A “Big Bath” in China: accounting and corporate governance
Publication date: 1 January 2011
Abstract
Subject area
Accounting, corporate governance, business ethics.
Study level/applicability
MBA and EMBA.
Case overview
China has largely changed its accounting practice in line with international norms. But its corporate governance structure continued to be administratively driven. Many Chinese-listed companies, especially big ones, are transformed from state-owned enterprises, with the government as their largest shareholder. It is no exception to Company C. Then what is the common pattern of accounting behaviour in China? An insight could be drawn by analysing this case.
Expected learning outcomes
Highlight two issues in point, namely accounting issue and governance issue. Chinese companies are now allowed to choose their accounting policies, while their top decisions are subject to government policies. Identify Company C's creative accounting by discussing China's accounting reform. In this regard, China has been relatively robust in terms of dropping its own practice and adopting western one. Discuss the corporate governance issues unveiled. What are company's performance criteria? Are they clearly established and enforced? And what about government's decision to change CEO twice in less than one year? What are the impacts on CEO's behaviour?
Supplementary materials
Teaching note.
Keywords
Citation
Ren, M. (2011), "A “Big Bath” in China: accounting and corporate governance", , Vol. 1 No. 1. https://doi.org/10.1108/20450621111110663
Publisher
:Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited