The Study On Impact Of The Institutional Environment For The Effect Of The Implementation Of Chinese Accounting Standards

The Chinese accounting standards have carried out for eight years since2007. Itis known to all that only the high quality of implement of accounting standards canensure the high quality of accounting information. Therefore, as an important part ofaccounting standards study, the implement of accounting standards caught academics’eyes. Through the research of determinants of the effect of accounting standardsexecution, researchers pointed out that institutional environment determine the effectof the implementation of accounting standards. But most of these researchers didtheoretical studies, only a handle of them did empirical studies. To enrich the study ofthis field, this paper tried to quantify institutional environments and the accountingstandards implement. Also it focused on study the relationship between them by anempirical way.This article subdivided institutional environments into four categories as marketenvironment, political environment, legal environment and informal environment.Based on the literature review, theoretical analysis and status description ofaccounting standards execution, four hypotheses about the relationship betweeninstitutional environments and the effect of the accounting standards enforcementwere raised. Furthermore, in order to solve the quantitative problem, this papermeasured the institutional environments with the NERI indexes of marketization ofChina’s provinces and cross-regional trust index, which are provided by theauthorities and relevant literatures, respectively. And the effect of the accountingstandards enforcement is measured by computing the compliance index. Moreover,for fully investigation of institutional environments of provinces and the relationshipwith the effect of implementation of accounting standards over China, the authorselected the same amount of listed companies by province from Shanghai andShenzhen Stock Exchange as samples. And the research also used multiple linearregression method for the empirical research. The empirical results shown thatinstitutional environments and the effect of the accounting standards implement havepositive correlation, significantly. That is, the high level of marketization, legalprotection and social capital and the lower level of government intervention bring thebetter effect of accounting standards implement.This article used compliance index as a measurement of accounting standardsenforcement while previous literatures used the quality of financial accounting information. The innovation of this paper is: a CAS disclosure checklist, including15specific items within8accounting standards was constructed based on previousresearches. And the checklist was a basis of computing the compliance index.