How have sustainable development goals influenced accounting and accountability settings in Chinese corporations?
this is a dissertation totally need 8500 words , first doc is my proposal and professor feedback, The second and third doc is requirement, The fourth and fifth doc is dissertaion sample , u could refer to finish
Requirements: 8500
How have sustainable development goals influenced accounting and accountability settings in Chinese corporations?
. Introduction
The investigation on the impact of Sustainable Development Goals (SDGs) on accounting and accountability within the Chinese corporate context emerges as a significant area of interest given China’s influential role in the global economy and sustainability initiatives. As China continues to progress in its globalization endeavors and commit to the United Nations’ SDGs, it becomes essential to understand how these goals shape its corporate accounting practices. The research holds paramount importance for diverse stakeholders including academic researchers, policy makers, corporations, and investors. For academics, the study enriches the existing knowledge base by offering a profound analysis of the nexus between SDGs and accounting within China’s unique socio-political landscape. It equips policy makers with insights that could guide decisions to amplify corporate accountability and transparency in support of SDG realization. Corporations and investors, on the other hand, gain valuable understanding of how SDG adoption can transform business strategies and financial reporting. The research makes a significant contribution to literature by bridging the theoretical understanding of the relationship between accounting and SDGs with empirical evidence drawn from Chinese corporations. Contrasting most existing research that concentrates on Western contexts, this study navigates through China’s pursuit of sustainable development and its socio-political features to investigate their influence on accounting and accountability practices. Through such exploration, it offers fresh perspectives on SDG integration in corporate accounting in a non-western milieu, thereby broadening the comprehension of global sustainability accounting practices.
2. Literature review and hypotheses
The relevance of accounting to the Sustainable Development Goals (SDGs) is outlined in the research of Bebbington and Unerman (2018), which discusses how the field can contribute to SDG discussions and foster theoretical innovation. They argue that while the SDGs offer novel opportunities for research, accounting academics have been slow to engage in SDG-centric studies, resulting in a gap between the pursuit of these goals and the development of accounting scholarship. This lack of engagement prevents accounting from fully contributing to the body of knowledge necessary to realize SDGs. Conversely, Shen et al. (2020) point out that in China, research focus is shifting towards SDGs, with emphasis on sustainability reporting, corporate social responsibility disclosures, and environmental management. This research aligns with China’s globalization initiatives and is facilitated by scholars actively engaging with the country’s sustainable development objectives.
Mook (2020) presents a fourth wave of integrated social accounting influenced by the popularization of SDGs, advocating an accounting model that incorporates the goals’ lens in organizational activities. This model necessitates time, resources, and potential additional funds for new information systems. Despite implementation challenges, this model could potentially guide social change and help organizations comprehend their social and economic dynamics. Studies by Stefanescu (2022) and Hummel & Szekely (2022) also support the role of SDGs in accounting, with the former linking SDGs to sustainability reporting and proposing it as a tool for transparency enhancement, and the latter examining SDG disclosures in firms’ annual reports, which is associated with increased SDG reporting quality. However, challenges persist, such as lack of quantitative and forward-looking information. The practical difficulties in implementing the System of Environmental-Economic Accounting (SEEA) for SDGs monitoring, particularly in developing countries, are highlighted by Pirmana et al. (2019), further emphasizing the need for capacity building to support such implementation.
Hypothesis 1 (H1): The implementation of Sustainable Development Goals (SDGs) has significantly impacted the accounting practices in Chinese corporations, making them more sustainability-oriented.
Hypothesis 2 (H2): There is a positive correlation between the use of SDGs in Chinese corporations’ accounting practices and the enhancement of transparency in their reporting.
3. Methodology
The method employed is a Difference-in-Differences (DiD) approach to identify the causal impact of the implementation of Sustainable Development Goals (SDGs) on the accounting practices in Chinese corporations and the enhancement of transparency in their reporting.
The DiD method is applied with data on treatment and control groups before and after the policy implementation. In this case, the treatment group would be corporations in China that have implemented SDGs, and the control group would be similar corporations that have not implemented SDGs. The before and after periods would be before and after the implementation of SDGs in the corporations. The primary purpose here is to check the difference in the accounting practices of corporations and the level of transparency in their reporting between the before and after periods in both the treatment and control groups.
