Confucian Culture And Comparability Of Accounting Information

Comparability of accounting information refers to the degree of consistency between financial reports of different companies.Comparability of accounting information has certain spillover effects,and companies with high comparability of accounting information not only improve the quality of investors’ decisions,but also improve the monitoring efficiency of external regulators.Therefore,how to improve the comparability of accounting information is an important research topic in the field of empirical accounting.Higher order and imprinting theories argue that entrepreneurs’ early individual upbringing experiences and cultural inculcation shape individual perceptions and value preferences,which are reflected in the firm’s decision-making behavior.On the whole,accounting standards give companies a certain degree of autonomy to choose appropriate accounting policies and accounting estimation methods according to the characteristics of their own industry and production operations,which also gives managers more scope for camera choices in accounting selection,recognition and measurement.Company managers can only achieve ultimate comparability if they choose accounting estimation methods and accounting policies that are similar to those of their peers.According to the new institutional economics,in addition to economic factors and formal institutions,cultural factors in informal institutions can also have a significant impact on corporate behavior.As the dominant culture in Chinese society,Confucian culture has been integrated into the values of Chinese entrepreneurs and profoundly influences their daily business decisions.Especially since the 18 th National Congress,General Secretary Xi Jinping has proposed to adhere to cultural self-confidence,and Confucian culture,as the soft power of traditional Chinese culture,has an important theoretical value and practical significance for the good development of Chinese enterprises by deeply exploring the management ethical ideas it contains.In particular,as China is in the development stage of marketization,with a low degree of marketization and imperfect institutional development,informal institutions such as Confucian culture may play an important role in curbing managers’ camera choice of accounting policies and improving the comparability of accounting information.Based on this,this paper examines the impact of Confucian culture on the comparability of corporate accounting information,using Chinese listed companies as the research target.This paper examines the effects,pathways and context of the influence of Confucian culture on the comparability of accounting information from the perspective of informal institutions.The study finds that: firstly,the more influenced by Confucian culture listed companies are,the higher the comparability of their accounting information,which indicates that Confucian culture has a facilitating effect on improving the comparability of accounting information.The findings still hold after robustness tests such as endogeneity.This fully highlights the important role of informal institutions such as Confucian culture in improving the comparability of accounting information and ensuring the quality of accounting information.Second,the path of the effect of Confucian culture on the comparability of accounting information is that Confucian culture mitigates agency conflicts and thus increases the comparability of accounting information of companies.Thirdly,the positive effect of Confucian culture on the comparability of accounting information is more pronounced in companies with a low level of external supervision than in companies with a high level of external supervision,which means that Confucian culture can compensate for the lack of external supervision when external supervision is inadequate.At the same time,the positive effect of Confucian culture in improving the comparability of accounting information is more pronounced when the company is not facing the impact of external culture.Fourth,further research found that informal institutions such as Confucian culture complemented corporate governance mechanisms as a complementary governance mechanism.In addition,the attribute of executives having an overseas background weakens the contribution of Confucian culture to the comparability of accounting information,which is also consistent with the results on the impact of foreign culture shock on Confucian culture and the comparability of accounting information.The Confucian culture where executives are educated also has an impact on the comparability of accounting information.These also provide empirical evidence for the governance role of informal institutions in the soundness of market mechanisms.This paper extends the research on the factors influencing the comparability of accounting information.Research on the factors influencing the comparability of accounting information has focused on corporate governance factors and formal institutional factors,with little literature examining the factors influencing the comparability of accounting information from the perspective of informal institutions such as culture.This paper examines the comparability of accounting information from the perspective of Confucian culture,which not only deepens the understanding of the factors influencing the comparability of accounting information,but also enriches the research literature in the field of comparability of accounting information.This paper also enriches the research on the influence of Confucian culture on corporate behavior.It reveals the influence of Confucian culture on the comparability of accounting information and its pathways of action,further enriching the research on how culture influences corporate behavior and enhancing the understanding of the role of Confucian culture in improving the comparability of accounting information.In addition,the paper provides empirical evidence on the governance role of informal institutions such as Confucian culture and enriches the ideological connotation of Confucian management ethics.Secretary General Xi emphasises "cultural confidence" and seeks solutions to real-life problems from good traditional culture.This paper provides evidence that informal institutions such as Confucian culture have a role in governance,which not only corrects the negative perceptions of some scholars of Confucian culture,but also provides a theoretical basis and practical reference for promoting and passing on the management ethics ideas and methods of Confucian culture.The research in this paper has important implications.For corporate managers,Confucian culture has a facilitating role in improving the comparability of accounting information,ensuring the quality of information disclosure and promoting the development of the capital market.Chinese companies should build on their excellent traditional culture,enhance their cultural confidence,draw on the essence of traditional Confucian culture,inherit and carry forward excellent Chinese traditional culture,find solutions to real-life problems from it,and use cultural norms to promote the long-term development of their companies.For policy makers,Confucian culture,as an informal system,has a role in corporate governance and should fully strengthen the guidance of traditional culture-based informal systems for market activities and accelerate the process of building Chinese systems.