| Peer-Reviewed

Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory

Received: 1 April 2020     Accepted: 23 April 2020     Published: 14 May 2020
Views:       Downloads:
Abstract

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.

Published in Journal of Finance and Accounting (Volume 8, Issue 3)
DOI 10.11648/j.jfa.20200803.12
Page(s) 115-124
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Environmental Audit, Environmental Responsibility, Environmental Whistle-blowing, Whistle-blower Protection System, Cooperative Governance, Tripartite Game Analysis

References
[1] http://www.chinadaily.com.cn/china/19thcpcnationalcongress/2017-10/09/ content_33032118.htm
[2] 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
[3] 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
[4] 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
[5] Shapiro, J. (2016). China’s environmental challenges: John Wiley & Sons.
[6] 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
[7] 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
[8] Malin, M. H. (1983). Protecting the whistle-blower from retaliatory discharge. University of Michigan Journal of Law Reform.
[9] 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|
[10] Murdock, H. (2003). Protecting the whistle-blower. Internal Auditor, 60 (6): 8.
[11] Westman, D. P. (2005). The significance of the Sarbanes-Oxley whistle-blower provisions. Labour Lawyer, 2: 141-155. https://doi.org/10.2307/40862871
[12] 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
[13] 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.
[14] Lai, C. M., & Lai, D. L. (2006). Strengthening the system guarantee of citizens reporting rights. Law Science, 7: 14-24.
[15] Wu, Y. (2013). The private force in public law enforcement: Restatement of legal economics of reward and report system. Law Science, 9: 14-23.
[16] 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
[17] 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
[18] 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.
[19] 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.
[20] Zhang, Y. (2017). Rewarding pollution reports highlights environmental protection and governance. Environmental Protection and Circular Economy, 37 (11): 1.
[21] Liu, G. C. (2016). The central environmental protection inspector plays a supervisory role in investigating and supervising people. Environmental Economy, Z3: 21-23.
[22] 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
[23] 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
[24] Cai, C., & Bi, M. Y. (2014). Theoretical thinking about accountability audit of natural resource. Auditing Research, 5: 3-9.
[25] Li, B., & Yin, H. (2016). The theory and methods of the natural resources accountability audit of outgoing officials. Auditing Research, 5: 32-37.
[26] 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.
[27] 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.
[28] 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.
[29] 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.
[30] 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.
[31] Liu, R. B. & Wang, H. B. (2017). Analysis of audit of outgoing leading officials’ natural resources accountability. Auditing Research, 4: 32-38.
[32] 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.
[33] Ran, R. (2013). Political incentives and local environmental governance under a ‘pressurized system’. Comparative Economic & Social Systems 3: 111-118.
[34] 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.
[35] 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.
[36] 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
[37] Huang, F. (2017). Research on collusion of government and enterprise in environmental regulation and its preventive mechanism: Jiangsu University.
[38] Schaltegger, S., & Wagner, M. (2017). Managing the business case for sustainability: The integration of social, environmental and economic performance: Routledge.
Cite This Article
  • APA Style

    Rubing Liu, Yuyu Zhang, Teng Lin. (2020). Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory. Journal of Finance and Accounting, 8(3), 115-124. https://doi.org/10.11648/j.jfa.20200803.12

    Copy | Download

    ACS Style

    Rubing Liu; Yuyu Zhang; Teng Lin. Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory. J. Finance Account. 2020, 8(3), 115-124. doi: 10.11648/j.jfa.20200803.12

    Copy | Download

    AMA Style

    Rubing Liu, Yuyu Zhang, Teng Lin. Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory. J Finance Account. 2020;8(3):115-124. doi: 10.11648/j.jfa.20200803.12

    Copy | Download

  • @article{10.11648/j.jfa.20200803.12,
      author = {Rubing Liu and Yuyu Zhang and Teng Lin},
      title = {Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory},
      journal = {Journal of Finance and Accounting},
      volume = {8},
      number = {3},
      pages = {115-124},
      doi = {10.11648/j.jfa.20200803.12},
      url = {https://doi.org/10.11648/j.jfa.20200803.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20200803.12},
      abstract = {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.},
     year = {2020}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory
    AU  - Rubing Liu
    AU  - Yuyu Zhang
    AU  - Teng Lin
    Y1  - 2020/05/14
    PY  - 2020
    N1  - https://doi.org/10.11648/j.jfa.20200803.12
    DO  - 10.11648/j.jfa.20200803.12
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 115
    EP  - 124
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20200803.12
    AB  - 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.
    VL  - 8
    IS  - 3
    ER  - 

    Copy | Download

Author Information
  • School of Accounting/Audit Governnance and Risk Control Research Center, Guangdong University of Foreign Studies, Guangzhou, China

  • School of Accountancy, Queensland University of Technology, Brisbane, Australia

  • School of Accounting/Audit Governnance and Risk Control Research Center, Guangdong University of Foreign Studies, Guangzhou, China

  • Sections