Hypothesis 1 (H1):
The regression equation can be written as:
Sipt = α + β*SDGsipt + γ*Xipt + λp + δt + εipt
Where:
Sipt is a measure of sustainability orientation of accounting practices for corporation i at province p at time t.
SDGsipt is a binary variable representing the implementation of SDGs by corporation i at province p at time t (1 if implemented, 0 otherwise).
Xipt is a vector of control variables for corporation i at province p at time t.
λ_p represents fixed effects for each province (corporation’s location).
δ_t represents fixed effects for each time period.
ε_ipt is the error term.
Hypothesis 2 (H2):
A similar approach can be used to assess the second hypothesis, but the dependent variable would change. The equation can be written as:
Tipt = α + β*SDGsipt + γ*Xipt + λp + δt + εipt
Where:
Tipt is a measure of transparency in reporting for corporation i at province at time t.
Other variables are defined as in the previous equation.
The measure of sustainability orientation of accounting practices (Sipt) and the measure of transparency in reporting (Tipt) could be scores or indexes created based on the elements of accounting practices that relate to sustainability or transparency, respectively. Data for these measures would need to be collected from corporations’ accounting and reporting documents.
Data for the implementation of SDGs (SDGsipt) could be collected from corporate reports or other relevant documents. The control variables (Xipt) could include variables like corporation size, industry type, and profitability and would also be collected from corporate reports or databases.
Province-level fixed effects (λp) control for time-invariant unobserved differences across provinces (e.g., differences in laws and regulations), while time fixed effects (δt) control for shocks that equally affect all corporations at a specific time (e.g., global economic crisis). The error term (εipt) captures all other unobserved factors affecting the dependent variable.
As for the data, it can be obtained from a variety of sources such as financial statements, annual reports, and sustainability reports of the corporations. Information about the implementation of SDGs can be directly gathered from these reports or from dedicated corporate sustainability websites or databases. Data for the control variables would typically be collected from corporate financial databases.
References
Bebbington, J., & Unerman, J. (2020). Advancing research into accounting and the UN sustainable development goals. Accounting, Auditing, & Accountability, 33(7), 1657-1670.
Bebbington, J., & Unerman, J. (2018). Achieving the united nations sustainable development goals: An enabling role for accounting research. Accounting, Auditing, & Accountability, 31(1), 2-24.
Hörisch, J. (2021). The relation of COVID-19 to the UN sustainable development goals: Implications for sustainability accounting, management and policy research. Sustainability Accounting, Management and Policy Journal (Print), 12(5), 877-888.
Hummel, K., & Szekely, M. (2022). Disclosure on the sustainable development goals – evidence from Europe. Accounting in Europe, 19(1), 152-189.
Mook, L. (2020). Performance management, impact measurement, and the sustainable development goals: The fourth wave of integrated social accounting. Canadian Journal of Nonprofit and Social Economy Research, 11(2), 20-34.
Pirmana, Alisjahbana, Hoekstra, & Tukker. (2019). Implementation barriers for a system of environmental-economic accounting in developing countries and its implications for monitoring sustainable development goals. Sustainability (Basel, Switzerland), 11(22), 6417.
Shen, H., Ng, A. W., Zhang, J., & Wang, L. (2020). Sustainability accounting, management and policy in china: Recent developments and future avenues. Sustainability Accounting, Management and Policy Journal (Print), 11(5), 825-839.
Stefanescu, C. A. (2022). Linking sustainability reporting frameworks and sustainable development goals. Accounting Research Journal, 35(4), 508-525.
How have sustainable development goals influenced accounting and accountability settings in Chinese corporations?
. Introduction
The investigation on the impact of Sustainable Development Goals (SDGs) on accounting and accountability within the Chinese corporate context emerges as a significant area of interest given China’s influential role in the global economy and sustainability initiatives. As China continues to progress in its globalization endeavors and commit to the United Nations’ SDGs, it becomes essential to understand how these goals shape its corporate accounting practices. The research holds paramount importance for diverse stakeholders including academic researchers, policy makers, corporations, and investors. For academics, the study enriches the existing knowledge base by offering a profound analysis of the nexus between SDGs and accounting within China’s unique socio-political landscape. It equips policy makers with insights that could guide decisions to amplify corporate accountability and transparency in support of SDG realization. Corporations and investors, on the other hand, gain valuable understanding of how SDG adoption can transform business strategies and financial reporting. The research makes a significant contribution to literature by bridging the theoretical understanding of the relationship between accounting and SDGs with empirical evidence drawn from Chinese corporations. Contrasting most existing research that concentrates on Western contexts, this study navigates through China’s pursuit of sustainable development and its socio-political features to investigate their influence on accounting and accountability practices. Through such exploration, it offers fresh perspectives on SDG integration in corporate accounting in a non-western milieu, thereby broadening the comprehension of global sustainability accounting practices.
