“Celebrating the 45th Anniversary of the University of Macau”
Seeing Through the Fog: Financial Statement Disaggregation and Managerial Oversight
Prof. Cheng (Colin) ZENG, Associate Professor, School of Accounting and Finance, Hong Kong Polytechnic University
Date: 27 April 2026 (Monday)
Time: 9:00-12:30
Venue: E22-G013
Host: Prof. Rubin HAO, Assistant Professor in Accounting
Abstract
The role of financial information disaggregation in contracting is important but remains underexplored. Leveraging a regulatory change in China that requires firms to disclose R&D expenses as a separate line item in their income statement rather than aggregating them under administrative expenses, we examine whether such disaggregation enhances external monitoring of managerial behavior. Using a difference-in-differences design, we find that firms that are more affected by the disclosure rule experience a significantly larger decline in both abnormal executive compensation and perks embedded within administrative expenses. The effect is more pronounced in firms with stronger external monitoring of administrative expenses, less sophisticated investors, excessive pre-reform administrative expenses, and in non-state-owned enterprises. We also find that abnormal administrative expenses are priced more negatively and that administrative expenses become less sticky following the reform. Overall, our findings offer new insights into the role of disaggregated financial information in strengthening corporate governance and improving resource allocation efficiency.
Speaker
Cheng (Colin) Zeng is an Associate Professor of Accounting at The Hong Kong Polytechnic University. Prior to joining PolyU, he held academic positions as an Assistant Professor at the University of Bristol and as an Associate Professor at the University of Manchester. His research interests are broad, encompassing accounting, finance, and economics. Specific areas of focus include the influence of political and regulatory factors on financial reporting, International Financial Reporting Standards (IFRS), and China-related topics.
His work has been published in leading academic journals such as the Journal of Accounting Research, The Accounting Review, Management Science, Contemporary Accounting Research, Accounting, Organizations and Society, and Production and Operations Management, among others. In addition to his research, Colin serves as an Associate Editor for Abacus and the British Accounting Review.
All are welcome!
