Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory
Journal of Finance and Accounting
Volume 8, Issue 3, May 2020, Pages: 115-124
Received: Apr. 1, 2020;
Accepted: Apr. 23, 2020;
Published: May 14, 2020
Views 429 Downloads 137
Rubing Liu, School of Accounting/Audit Governnance and Risk Control Research Center, Guangdong University of Foreign Studies, Guangzhou, China
Yuyu Zhang, School of Accountancy, Queensland University of Technology, Brisbane, Australia
Teng Lin, School of Accounting/Audit Governnance and Risk Control Research Center, Guangdong University of Foreign Studies, Guangzhou, China
The establishment of central environmental supervision system (CESS) and the departure audits of outgoing local government officials are major environmental initiatives established by the Chinese government during the 18th National Congress of the Communist Party of China in 2012. Their aim is to separate the different environmental responsibilities of the local and central governments. In just one year, central environmental supervisors inspected 30 provinces’ and cities’ environmental performance and punished many local officials for their failures to fulfil their environmental responsibility as part of a national pollution crackdown. Inspired by the significant and profound effects of the environmental audits, we construct a tripartite game model involving the central auditors, environmental whistle-blowers and local government officials. We show that local government officials are more likely to act responsibly and that auditors adopt more detailed auditing procedures due to the involvement of whistle-blowers. This suggests that the central environmental supervision system must be institutionalised, legalised, normalised and focus on protections for whistle-blowers. Environmental audits are useful for focusing on departing officials’ accountability for environmental protection. We urge the government to strengthen the transparency of audit and to distribute environmental audit information on social media.
Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory, Journal of Finance and Accounting.
Vol. 8, No. 3,
2020, pp. 115-124.
Maung, M., Wilson, C. & Tang X. B. (2016). Political connections and industrial pollution: Evidence based on state ownership and environmental levies in china. Journal of Business Ethics, 138 (4): 649-659. https://doi.org/10.1007/s10551-015-2771-5
Van Rooij, B., Li, N., & Wang, Q. (2018). Punishing polluters: Trends, local practice, influences, and their implications for administrative law enforcement in China. China Law and Society Review, 3 (2): 118-176. https://doi.org/10.1163/25427466-00302002
Lu, Y., & Abeysekera, I. (2014). Stakeholders’ power, corporate characteristics, and social and environmental disclosure: Evidence from China. Journal of Cleaner Production, 64: 426-436. https://doi.org/10.1016/j.jclepro.2013.10.005
Shapiro, J. (2016). China’s environmental challenges: John Wiley & Sons.
Chen, H. S. (2017). Legalization of environmental protection supervision system: Location, dilemma and exit. Law Review, 3: 176-187. https://doi.org/10.13415/j.cnki.fxpl.2017.03.019
Dubey, R., Gunasekaran, A., & Ali, S.S. (2015). Exploring the relationship between leadership, operational practices, institutional pressures and environmental performance: A framework for green supply chain. International Journal of Production Economics, 160: 120-132. https://doi.org/10.1016/j.ijpe.2014.10.001
Malin, M. H. (1983). Protecting the whistle-blower from retaliatory discharge. University of Michigan Journal of Law Reform.
Dworkin, T. M., & Callahan, E. S. (1991). Internal whistleblowing: Protecting the interests of the employee, the organization, and society. American Business Law Journal, 2: 267-308. https://doi.org/10.1111/j.1744-1714.1991.tb00634.x|
Murdock, H. (2003). Protecting the whistle-blower. Internal Auditor, 60 (6): 8.
Westman, D. P. (2005). The significance of the Sarbanes-Oxley whistle-blower provisions. Labour Lawyer, 2: 141-155. https://doi.org/10.2307/40862871
Sawyer, K. R., Johnson, J., & Holub, M. (2010). The necessary illegitimacy of the whistle-blower. Business & Professional Ethics Journal, 29 (1/4): 85-107. https://doi.org/10.2139/ssrn.917316
Cordis, A. & Lambert, E. (2017). Whistle-blower laws and corporate fraud: Evidence from the United States. Accounting Forum, 4: 289-299. https://doi.org/10.1016/j.accfor.2017.10.003.
Lai, C. M., & Lai, D. L. (2006). Strengthening the system guarantee of citizens reporting rights. Law Science, 7: 14-24.
Wu, Y. (2013). The private force in public law enforcement: Restatement of legal economics of reward and report system. Law Science, 9: 14-23.