2. Literature review and hypotheses
The relevance of accounting to the Sustainable Development Goals (SDGs) is outlined in the research of Bebbington and Unerman (2018), which discusses how the field can contribute to SDG discussions and foster theoretical innovation. They argue that while the SDGs offer novel opportunities for research, accounting academics have been slow to engage in SDG-centric studies, resulting in a gap between the pursuit of these goals and the development of accounting scholarship. This lack of engagement prevents accounting from fully contributing to the body of knowledge necessary to realize SDGs. Conversely, Shen et al. (2020) point out that in China, research focus is shifting towards SDGs, with emphasis on sustainability reporting, corporate social responsibility disclosures, and environmental management. This research aligns with China’s globalization initiatives and is facilitated by scholars actively engaging with the country’s sustainable development objectives.
Mook (2020) presents a fourth wave of integrated social accounting influenced by the popularization of SDGs, advocating an accounting model that incorporates the goals’ lens in organizational activities. This model necessitates time, resources, and potential additional funds for new information systems. Despite implementation challenges, this model could potentially guide social change and help organizations comprehend their social and economic dynamics. Studies by Stefanescu (2022) and Hummel & Szekely (2022) also support the role of SDGs in accounting, with the former linking SDGs to sustainability reporting and proposing it as a tool for transparency enhancement, and the latter examining SDG disclosures in firms’ annual reports, which is associated with increased SDG reporting quality. However, challenges persist, such as lack of quantitative and forward-looking information. The practical difficulties in implementing the System of Environmental-Economic Accounting (SEEA) for SDGs monitoring, particularly in developing countries, are highlighted by Pirmana et al. (2019), further emphasizing the need for capacity building to support such implementation.
Hypothesis 1 (H1): The implementation of Sustainable Development Goals (SDGs) has significantly impacted the accounting practices in Chinese corporations, making them more sustainability-oriented.
Hypothesis 2 (H2): There is a positive correlation between the use of SDGs in Chinese corporations’ accounting practices and the enhancement of transparency in their reporting.
3. Methodology
The method employed is a Difference-in-Differences (DiD) approach to identify the causal impact of the implementation of Sustainable Development Goals (SDGs) on the accounting practices in Chinese corporations and the enhancement of transparency in their reporting.
The DiD method is applied with data on treatment and control groups before and after the policy implementation. In this case, the treatment group would be corporations in China that have implemented SDGs, and the control group would be similar corporations that have not implemented SDGs. The before and after periods would be before and after the implementation of SDGs in the corporations. The primary purpose here is to check the difference in the accounting practices of corporations and the level of transparency in their reporting between the before and after periods in both the treatment and control groups.
Hypothesis 1 (H1):
The regression equation can be written as:
Sipt = α + β*SDGsipt + γ*Xipt + λp + δt + εipt
Where:
Sipt is a measure of sustainability orientation of accounting practices for corporation i at province p at time t.
SDGsipt is a binary variable representing the implementation of SDGs by corporation i at province p at time t (1 if implemented, 0 otherwise).
Xipt is a vector of control variables for corporation i at province p at time t.
λ_p represents fixed effects for each province (corporation’s location).
δ_t represents fixed effects for each time period.
ε_ipt is the error term.
Hypothesis 2 (H2):
A similar approach can be used to assess the second hypothesis, but the dependent variable would change. The equation can be written as:
Tipt = α + β*SDGsipt + γ*Xipt + λp + δt + εipt
Where:
Tipt is a measure of transparency in reporting for corporation i at province at time t.
Other variables are defined as in the previous equation.
The measure of sustainability orientation of accounting practices (Sipt) and the measure of transparency in reporting (Tipt) could be scores or indexes created based on the elements of accounting practices that relate to sustainability or transparency, respectively. Data for these measures would need to be collected from corporations’ accounting and reporting documents.
