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Accounting Conservatism and Corporate Governance: An Examination of the Influence on Financial Reporting Quality and Stakeholder Trust

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  • Guanwei Liu

    (Macau University of Science and Technology)

Abstract

This study explores the effects of accounting conservatism and strong corporate governance in Chinese private enterprises based in Foshan City, Guangdong, China. The mixed-methods approach particularly the quantitative part of the survey found strong evidence of conservative accounting practices and high levels of corporate governance. These practices were perceived by companies to significantly affect financial reporting quality and enhance stakeholder trust. Likewise, thematic analysis of the qualitative part of the survey revealed both the complexities of implementing accounting conservatism and strong corporate governance, alongside the substantial benefits perceived by companies that embrace these practices. With these findings, the study recommends promoting awareness, best practices, resource investment, and knowledge sharing to strengthen accounting conservatism, corporate governance, and overall financial reporting integrity.

Suggested Citation

  • Guanwei Liu, 2024. "Accounting Conservatism and Corporate Governance: An Examination of the Influence on Financial Reporting Quality and Stakeholder Trust," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 2158-2175, March.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:3:p:2158-2175
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    References listed on IDEAS

    as
    1. Ain Hajawiyah & Agus Wahyudin & Kiswanto & Sakinah & Indra Pahala, 2020. "The effect of good corporate governance mechanisms on accounting conservatism with leverage as a moderating variable," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1779479-177, January.
    2. Ruth V. Aguilera & Kurt Desender & Mónica López-Puertas Lamy, 2021. "Bridging Accounting and Corporate Governance: New Avenues of Research," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 56(01), pages 1-21, March.
    3. Xingqiang Du & Yuhui Xie & Shaojuan Lai & Quan Zeng, 2022. "Confucian culture and accounting conservatism: evidence from China," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 10(4), pages 549-589, October.
    4. Zhou, Mengling & Li, Kexin & Chen, Zhongfei, 2021. "Corporate governance quality and financial leverage: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 73(C).
    5. Yi Shen & Qingsong Ruan, 2022. "Accounting Conservatism, R&D Manipulation, and Corporate Innovation: Evidence from China," Sustainability, MDPI, vol. 14(15), pages 1-25, July.
    6. Patrick Velte, 2023. "The link between corporate governance and corporate financial misconduct. A review of archival studies and implications for future research," Management Review Quarterly, Springer, vol. 73(1), pages 353-411, February.
    7. Gao, Xiaoxue, 2023. "Digital transformation in finance and its role in promoting financial transparency," Global Finance Journal, Elsevier, vol. 58(C).
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