Abstract

http://ssrn.com/abstract=408800
 
 

References (16)



 
 

Citations (6)



 


 



Chinese Tango: Government Assisted Earnings Management


Xiao Chen


Tsinghua University - School of Economics & Management

Chi-Wen Jevons Lee


Tulane University - A.B. Freeman School of Business; Tsinghua University - School of Economics & Management

Jing Li


Carnegie Mellon University - David A. Tepper School of Business

May 2003


Abstract:     
In a Socialist market economy like China, the relations between various layers of government and state-owned enterprises are tangled. When the Socialist system embraces the market economy, it creates many facets of interest conflict and goal incongruence. This paper describes the collusion between local government and state-owned enterprises in conducting earnings management to circumvent central government regulation, a phenomenon known as Chinese Tango. Our study shows that the local government has actively participated in earnings management of the listed firms located in her jurisdictions by providing them fiscal transfers. The primary purpose of this government-assisted earnings management is to assist the firms to manage accounting earnings so as to meet the regulation stipulated by the central government.

Number of Pages in PDF File: 37

Keywords: local taxation, fiscal transfers, rights offering, earnings management, returns on equity (ROE)

JEL Classification: M41, M43, G38, H25

working papers series





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Date posted: June 23, 2003  

Suggested Citation

Chen, Xiao and Lee, Chi-Wen Jevons and Li, Jing, Chinese Tango: Government Assisted Earnings Management (May 2003). Available at SSRN: http://ssrn.com/abstract=408800 or http://dx.doi.org/10.2139/ssrn.408800

Contact Information

Xiao Chen
Tsinghua University - School of Economics & Management ( email )
Hiadian District
Beijing 100084
China
+8610-6278-9863 (Phone)
+8610-6278-5876 (Fax)
Chi-Wen Jevons Lee (Contact Author)
Tulane University - A.B. Freeman School of Business ( email )
7 McAlister Drive
New Orleans, LA 70118
United States
504-862-8485 (Phone)
Tsinghua University - School of Economics & Management ( email )
Beijing 100084
China
86-10-6277-2942 (Phone)
Jing Li
Carnegie Mellon University - David A. Tepper School of Business ( email )
5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
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