Data for the implementation of SDGs (SDGsipt) could be collected from corporate reports or other relevant documents. The control variables (Xipt) could include variables like corporation size, industry type, and profitability and would also be collected from corporate reports or databases.
Province-level fixed effects (λp) control for time-invariant unobserved differences across provinces (e.g., differences in laws and regulations), while time fixed effects (δt) control for shocks that equally affect all corporations at a specific time (e.g., global economic crisis). The error term (εipt) captures all other unobserved factors affecting the dependent variable.
As for the data, it can be obtained from a variety of sources such as financial statements, annual reports, and sustainability reports of the corporations. Information about the implementation of SDGs can be directly gathered from these reports or from dedicated corporate sustainability websites or databases. Data for the control variables would typically be collected from corporate financial databases.
References
Bebbington, J., & Unerman, J. (2020). Advancing research into accounting and the UN sustainable development goals. Accounting, Auditing, & Accountability, 33(7), 1657-1670.
Bebbington, J., & Unerman, J. (2018). Achieving the united nations sustainable development goals: An enabling role for accounting research. Accounting, Auditing, & Accountability, 31(1), 2-24.
Hörisch, J. (2021). The relation of COVID-19 to the UN sustainable development goals: Implications for sustainability accounting, management and policy research. Sustainability Accounting, Management and Policy Journal (Print), 12(5), 877-888.
Hummel, K., & Szekely, M. (2022). Disclosure on the sustainable development goals – evidence from Europe. Accounting in Europe, 19(1), 152-189.
Mook, L. (2020). Performance management, impact measurement, and the sustainable development goals: The fourth wave of integrated social accounting. Canadian Journal of Nonprofit and Social Economy Research, 11(2), 20-34.
Pirmana, Alisjahbana, Hoekstra, & Tukker. (2019). Implementation barriers for a system of environmental-economic accounting in developing countries and its implications for monitoring sustainable development goals. Sustainability (Basel, Switzerland), 11(22), 6417.
Shen, H., Ng, A. W., Zhang, J., & Wang, L. (2020). Sustainability accounting, management and policy in china: Recent developments and future avenues. Sustainability Accounting, Management and Policy Journal (Print), 11(5), 825-839.
Stefanescu, C. A. (2022). Linking sustainability reporting frameworks and sustainable development goals. Accounting Research Journal, 35(4), 508-525.
LECTURE 2Research Dissertation998N1 & 123N1
Brief review of last week classRole of SupervisorsApproaches & Methodology to ResearchLecture Outline
•Research Design: what is it? How to build a RD?•Components of Research Design: Research Problem: Topic, Focus and RQTheoretical PerspectivesMethododolgyMethods•Theory and Theorizing•Methodology & Methods (see today class)•Writing upLAST WEEK CLASS
Supervisor / Student list will be on Canvas immediately after the third lecture.Primary role is to help with research methods, NOT the research itself, and NOT to teach contentContact with your supervisor can be via email, or, if agreed, alternative methods (Telephone, Skype / Facetime etc)Contact time is limited -make best use of it!Dissertation Supervisors
By early June, you should agree with your supervisor:The area you are going to research & focus of your researchWhat support you require from them, and howDissertation Supervisors
Supervisors will review draft sections, but not over and over again (USUALLY ONCE)Supervisors will give overall feedback on how to improve your work Supervisors will NOT tell you what to do or write, nor will they proof-read your workWorking with your Supervisor
The more you put in, the more you will take out.Good example:Send your supervisor an outline, with an accompanying message highlighting specificareas you feel that you need guidance on.Arrange a time to discuss this guidance, having allowed time for your supervisor to consider the work.Bad example:Send your supervisor an email that says “My work is a real mess. Could I make an appointment with you as soon as possible?”Working with your Supervisor
Supervision is most effective when you and your supervisor clearly understand your work.Throughout the process you should be clear about:1. Your research area, including the research question as it currently stands 2. Your methodology, you should be able to provide a very brief (a sentence or two) summaryAs the work progresses, you should also be clear about:3. Findings, results, and relevanceWorking with your Supervisor
Finally:Always be prepared to explain and justify aspects of your work to your supervisorDo not assume they already know everything about your work or the specific subject areaWorking with your Supervisor
Questions?
