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Political Influence and Coexistence of a Uniform Accounting System and Accounting Standards: Recent Developments in China

Authors

  • Jason Zezhong Xiao,

    1. Cardiff Business School, Cardiff University
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    • Jason Zezhong Xiao is a Senior Lecturer in the Cardiff Business School, Cardiff University (xiao@cf.ac.uk), Pauline Weetman is a Professor of Accounting at the University of Strathclyde, and Manli Sun is a Lecturer in Accounting at Renmin University of China.

  • Pauline Weetman,

    1. University of Strathclyde
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    • Jason Zezhong Xiao is a Senior Lecturer in the Cardiff Business School, Cardiff University (xiao@cf.ac.uk), Pauline Weetman is a Professor of Accounting at the University of Strathclyde, and Manli Sun is a Lecturer in Accounting at Renmin University of China.

  • Manli Sun

    1. Renmin University of China
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    • Jason Zezhong Xiao is a Senior Lecturer in the Cardiff Business School, Cardiff University (xiao@cf.ac.uk), Pauline Weetman is a Professor of Accounting at the University of Strathclyde, and Manli Sun is a Lecturer in Accounting at Renmin University of China.


  • Jason Xiao acknowledges a Cardiff Business School Seedcorn Grant that financially supported the interviews relating to this article. We are grateful to those persons who participated in the interviews and thank three anonymous reviewers for constructive and helpful comments.

Abstract

This article investigates the role of political influence, as well as accounting tradition and the equity market, in China's recent changes in accounting regulation. We find that the Chinese government, in part self-motivated and in part under external pressure, has been active in developing accounting standards in harmony with international accounting standards. However, it has retained a uniform accounting system in the Enterprise Accounting System issued in 2000 to accommodate the special circumstances of a transforming government, strong state-ownership, a weak accounting profession, a weak and imperfect equity market, and the inertial effect of accounting tradition and cultural factors. This article also contributes to existing models of accounting system classification by illustrating the need for considering political influence as a factor that affects the rate of transition towards full implementation of international accounting standards.

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