Cultural impact on Chinese corporate disclosure – a corporate governance perspective

Research output: Contribution to journalArticle

38 Citations (Scopus)

Abstract

Purpose The purpose of this preliminary study is to explore the impact of changed cultural environment on the voluntary disclosure behaviour of Chinese listed companies. Design/methodology/approach A theoretical framework of the relationship between corporate disclosure and governance forms the basis of the research. A composite checklist of corporate disclosure was developed using relevant corporate governance indices and analyses were carried out on the 2003 financial reports of 120 Chinese listed companies. Six areas of voluntary disclosure of the sample companies were analysed and reported. These areas are: board structure and functioning, employees related issues, director remuneration, audit committee, related party transactions and stakeholder interest. Findings The results suggest that as China's cultural and social norms change, there was willingness of Chinese listed companies to provide voluntary information in addition to the disclosure requirements. Information relating to stakeholder interest and employees issues are found more frequently disclosed by listed companies than those which were regarded as sensitive. This is an exploratory study which shows that further research may provide more concrete evidence of the changing corporate disclosure environment in China. Research limitations/implications This study based on one year's results and as such has limitation in the interpretation of the results. Further research is necessary to demonstrate the impact of culture in corporate disclosure. Practical implications The results have practical implications for professional accountants and auditors to understand further the trend of voluntary disclosure in China. The paper provides some evidence of the changing scene of Chinese corporate governance practice. Originality/value This study fulfils a gap in prior research by examining the effect of cultural implications in corporate governance, in an emerging economy. The composite voluntary disclosure checklist will serve a good basis of measurement in corporate disclosure.

Original languageEnglish
Pages (from-to)241-264
Number of pages24
JournalManagerial Auditing Journal
Volume21
Issue number3
DOIs
Publication statusPublished - 2006
Externally publishedYes

Keywords

  • Audit committees
  • China
  • Corporate governance
  • Disclosure
  • Organizational culture

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