Approach to research and your dissertation:Saunders, M., Thornhill, A., Lewis, P. (2012) Research Methods for Business Students. London: FT Prentice Hall. ISBN-13: 978-0273750758[Available as an ebookvia the Library]Specific guidance on Accounting Research:Ryan, B., Scapens, R., and Theobald, M. (2002) Research Method & Methodology in Finance and Accounting (2nd Ed). ISBN Oxford: Oxford University Press.The Research Process
What and how to researchTable 1.1 A taxonomy for considering the ‘relevance gap’ in relation to managerial knowledgeSource:Developed from Hodgkinson et al. (2001)
Basic and Applied ResearchFigure 1.1Basic and applied researchSource:Authors’experience; Easterby-Smith et al. (2012); Hedrick et al. (1993)
Self Assessment of Idea:Capability: is it feasible?Is the topic something with which you are really interested?Do you have, or can you develop within the project time frame, the necessary research skills to undertake the topic?Is the research topic achievable within the available time?Will the topic still be current when you finish your dissertation?Is the topic achievable within the financial resources that are likely to be available?Are you reasonably certain of being able to gain access to data you are likely to require for this topic?
Self Assessment of Idea:Appropriateness: is it worthwhile?Does the topic fit the specifications and meet the standards set?Does your topic contain issues that have a clear link to theory?Are you able to state your research question(s), aim and objectives clearly?Will your proposed research be able to provide fresh insights into this topic?Does your topic relate clearly to the idea you have been given (perhaps by an organisation)?Are the findings for this topic likely to be symmetrical: that is, of similar value whatever the outcome?Does the topic match your career goals?
Understanding of what has already been written is essential when:Planning your workDeveloping your ideaPlanning your methodologyConducting your workDocumenting your work[The Literature Review will be covered in more detail in next week’s Lecture]Importance of Literature
The research “Onion”
Note:Just because accounting uses numbers, this does not mean accounting research is always Quantitative Be realistic about what you can achieve in the time givenMethodological Choice
Note:Use of retrospective, secondary data still possible, however caution should be exercised to avoid researcher bias.Classical Experiment Strategy
Note:It is highly unlikely that you will be able to adopt this approach!Remember the self assessment –“…in the available time”Action Research Strategy
You are only expected to use secondarydatain your researchIntegrity and objectivity are required still though*Pre-check ethical review form is due on 7thJune * Ethical review form submission deadline is 30thJune 2023 (better by 20th)Ethical Issues in Research
All research should consider limitations of sampling.The approach must be justified, and limitations acknowledged.Collecting Data
Advantages and Disadvantages of secondary data must be understood and acknowledged Collecting Data –Secondary SourcesAdvantages•Fewer resource requirements•Unobtrusive•Longitudinal studies feasible•Comparative/contextual data•Unforeseen discoveries•Permanence of data Disadvantages•Original purpose does not match your need•Access difficult/costly•Aggregation/definition unsuitable•No control over data quality•Initial purpose affects how data is presented
Collecting Data –Secondary Sources
Qualitative and Quantitative DataQuantitative DataEg: Frequencies, financial informationRequires analysis and interpretation: Graphs, tables, statistical analysis (relationships and modelling)Qualitative DataEg: published documents (annual reports), interviewsRequires analysis and interpretation as above, however, first some requires organisation
Qualitative Data –CodingCategorising data with similar meaningsCondenses sentences(s), images etcinto a particular codeInductive Deductive
Qualitative Data –Inductive ApproachData collected and explored to identify themes and issuesConceptual framework developed as you proceedAvoids being sensitised by existing theoretical constructsNote:This is unlikely to be an appropriate approach for your work.Remember self-assessment: Do you have, or can you develop within the project time frame, the necessary research skills to undertake the topic?Is the research topic achievable within the available time?Does your topic contain issues that have a clear link to theory?
