Advances in Pacific Basin Business, Economics and Finance by Lee Cheng-Few;Yu Min-Teh;

Author:Lee, Cheng-Few;Yu, Min-Teh;
Language: eng
Format: epub
Publisher: Emerald Publishing Limited
Published: 2017-09-12T00:00:00+00:00

2. INSTITUTIONAL BACKGROUND

Since economic reform in 1979, the Chinese government has embarked upon various reforms to improve the economic efficiency and change the ownership structure of corporations. In 1980, Chinese government allowed for joint ventures between domestic and foreign companies. The foundation of Chinese Institute of Certified Public Accountants (CPA) was established in the same year. In the early 1990s, Shanghai and Shenzhen stock exchanges were established. This opens the demand for auditing services to the companies listed on these exchanges. To perform the services, CPA firms must obtain a license from the China Securities Regulatory Commission (CSRC) and the MOF. In 1992, international accounting firms were allowed to joint ventures with domestic CPA firms. Further, they have also been permitted to invest in and control domestic audit firms since 1999. Since 1999, China has granted foreign investment enterprises, including Sino-foreign joint ventures, a period of up to five years of income tax exemptions and reductions.

Although the accounting profession in China has undergone rapid expansion, most local auditors remain small in terms of the number of listed clients (Chan & Wu, 2011). To satisfy the audit services needs from capital market and SOEs and help local auditors compete with large international accounting firms when the latter are allowed to operate directly in China after the country’s accession to the WTO, MOF encouraged local auditors to increase their size via mergers and acquisitions in 1999. To further facilitate local auditors’ competitiveness, the State Council of China released the Circular which encourages firms (especially for firms listed overseas, firms in finance, energy, and communication industries, and SOEs involved in national welfare and the people’s livelihood) to give priority to local big auditors in 2009.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.