic sources, this paper identifies 6 major issue clusters and future challenges that will influence the management of NHRSSs over time. It also provides a number of cases to illustrate the particular features of NHRSSs. Identifying the hot issues and important challenges in Chinese NHRSSs will provide valuable insights into priorities now being discussed in highly populated areas of the World.

Multimedia search capabilities of Chinese language search engines

This paper reports results from a study exploring the multimedia search functionality of Chinese language search engines. Web searching in Chinese (Mandarin) is a growing research area and a technical challenge for popular commercial Web search engines. Few studies have been conducted on Chinese language search engines. We investigate two research questions: which Chinese language search engines provide multimedia searching, and what multimedia search functionalities are available in Chinese language Web search engines. Specifically, we examine each Web search engine's (1) features permitting Chinese language multimedia searches, (2) extent of search personalization and user control of multimedia search variables, and (3) the relationships between Web search engines and their features in the Chinese context. Key findings show that Chinese language Web search engines offer limited multimedia search functionality, and general search engines provide a wider range of features than specialized multimedia search engines. Study results have implications for Chinese Web users, Website designers and Web search engine developers. © 2009 Elsevier Ltd. All rights reserved.

Exploring regional differences in Chinese consumer acceptance of new mobile technology : a qualitative study

This study examines consumer adoption of 3G mobile technology in China. The qualitative study involved 45 in-depth interviews undertaken in three major Chinese cities to explore the beliefs and attitudes which determine Chinese consumers’ acceptance of the mobile technological innovation. The findings are compared and contrasted against those reported in Western studies. The variations underpinning adoption of 3G between consumers in the three regional cities were identified. Specifically, it was found that the regions differed in terms of the relative importance of the identified adoption determinants, such as perceived social outcomes for using the innovation and the effects of social influence on the adoption. These findings provide subtle insight into the nature of Chinese consumers’ responses to new mobile technologies and a better understanding of variations among regional Chinese consumers.

Educational stress scale for adolescents : development, validity, and reliability with Chinese students

This article describes the development and initial validation of a new instrument to measure academic stress—the Educational Stress Scale for Adolescents (ESSA). A series of cross-sectional questionnaire surveys were conducted with more than 2,000 Chinese adolescents to examine the psychometric properties. The final 16-item ESSA contains five latent variables: Pressure from study, Workload, Worry about grades, Self-expectation, and Despondency, which together explain 64% of the total item variance. Scale scores showed adequate internal consistency, 2-week test–retest reliability, and satisfactory concurrent validity. A confirmatory factor analysis suggested the proposed factor model fits well in a different sample. For researchers who have a particular interest in academic stress among adolescents, the ESSA promises to be a useful tool.

Enhancing Chinese TEFL academics' research performance : necessity and urgency

China’s increasing participation in world affairs and the growing popularity of English as a lingua franca have made significant impact on Chinese society, culture and education. As such, considerable research topics in relation to English require TEFL researchers’ attentions. Additionally, higher education reform in China has created higher demand on academics by stressing research as an important element in academics’ assessment. Recurrent rhetoric in the field of TEFL also calls on practitioners to theorise their practice. All these practical needs and theoretical arguments point to the necessity and significance of TEFL academics’ engagement in research. To find out whether Chinese TEFL academics’ research meet the new demand on them, a survey of TEFL academics at three Chinese higher institutions was conducted. One hundred eighty two of them provided valid responses which were analysed using SPSS. It was found that TEFL academics’ research productivity in each category of research products was quite low. Large percentages of them did not produce any item in the investigated categories of research. They were least productive in conference papers and research products at the national level. However for these least productive categories, there were highly-productive TEFL academics. The categories of research where the TEFL academics were found relatively productive were non-core journal articles and provincial projects. The findings suggest that it is necessary and urgent for Chinese TEFL academics to enhance their research productivity to be able to meet the demand that new era has rendered.

Mapping of shallow coastal groundwaters, their hydrology and environmental geochemistry : Pumicestone catchment, Southeast Queensland