Qualitative Data –Deductive ApproachUses existing theory to formulate question and objectivesDevelop a framework for analysisWith Care…what are the variableswhat are the themes/issuesTranscribe data into frameworkNote:Link to theory is an essential component of your Research Dissertation
Today we have discussed:The role of supervisorsRelevance gap –considering pedantic science, popularist science, puerile science and pragmatic scienceThe research process –including research philosophies, approaches to theory development, methodological choice, research strategies, time horizons and data collection and analytical techniquesEthical issues in researchOverall, consider the self-assessment your research idea early on and ensure that the research is feasible and worthwhileConclusion
Give an example of just ONE of Pedantic, Popularist, Puerile, or Pragmatic researchANDChoose a journal articleIdentify the source and usage of dataIdentify the limitations of the dataDiscuss in classWorking group
Sussex Business School769N1 –Research Project of International Accounting and Corporate GovernanceTOPIC: THE ROLE OF TRADITIONAL ACCOUNTING IN MAKING DESTRUCTION OF WAR INVISIBLE;EVIDENCE FROM THE CONFLICT IN UKRAINE
2Contents1.0Introduction……………………………………………………………………………………………………….32.0How accounting makes war invisible…………………………………………………………………….43.0Background of the conflict in Ukraine…………………………………………………………………..64.0The impact of destruction in conflict on Ukraine…………………………………………………….94.1Hospitals and clinics…………………………………………………………………………………104.2Water and sanitation………………………………………………………………………………….114.3Electricity and gas…………………………………………………………………………………….124.4Education………………………………………………………………………………………………..144.5Transportation………………………………………………………………………………………….154.6How destruction in conflict affected Ukraine’s economy………………………………155.0The impact of the conflict in Ukraine on Russia……………………………………………………175.1Russian military spending during the period of conflict in Ukraine…………………175.2Welfare expenditure………………………………………………………………………………….185.3Economic sanctions fortheUkrainian conflict……………………………………………..195.4Cost Russia paid for the annexation of Crimea……………………………………………..215.5Russian economic crisis…………………………………………………………………………….236.0The impact of the conflict in Ukraine on flight MH17…………………………………………..237.0Concepts that a complete accounting for war should include………………………………….248.0Conclusion……………………………………………………………………………………………………….25Bibliography…………………………………………………………………………………………………………….28Appendices……………………………………………………………………………………………………………….34
31.0IntroductionThis paper will investigate how destruction in theconflict in Ukraine was made invisible through traditional accounting. Theinvestigation will initiate with evaluating the role of accounting in terms of making war invisible. In this section, discussion of various authors will be carried outregarding therelationship betweentraditional accounting, military and wars in the past.In order to elaborate on this investigation, this paper will highlight the background of the conflict in Ukraine. This section is dedicated to explorethe historical connection of Ukraine and Russia, political situation of both countries, the reason behind the emergence of Russian separatistsin Ukraine, the reason behind Russia’s business and political interest in Ukraine and when the conflict was triggered and the basis of this.This paper will then follow on to discuss the impact of the destruction in conflict on Ukraine,as a victim country. It will discuss in detail to what extent infrastructures, such ashospitals, clinics, water,sanitation, electricity, gas, education andtransportation were destroyed and the consequences of losing these infrastructures on the people of Ukraine. Additionally, the effect of this destruction on Ukraine’s economy is analysed to find out the financial impact of this war on Ukraine.Theresearchcarried out in this paperwould have beenincompleteif the consequences of this war on the aggressor country wasnot taken into consideration. Therefore, the costs that Russia paid for this conflict is measured in detail. This includes, analysing the Russian military spendingduring wartime, the amount of Russian expenditure on social welfarecompared to military expenditure, the effect of the conflict inUkraine on Russia’s foreign relationshipand the impact of this on Russian trade, followed by a discussion onthe economic crisis in Russia, which stemmed from this conflict.Additionally, Russia and Ukraine were not the only countries that suffered fromthis conflict. A civilian aircraft that was flying over the area of conflict was destroyed during wartime (Ministry of Information Policy ofUkraine, 2018). How and when the aircraft was destroyed, who destroyed the aircraft, how much the aircraft was worth, how many passengers were affected, how this destruction has financially affected the owner company of the aircraft, the
4Ukrainian government and other airline companies, istherefore also evaluated. This paper then suggestswhich concepts a complete accounting for war should include.This section points out weaknesses in accounting and offers solutions that would play a vital role in overcomingthese weaknesses. Concluding remarks are then made to finalise this investigation. 2.0How accounting makeswar invisibleAccounting limits analysis to problems that are economic and disregardsproblems other than this. As aresult, the intrinsic value of what is being analysed in accounting is masked and remains hidden. For example,the sale of wheat to starving people and the sale of deadly weapons are not differentiated as constructive or destructive activities in accounting. According to the principles of accounting, natural disasters, entertainment businesses, committed crimes and dumping toxic waste in the environment are all creating value, as long as they are making profitsfor businesses (Boulding, 2000).The interpretation of the preparation and execution of war is interconnected with accounting. For instance, in accounting, in the budgeting processfor war,the long-term costs, such asphysical, social, psychological, economic and environmental costs are not taken into consideration, which makes war a feasible resolution to mitigate conflicts (Chwastiak, 2008).Furthermore, Bauman (2000) discussed the concept called ‘dehumanization’, which means, the language that is used in conventional warfare,toanalyse and interpretwartime activities,is fabricated to hide the death and destruction in victim countries, preventing citizens of the aggressor country to ethically evaluate their actions in war and empathise the victim country. For example, when anuclear war is planned, the main target is interpreted as destruction of weapons that are threatening the aggressor country, but not killing humans in victim countries (Chwastiak & Lehman, 2008).Additionally, destroying a vulnerable village was referred as ‘destroying social infrastructure’, where people were not living but ‘infesting the area’. Slaughtering innocent civilians through bombing in the Vietnam Warwas interpreted as ‘air interdiction of hostiles’ and their homes were mentioned as ‘enemy structures’ (Sheehan, 1988; Harris, 1996).
