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This study uses an ideal setting to capture the influence of the national institutional environment on outcomes (i.e., earnings quality) of IFRS convergence using a within‐country approach. We show that earnings quality in terms of discretionary accruals and persistence has increased, while conservatism has decreased after IFRS convergence. The results are more pronounced in companies with a strong institutional environment. Our results are robust after considering incentives and other confounding factors. Our findings show differences in earnings quality in firms within a country adopting the same standards, let alone in firms worldwide. This indicates the context embeddedness of accounting standards.

This study investigates the impact of property rights reform on private firms' environmental, social, and governance (ESG) practices. ESG investing has become mainstream and a hot topic globally, but it is a black box of corporate ESG practices and performance. Importantly, it is not clear how to specifically enhance private firms' ESG practices.This study addresses this problem by exploring an ideal setting of China's mixed-ownership reform in which private firms acquire equity in state-owned enterprises (SOEs).We examine whether and how this reform affects private acquirer firms' ESG practices. Using a powerful differencein-differences design, we find that mixed-ownership reform significantly enhances private firms' ESG practices through heightened public scrutiny and the privileges of formal financing and government subsidies that are available due to the firms' partial government ownership after mixedownership reform. Our findings have policy implications for promoting ESG practices and SOE reform. Specifically, our empirical evidence indicates that mixed-ownership reform can facilitate sustainable development for both SOEs and private firms.

There has been a significant worldwide movement to adopt International Financial Reporting Standards (IFRS), which are more principles-based compared to many of the more rules-based national accounting standards that they replaced. The majority of previous studies focus on how this financial reporting environment change influences earnings quality, while there has been limited research on how auditors respond to IFRS. We perform an experiment using Chinese professional auditors to test the joint effects of the type of accounting standards and the strength of the financial regulatory regime on both the quantity and quality of auditors' evidence demands. We find that auditors are likely to have more evidence demands and, particularly, more diagnostic evidence demands under principles-based accounting standards. This influence is more pronounced under the stronger financial regulatory regime. The effect of the institutional environment on IFRS standards is an important international reporting topic particularly for emerging markets like China where there is strong economic growth with an increased focus on reporting standards and regulation. China is an ideal environment to examine this topic because it is the largest country in the world to adopt IFRS, and many Chinese auditors have experienced both rules-and principles-based accounting standards.