Qian, C. & Chen, J. (2015). Whistle-blower Protection Act for Chinese drug administration in context of chromium-tainted capsule incident. Chinese Pharmaceutical Affairs, 6: 563-567. https://doi.org/10.16153/j.10027777.2015.06.001
Yin, C. Z., Chen, B., Xie, Z., Li, T. & Li, S. G. (2015). Improvement of China’s reporting reward system on food safety referring to western whistle-blower protection act. Journal of Environmental and Occupational Medicine, 6: 597-601. https://doi.org/10.13213/j.cnki.jeom.2015.14753
Che, P. & Jin, Y. (2016). On the construction of the whistle-speaker system in China’s food safety supervision: based on Articles 115 and 133 of the new Food Safety Law. Legality Vision, 28: 206.
Luan, F. G. & Tian, L. Y. (2017) Game analysis of whistling, company and auditor: Research based on the whistle-blower protection system. Journal of Audit and Economics, 1: 38-48.
Zhang, Y. (2017). Rewarding pollution reports highlights environmental protection and governance. Environmental Protection and Circular Economy, 37 (11): 1.
Liu, G. C. (2016). The central environmental protection inspector plays a supervisory role in investigating and supervising people. Environmental Economy, Z3: 21-23.
Ge, C. Z., Weng, Z. X., & Zhao, X. T. (2016). Environmental protection inspector: A top instrument for co-responsibility of the Party and governmental officials. Chinese Journal of Environmental Management, 1: 57-60. https://doi.org/10.16868/j.cnki.1674-6252.2016.01.012
Li, X. J. (2017). Experience and suggestion on petition work of central environmental inspector. Environmental Protection, 13: 62-64. https://doi.org/10.14026/j.cnki.0253-9705.2017.13.014
Cai, C., & Bi, M. Y. (2014). Theoretical thinking about accountability audit of natural resource. Auditing Research, 5: 3-9.
Li, B., & Yin, H. (2016). The theory and methods of the natural resources accountability audit of outgoing officials. Auditing Research, 5: 32-37.
Liu, M. H. & Sun, J. P. (2016). Research on elements of accountability audit of natural resources assets for leading carders. Journal of Audit and Economics, 4: 12-20.
Chen, C. B., Geng, X. Y. & Meng, C. (2016). Thinking based on the practice of accountability audit of natural resource in Jiaozhou city. Auditing Research, 4: 10-14.
Wang, Z. Y., Feng, X. M. & Xu, R. M. (2017). Difficulties and countermeasures of the departure audit of leading cadres’ natural resource assets: Taking Fujian Province as an example. Finance Research, 3: 57-61.
Qin, X. L., Liu, J. M. & Wang, J. Z. (2017). Research on the departure audit of natural resources assets of leading cadres: Based on the practice of Jiangsu province. Friends of Accounting, 20: 97-101.
Zhou, H. B. & Zhou, Q. (2017). Research on natural resource asset management based on auditing perspective. Audit Monthly, 1: 18-21. https://doi.org/10.15882/j.cnki.sjyk.2017.01.006.
Liu, R. B. & Wang, H. B. (2017). Analysis of audit of outgoing leading officials’ natural resources accountability. Auditing Research, 4: 32-38.
Du, X., Wei, J., Zeng, Q. & Chang, Y. (2018). Do auditors applaud corporate environmental performance? Evidence from China. Journal of Business Ethics, 151 (4): 1049-1080. https://doi.org/10.1007/s10551-016-3223-6.
Ran, R. (2013). Political incentives and local environmental governance under a ‘pressurized system’. Comparative Economic & Social Systems 3: 111-118.
Li, H. & Zhou, L. (2005). Political turnover and economic performance: The incentive role of personnel control in China. Journal of Public Economics, 89 (9-10): 1743-1762. https://doi.org/10.1016/j.jpubeco.2004.06.009.
Cao, X., Lemmon, M., Pan, X., Qian, M., & Tian, G. (2018). Political promotion, CEO incentives, and the relationship between pay and performance. Management Science. https://doi.org/10.1287/mnsc.2017.2966.
Lu, Y., & Abeysekera, I. (2017). What do stakeholders care about? Investigating corporate social and environmental disclosure in China. Journal of Business Ethics, 144 (1): 169-184. https://doi.org/10.1007/s10551-015-2844-5
Huang, F. (2017). Research on collusion of government and enterprise in environmental regulation and its preventive mechanism: Jiangsu University.
Schaltegger, S., & Wagner, M. (2017). Managing the business case for sustainability: The integration of social, environmental and economic performance: Routledge.