In November 2013, CKGSB hosted the Review of Accounting Studies (RAST) Conference, a two-day event that gathered 85 scholars from leading academic institutions from around the globe. Since 1996, RAST has served as one of the top international journals in business and finance, and provides an outlet for significant academic research in accounting including theoretical, empirical and experimental work. CKGSB—a research-led business school with world-class faculty—is proud to hold RAST’s conference for the first time in Asia.
Leading up to the conference, Liu Jing, professor of accounting and finance and member of the editorial board of RAST, shed some light on how the presence of RAST in Asia demonstrates the region’s rising influence in academics and accounting in particular.
Q: Accounting is not really a subject that most people who are not in the field thoroughly understand. In simple terms, can you discuss why accounting is important in business and economics?
A: Accounting is a sub-branch of applied economic research, and very closely related to corporate finance. Actually, if you go back 30 to 40 years ago, the accounting department and the finance department of business schools used to be the same thing. For instance, the kind of research discussed in the RAST conference includes topics such as corporate governance and market efficiency, subjects that are also found in corporate finance.
But there are some things in accounting that are quite unique. Accounting is specifically concerned with measurements. When you do planning and analyses of economic activities, you need a measurement to assess impact. A good example of the macro-level application of accounting is gross domestic product (GDP). Without the GDP measurement, it would difficult to find out what the aggregate economy is doing, compared with prior years and with other countries.
At the micro-level, accounting basically measures the economic activities of the firm. For example, I recently wrote a working paper with Prof. James Ohlson, an adjunct professor at CKGSB, where we looked at public companies in China. There is a notion that Chinese firms are inefficient and that they generate very low returns. What we found is that if you look at the accounting measurements, Chinese firms and U.S. firms roughly have the same profitability. But the numbers are distorted by a bias in the accounting system called accounting conservatism. Chinese firms appear less profitable because of their high growth rates. Through our research, we were able to adjust for this bias and uncover the true profitability of Chinese companies. You can imagine the importance of this in assessing the viability of firms in the global market.
Q: You are a member of the editorial board of RAST. Can you tell us a little bit about how CKGSB was selected to host the RAST conference and the significance of the journal itself?
A: RAST is one of the top journals in the field of accounting research, a field that is becoming more and more global. As you mentioned, I am a member of the editorial board and Prof. James Ohlson is also one of the editors of the journal. Jim and I have been working together for a long time, and we thought it would be a great idea to bring RAST to China, because it had never been done before. As a pioneer of world-class business education in China, we thought our school could lead research efforts and host an event of this caliber.
Being published in RAST is a fairly significant accomplishment for accounting researchers. The journal receives lots of submissions a year, and only a few are published. The selection of a particular paper depends on the merits of its research methodologies as well as its contributions to the field of accounting.
Q: What is the purpose of the conference? What kinds of decisions are made when the most prominent accounting researchers meet annually at such an academic event?
A: The purpose of this event is get top scholars together so that they can discuss good research. More often than not, the papers discussed at the conference will go through the review process and be published at the journal.
Q: What do you think about the timing that RAST chose to hold its first conference in China? And what is driving Asia’s academic renaissance?
A: Asia’s increasing prominence in academia can be partly attributed to “the great migration” of established scholars, usually of Asian origin, coming back to Asia. I am one of those scholars who was attracted back to China for various reasons, including the interesting economic landscape that can foster unique knowledge and research, which are demonstrated at CKGSB. At this conference, about 30 of the 85 participants hail from Asian countries, signifying the talent that we have here. A decade ago, Asia’s academic presence was not as robust. Things have changed a lot since then.
Q: It is a big milestone for CKGSB to host the first RAST conference in Asia. Why do you think CKGSB was granted this opportunity?
A: RAST is highly selective about which school can serve as a venue for its annual conference. I think CKGSB was chosen because our institution is a very strong platform where world-class scholars from Asia, Europe, North America, and other regions can come together and interact with academics of a similar caliber. The faculty members at CKGSB are top scholars in their fields and have graduated from the top schools in the United States and Europe. But most importantly, they have mastered rigorous methods of research. The scholars we welcomed at this conference see us as colleagues and as friends. This maintains the high quality of discussions and ideas at the conference, which should be expected from a global academic event of the highest standard.
Q: What do you think should be done to continue increasing China’s and Asia’s role in academia today?
A: The best way to increase Asia’s stake in academia is to strengthen the rigor of research and focus on quality of education. China for example, has highly competitive students. We should couple that with highly competitive educational institutions and faculty. If we continue to invest in that, we will certainly make significant contributions and become thought-leaders on a range of subjects that are of global importance.