Blooms of the toxic cyanobacterium majuscula Lyngbya in the coastal waters of southeast Queensland have caused adverse impacts on both environmental health and human health, and on local economies such as fishing and tourism. A number of studies have confirmed that the main limiting nutrients (“nutrients of concern”) that contribute to these blooms area Fe, DOC, N, P and also pH. This study is conducted to establish the distribution of these parameters in a typical southeast Queensland coastal setting. The study maps the geochemistry of shallow groundwater in the mainland Pumicestone catchment with an emphasis on the nutrients of concern to understand how these nutrients relate to aquifer materials, landuse and anthropogenic activities. The results of the study form a GIS information layer which will be incorporated into a larger GIS model being produced by Queensland Department of Environment and Resource Management (DERM) to support landuse management to avoid/minimize blooms of Lyngbya in Moreton Bay, southeast Queensland, and other similar settings. A total of 38 boreholes were established in the mainland Pumicestone region and four sampling rounds of groundwater carried out in both dry and wet conditions. These groundwater samples were measured in the field for physico-chemical parameters, and in the laboratory analyses for the nutrients of concern, and other major and minor ions. Aquifer materials were confirmed using the Geological Survey of Queensland digital geology map, and geomaterials were assigned to seven categories which are A (sands), B (silts, sandy silts), C (estuarine mud, silts), D (humid soils), E (alluvium), F (sandstone) and G (other bedrock). The results of the water chemistry were examined by use of the software package AquaChem/AqQA, and divided into six groundwater groups, based on groundwater chemical types and location of boreholes. The type of aquifer material and location, and proximity to waterways was found to be important because they affected physico-chemical properties and concentrations of nutrients of concern and dissolved ions. The analytical results showed that iron concentrations of shallow groundwaters were high due to acid sulfate soils, and also mud and silt, but were lower in sand materials. DOC concentrations of these shallow groundwaters in the sand material were high probably due to rapid infiltration. In addition, DOC concentrations in some boreholes were high because they were installed in organic rich wetlands. The pH values of boreholes were from acidic to near neutral; some boreholes with pH values were low (< 4), showing acid sulfate soils in these boreholes. Concentrations of total nitrogen and total phosphorus of groundwaters were generally low, and the main causes of elevated concentrations of total nitrogen and total phosphorus are largely due to animal and human wastes and tend to be found in localized source areas. Comparison of the relative percentage of nitrogen species (NH3/NH4< Org-N, NO3-N and NO2-N) demonstrated that they could be related to sources such as animal waste, residential and agricultural fertilizers, forest and vegetation, mixed residents and farms, and variable setting and vegetation covers. Total concentrations of dissolved ions in sampling round 3 (dry period) were higher than those in sampling round 2 (wet period) due to both evaporation of groundwater in the dry period and the dilution of rainfall in the wet period. This showed that the highest concentrations of nutrients of concern were due to acid sulfate soils, aquifer materials, landuse and anthropogenic activities and were typically in aquifer materials of E (alluvium) and C (estuarine muds) and locations of Burpengary, Caboolture, and Glass Mountain catchments.

China's new Creative Clusters : Governance, Human Capital and Investment

Recognising that creativity is a major driving force in the post-industrial economy, the Chinese government has recently established a range of "creative clusters" – industrial parks devoted to media industries, and arts districts – in order to promote the development of the creative industries. This book examines these new creative clusters, outlining their nature and purpose, and assessing their effectiveness. Drawing on case studies of a range of cluster models, and comparing them with international examples, the book demonstrates that creativity, both in China and internationally, is in fact a process of fitting new ideas to existing patterns, models and formats. It shows how large and exceptionally impressive creative clusters have been successfully established, but raises the important questions of whether profit or culture is the driving force, and of whether the bringing together of independent-minded, creative people, entrepreneurial businessmen, preferential policies and foreign investment may in time lead to unintended changes in social and political attitudes in China, including a weakening of state bureaucratic power. An important contribution to the existing literature on the subject, this book will be of great interest to scholars of urban studies, cultural geography, cultural economics and Asian studies.

Impact of embeddedness in ethnic networks on business growth : evidence from Chinese immigrant entrepreneurs in Australia

Immigrant entrepreneurship, or, self-employment by immigrants (Light & Bonacich, 1988), has been of growing interest to researchers (Hosler, 1996). This is due in part to major immigrant receiving countries, such as Australia, the United States, Canada, the United Kingdom and Western Europe, experiencing a high growth rate in their immigrant populations, leading to a more visible presence of immigrant business in major cities (Woon, 2008). By starting their own businesses, immigrant entrepreneurs may circumvent some of the barriers and disadvantages encountered in looking for a job (Sequeira & Rasheed, 2006). Successful immigrant entrepreneurs will integrate into the economy by creating jobs, providing products and services for members of their own ethnic community and society, as well as introducing new products and services that expand consumers’ choices (Rath & Kloosterman, 2000). Immigrant entrepreneurs tend to start business within their ethnic enclave, as it is an integral part of their social and cultural context and the location where ethnic resources reside (Logan et al., 2002). An ethnic enclave is an interdependent network of social and business relationships that are geographically concentrated with its co-ethnic people (Portes & Bach, 1985).

Place and displacement : southeast Queensland architecture

The "vernacular" housing tradition of southeast Queensland is easily identifiable. Its history is more complex. This study seeks to challenge two popular conceptions of the "Queenslander" history by showing that they actually provide contradictory explanations. The aim is to produce a more complex account of local architecture and its historical explanation so that both its past and its present practices can be better understood as a distinctly subtropical idiom. This discussion shows that such practices may respond to common concerns but that are also ever-changing.