Accepted by Gordon Richardson. An earlier version of this paper was presented at the 2006 Contemporary Accounting Research Conference, generously supported by the Canadian Institute of Chartered Accountants, the Certified General Accountants of Ontario, the Certified Management Accountants of Ontario, and the Institute of Chartered Accountants of Ontario. We have received useful comments from Gary Biddle, Charles Chen, Kevin Chen, Dana Hollie, Woon O. Jung, Clive Lennox, Tony Kang, Soo Y. Kwon, Neale O'Connor, Xijia Su, Cheong H. Yi, Yoonseok Zang, and participants at the 2005 annual meeting of the Canadian Academic Accounting Association, the 2005 annual meeting of the Korea Accounting Association, the 2006 JCAE Doctoral Consortium at Xiamen University, and the 2006 annual meeting of the American Accounting Association, and research workshops at City University of Hong Kong, Hong Kong Polytechnic University, Hong Kong University of Science and Technology, Seoul National University, Singapore Management University, University of Auckland, and University of Technology at Sydney. Special thanks go to Gordon Richardson (editor), Michel Magnan (discussant), two anonymous reviewers, and participants at the 21st Contemporary Accounting Research Conference and the Accounting Mini Conference in Honor of Nick Dopuch held at Washington University in St. Louis for their helpful comments and suggestions. Jeong-Bon Kim acknowledges financial support from the Area of Strategic Development Research Grant at the Faculty of Business of the Hong Kong Polytechnic University. Dan Simunic acknowledges financial support from the KPMG Research Bureau in Financial Reporting at the Sauder School of Business and the Social Sciences and Humanities Research Council of Canada. All errors are our own.