5Even after many decades this tradition continues. ‘Delivering the ordinance’ was interpreted for dropping bombs on Iraqi civilians in the US-Iraq war (Jensen, 2004) and when US soldiers died in this war, their dead body bagswere called ‘transfer tubes’.Many innocent people are killed during war and to support war, the aggressor governments tend to either refuseto be aware ofcivilian deaths or illustrate fabricated scenarios to deny them. The actual wartime operations committed by the aggressor country, which may involve a significant death toll and inhumanity,is often denied in their official statement. This is to illustrate war as physically and emotionally costlessto victims and the aggressor. It is obvious thatif governments admit this, itwould threaten institutions associated with executing war.Accounting as an official tool forgovernments to create a war budget does not include the death of civilians. As a result, the brutality of war in the form of death remains invisible (Chwastiak, 2008).The impact on humans is therefore hidden throughdehumanising language, which supports the planning and execution of violent actions undertaken by the aggressor country in war.Accounting plays an integral role in this process. Inthe1960’s, Planning, Programming and Budgeting(PPB), a new accounting technique,was introduced in the defence sector, which was implemented to allocate defence resources. This new technique excluded human concerns in accounting. Therefore, anything that isexcluded in this analysis, such as concerns associated with humans, are considered as ‘unthinkable’ and are converted into a resource allocation problem. PPB, as a rational and economic analysis in war, measures sufficiency of nuclear forces through their‘target destruction capacity’ associated with war objectives (Chwastiak, 2001). PPB as a rational economic choice model limits people to logical decisions. Therefore, in terms of buying weapons, it measures the destruction capability and does not measure its negative impact on humans.War requires financing and,to conductwar, governments need to ensurethat there is availability of funds. Atthe expense of social services, such ashealth care, education and housing, wealth generated from tax payers’income is transferred to defence. This processis aided by accounting becauseit is economic and ignores human concerns; therefore, it has become a method for accountants working for governments to transfer welfare funds to defence, illustrating that thisis a rational and normal decision taken by governments (Chwastiak, 1996, 1998, 1999).However, in a business perspective, this does not suggest thatthe techniques of accounting have brought greater efficiency in the military (Funnell, 2006),
6but have greater potential to enhance conflict (Gallhofer & Haslam, 1991).Instead of benefitting the society by ensuring resources are allocated efficiently, the control techniques in accounting areutilised in the military industry to aid the decision-making power during the period of social crises to re-rationalise the allocation of national wealth for defence expenditure(Cooper & Catchpowle, 2009)3.0Background of the conflict in UkraineBoth Russia and Ukraine were members of the Union of Soviet Socialist Republics (USSR)that collapsed in 1991, upon whichboth countries became independent. However, since the independence, due to disputes in economic strategies, political priorities and geopolitical orientations, they have suffered with several conflicts and share a complex relationship (Korostelina, 2010). This includes,dispute on the division of the Soviet Black SeaFleet, dispute on acquiring and exerting influence ontheRepublicof Crimea thatis located between Russia and Ukraineand interference of Russian military intelligencein Ukraine’s territory since 1991, controlling Russian separatists in Crimea (Bebler, 2015).Ukraine, as a nation,has been through many politicalturbulencesin the past. Russia,having a geographical advantage as a large country,has exertedinfluence eversince the collapse of USSR(Bebler, 2015).The Russian influence in Ukraine was reinforced whenafter independence, many Russianspeaking peopleremained in Ukraine (Fournier, 2002).The number of Russian speakersin Ukraine has grown throughout the years and in recent