Browsing by Author "Zhang, Jieying"
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Item The Role of Federal Agency Accounting Quality in Federal Budget Allocation: Evidence From Audit Opinions(May 2023) He, Jiapeng 1996-; Li, Ningzhong; Hasler, Michael; Cready, William M.; Radhakrishnan, Suresh; Files, Rebecca; Zhang, JieyingPoliticians allocate substantial resources among federal government agencies through budgeting, yet little empirical evidence exists regarding whether accounting quality of federal agencies plays a role in this political process. Using audit opinions on agency financial statements to measure accounting quality, I find that when an agency receives a modified audit opinion, the president proposes and Congress passes a lower budget for the agency, and the budget disagreement between the president and Congress increases. These effects are stronger when politicians (the president and Congress) have stronger incentives to demonstrate accountability in federal spending. To enhance identification, I exploit the enactment of the Department of Homeland Security (DHS) Audit Requirement Target Act, which mandated DHS to end its long-lasting modified audit opinions. I find that the president proposes a higher budget for DHS, and the budget disagreement for DHS decreases after the Act. These findings suggest that higher-quality federal agency accounting plays an important role in federal budgeting by reducing information asymmetry between bureaucrats (agencies) and politicians.Item Why Do Firms Hide Customer Identities? An Accounting Manipulation Explanation(2021-05-01T05:00:00.000Z) Li, Chenchen; Cready, William M.; Li, Ningzhong; Wei, Kelsey D.; Files, Rebecca; Zhang, Jieying; Zhou, YibinPrior studies document that firms withhold about 40% of customer identities and attribute this practice to proprietary cost concerns. In this study, I propose a new economic reason for firms’ concealment of customer identities. I argue that when firms manipulate accounts related to customers, namely revenues and accounts receivable, they have incentives to conceal customer identities to reduce the likelihood of detection. Consistent with this argument, I find in a differencein-differences analysis that firms engaging in fraud related to revenues and accounts receivable reduce the disclosure of customer identities by 26% during the fraudulent years, relative to firms engaging in other types of fraud. The effect is more pronounced when managers have personal gains from the fraud, when firms have stronger relationships with their customers, and when firms face greater external monitoring from analysts and institutional investors. I also find that fraud detection risk is lower for firms that conceal customer identities than for firms that do not, consistent with the benefit of hiding customer identities.