Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective
Purpose: The objective of this study is to examine how formal and informal institutional environment influences managers’ fair value opinion shopping behaviour in the largest International Financial Reporting Standards adopter, China. Design/methodology/approach: To test the hypotheses, I c...
| Main Author: | |
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| Format: | Journal Article |
| Published: |
Elsevier
2023
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| Online Access: | http://hdl.handle.net/20.500.11937/90014 |
| _version_ | 1848765310229807104 |
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| author | Cao, June |
| author_facet | Cao, June |
| author_sort | Cao, June |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | Purpose:
The objective of this study is to examine how formal and informal institutional environment influences managers’ fair value opinion shopping behaviour in the largest International Financial Reporting Standards adopter, China.
Design/methodology/approach:
To test the hypotheses, I conduct a 2 × 2 between-subject randomised experiment since the inferences about cause and effect are important in this study. The between-subject experimental situations are manipulated on the basis of the financial condition of companies and boards’ oversight.
Findings:
I find that managers are likely to seek favourable fair value opinions from external valuation professionals when they are under the weak boards’ oversight and high stress to meet the regulation target of the China Securities Regulatory Commission. These results are more pronounced for managers with higher both rent-seeking and favour-seeking guanxi orientations are more likely to engage in fair value opinion shopping.
Originality/value:
Consistent with theoretical analysis of Balfoort et al. (2017), this study provides empirical evidence that guanxi influences the neutrality and faithful representation in fair value measurement in China. In addition, the findings extend Salzsieder’s study (2015) and reflect the context-embeddedness nature of accounting. |
| first_indexed | 2025-11-14T11:33:13Z |
| format | Journal Article |
| id | curtin-20.500.11937-90014 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T11:33:13Z |
| publishDate | 2023 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-900142023-02-07T02:50:42Z Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective Cao, June Purpose: The objective of this study is to examine how formal and informal institutional environment influences managers’ fair value opinion shopping behaviour in the largest International Financial Reporting Standards adopter, China. Design/methodology/approach: To test the hypotheses, I conduct a 2 × 2 between-subject randomised experiment since the inferences about cause and effect are important in this study. The between-subject experimental situations are manipulated on the basis of the financial condition of companies and boards’ oversight. Findings: I find that managers are likely to seek favourable fair value opinions from external valuation professionals when they are under the weak boards’ oversight and high stress to meet the regulation target of the China Securities Regulatory Commission. These results are more pronounced for managers with higher both rent-seeking and favour-seeking guanxi orientations are more likely to engage in fair value opinion shopping. Originality/value: Consistent with theoretical analysis of Balfoort et al. (2017), this study provides empirical evidence that guanxi influences the neutrality and faithful representation in fair value measurement in China. In addition, the findings extend Salzsieder’s study (2015) and reflect the context-embeddedness nature of accounting. 2023 Journal Article http://hdl.handle.net/20.500.11937/90014 10.0.4.84/JAL-10-2022-0103 Elsevier restricted |
| spellingShingle | Cao, June Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective |
| title | Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective |
| title_full | Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective |
| title_fullStr | Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective |
| title_full_unstemmed | Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective |
| title_short | Formal and Informal Institutions and Fair Value Opinion Shopping: An Institutional Anomie Theory Perspective |
| title_sort | formal and informal institutions and fair value opinion shopping: an institutional anomie theory perspective |
| url | http://hdl.handle.net/20.500.11937/90014 |