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.

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.

New Evidence for Structured Telephone Support in the Management of Patients with Heart Failure [Letter to Editor]

Letter to the Editor of New England Journal of Medicine on behalf of the Cochrane Systematic Review team.

[Letter to the Editor] Telemonitoring in Patients with Heart Failure

To the Editor: Chaudhry et al. suggest that enhanced support in the use of a telephone-based interactive voice-response system for patients recently discharged after worsening heart failure does not improve outcomes. This finding is broadly consistent with previous systematic reviews of telephone support1 and contrasts with the substantial effect observed with home telemonitoring of vital signs in similar populations.1 The treatment of patients in the control group was excellent, but unrepresentative of usual clinical care and not inferior to the treatment of patients receiving enhanced support. Monitoring alone is unlikely to improve outcomes but may do so when it improves prescription of or adherence to lifesaving treatments. Given enough resources, traditional methods for delivering care may render an interactive voice-response system or a home telemonitoring system ineffective. Nonetheless, there may be more cost-efficient approaches to ensuring quality care.2 Informal post hoc addition of these data to our recent meta-analysis of telephone support1 does not substantially alter the point estimates for death from any cause or heart-failure−related hospitalizations, but it does nullify the small benefit in hospitalizations for any cause, which may not be reduced by a heart-failure−focused intervention.1 Original article: Telemonitoring in Patients with Heart Failure NEJM. December 9, 2010 | S.I. Chaudhry and Others

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.

Writing the self : the emergence of a dialogic space

While much narrative inquiry is concerned with issues of self and identity, doing study on the processes (the how) of self-making offers ongoing challenges to methodology. This article explores the creation of a dialogic space that assisted young adolescents to write about themselves and their daily lives using email journals as an alternative to face-to-face interviews. With the researcher acting as a listener-responder, and in the absence of researcher-designed questions, a dynamic field was opened up for participant-led self-making to emerge over a six month period of self-reflective written expression. The article describes a shared email relationship based on a dialogic pattern of thinking, writing, listening and response intended to foster participants’ voices as ontological narratives of self. Findings show the use of email journals created a synergy for self-disclosure and a safe space for self-expression where the willingness of participants to be themselves was encouraged. The self-representations of a specific group of gifted young adolescents thus emerged as written versions of “who” they are —offering data that differs from interview approaches and contributing to discussion of the value of ontology narratives.

Abduction : the writing of a historical novel

This is a practice-led project consisting of a historical novel Abduction and related exegesis. The novel is a third person intimate narrative set in the mid-nineteenth century and is based on actual events and persons caught up in, or furthering, the mass dispossession of small farmers in Scotland known as the ‘Clearances’. The narrative focuses on the situation in the Outer Hebrides and northern Scotland. It is based on documented facts leading up to a controversial trial in 1850 that arose because a twenty year old woman of the period (the central protagonist, Jess Mackenzie) eloped with a young farmer to escape her parent’s pressure to marry a rival suitor, himself a powerful lawyer and ‘factor’ at the centre of many of the Clearances. The young woman’s independent ideas were ahead of her time, and the decisions she made under great pressure were crucial in some dramatic events that unfolded in Scotland and later in the colony of Victoria, to which she and her new husband emigrated soon after the trial. The exegesis is composed of two unequal parts. It briefly considers the development of the literary historical fiction genre in the nineteenth century with Walter Scott in particular, a genre found useful in representing women’s issues of the Victorian era by Victorian and contemporary authors. The exegesis also briefly considers the appropriateness of the fiction genre (as opposed to creative nonfiction) in creating the lived experience in a fact-based work. The major part of the exegesis is a detailed, reflective analysis of the problem-solving process involved in writing the novel, structured by reference to Kate Grenville’s Searching for the Secret River – a work of metawriting that explains her creative process in researching and writing historical fiction based on fact.

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.

After Sex? On Writing since Queer Theory, edited by Janet Halley and Andrew Parker [Review]

In its earliest and simplest form queer theory proposes that sexual identity is not essential, but socially constructed, and understandings of identity, gender and sexuality are constructed differently at different times and in different places. Queer theory aims to challenge normative understandings of sex, sexuality and gender, and also normative concepts of knowledge and being. Since its inception, queer theory has been taken up by a number of disciplines as an analytical framework. These include cultural geography, education studies, film studies and sociology. In the last decade queer theory has been used to consider citizenship, diasporas and post colonial experiences. A queer theoretical perspective has also been used to analyse emotions, the Death Drive, phenomenology, and disability. As queer theory enters its third decade Janet Halley and Andrew Parker ask what is after sex? ‘What has queer theory become now that it has a past?’

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.

Positive emotional responses to hybridised writing about a socio-scientific issue

In order to understand better the role of affect in learning about socio-scientificissues (SSI), this study investigated Year 12 students’ emotional arousal as they participated in an online writing-to-learn science project about the socio-scientific issue of biosecurity. Students wrote a series of hybridised scientific narratives, or BioStories, that integrate scientific information about biosecurity with narrative storylines, and uploaded these to a dedicated website. Throughout their participation in the project, students recorded their emotional responses to the various activities (N=50). Four case students were also video recorded during selected science lessons as they researched, composed and uploaded their BioStories for peer review. Analysis of these data, as well as interview data obtained from the case students, revealed that pride, strength, determination, interest and alertness were among the positive emotions most strongly elicited by the project. These emotions reflected students’ interest in learning about a new socio-scientific issue, and their enhanced feelings of self-efficacy in successfully writing hybridised scientific narratives in science. The results of this study suggest that the elicitation of positive emotional responses as students engage in hybridised writing about SSI with strong links to environmental education, such as biosecurity, can be valuable in engaging students in education for sustainability.

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.

Re-thinking context and reflexive mediation in the teaching of writing

This paper calls for a renewed focus on the teaching of writing. It proposes a conceptual model, based on a social realist perspective, which takes account of the ways in which teachers reflexively mediate personal, professional and political considerations in enacting their writing pedagogies. This model extends understanding of the factors contextualising the teaching of writing. It also provides a useful guide for research into the teaching of writing and a prompt for reflexivity in professional development.