Effect of place of incorporation, Chinese culture, and business practices on corporate fraud : evidence from Hong Kong listed companies
Document Type
Journal article
Source Publication
Asia-Pacific Journal of Financial Studies
Publication Date
4-1-2017
Volume
46
Issue
2
First Page
221
Last Page
245
Publisher
Wiley-Blackwell
Keywords
Chinese cross-border listings, Corporate culture and practices, Corporate fraud, Hong Kong, Legal system, Ownership structure
Abstract
Mainland Chinese companies make up more than 50% of the Hong Kong securities market in terms of number of listings and market capitalization. Our empirical results indicate that Chinese companies have a higher incidence of corporate fraud and greater fraud severity than other listed counterparts, even after controlling for state versus private ownership, internal corporate governance, financial standing, firm characteristics, and time factors. Further investigation reveals that incorporation in China and Chinese culture and business practices are two distinct and major driving factors in corporate fraud. Conventional explanatory variables for corporate fraud other than board tenure, firm size, listing year, and year of fraud detection do not have explanatory power in the Hong Kong context.
DOI
10.1111/ajfs.12168
Print ISSN
20419945
E-ISSN
20416156
Publisher Statement
Copyright © 2017 Korean Securities Association. Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Pang, J. C.-L., & Lo, S. M.-S. (2017). Effect of place of incorporation, Chinese culture, and business practices on corporate fraud: Evidence from Hong Kong listed companies. Asia-Pacific Journal of Financial Studies, 46(2), 221-245. doi: 10.1111/ajfs.12168