times, 29.6% of the total population accounts for Russian speakers. In contrast, 67.5% as a majority,speak theUkrainian language (Central Intelligence Agency, 2018).Therefore, the Russian population in Ukraine has grown stronger asa local minority andthey constitute a regional majority in Crimea, southern and eastern part of Ukraine (Bebler, 2015).Support for Russia has therefore grown among Ukrainian citizens.Citizens of the eastern part of Ukrainetend to have strong support towards Russia. In contrast, citizens of the westernparttend to oppose Russian influence and support Ukraine’s own political view. This creates conflict inopinions about Ukraine’s relationship with Russia and western countries.Additionally, the ethnicity of the people of eastern Ukraine, their social and economic ties and geographical proximity with Russia were identified as reasons behind their political preference and this political division in Ukraine (Constant et al, 2011).
7Russia demonstrates an anti-Western and pro-Russian political view; whereas, Ukraine demonstrates an anti-Russian and pro-Western perspective (Szostek, 2017). Therefore, Russian supportersin Ukraine tend tofavour Russia and opposeEurope and other western countries, with Ukrainian supporters favouring the latterand opposing Russia. In 2013, when the discussion of a free trade deal between Ukraine andtheEuropean Union (EU) was in progress, Russia’s president,Vladimir Putin,was expecting a customs union trade deal with Russia, opposing the deal between the EU and Ukraine, exerting political influence. By late 2013, political crisis hadgrown, requiring Ukrainian states to choose between Russia-oriented and EU-oriented trade deals.During this period, Yanukovych was the president of Ukraine, who was heavily supported by Russian supporters in Ukraine and elected president in 2010. Yanukovychwas known for his admiration for Russia and soon after being elected, the plan of Ukraine joining the North Atlantic Treaty Organization (NATO), an intergovernmental military alliance between European countries and North America, was terminatedby him (Allison, 2014).Ukraine’s negotiation with the EU and western countries would reduce Russian influence. This may beappealing to other neighbouring countries and may endRussia’s hope of creating aunion of Slavic nations,a union of nations that were formerly a part of the Soviet Union(Larrabee, 2010).Therefore, in 2013, Yanukovych rejected signing the EU Association Agreement and negotiated an agreement with Russia.As most Ukrainians were expecting a deal with the EU,this surprising decision taken by the presidentled to violent reactions and heavy protestby thousands of Ukrainians.As a result, Victor Yanukovych eventually steppeddown from his position and fled to Russiain 2014 (O’Donoghue, 2016).Russianofficials were shockedupon removal of Yanukovychfrom his position by Ukrainian populist leaders(Allison, 2014).In response, Russia invaded Crimea and eastern parts of Ukraine in 2014, using coercion and force to destabilise and take control. Since its independence, this has broughtenormous challenges toUkrainian national security, as well asEuropean security,in decades (Kramer, 2015)and threatened sovereignty of other neighbouring states (Allison, 2014).It isconsidered one the most significant and consequential decisionsPutin ever made in his
8sixteenyearsaspresident (Treisman, 2016).Authors have pointed out various reasons behind this invasion.According to Allison (2014), this was to reinforce weakening Russian political influence in Ukraine. Kramer (2015) added that, Russia invaded Ukraine after Yanukovychwas ousted becauseother neighbouring countries may follow Ukraine’s steps, which may strengthen European political influence on Slavic and former Soviet nations.Toal (2017) viewed this as a contest between Russia and western countries to exert influence.However, Treisman (2016) claimed this as defensive behaviour of Russia stating that, it has seized parts of Ukraineto prevent NATO’s expansion and protectthe region, as the new president of Ukraine may join NATO after being elected, which could make this region’s security vulnerable.This may have caused eviction oftheRussian ‘Black Sea Fleet’ from Sevastopol, which is the long-standingbase of Russia; therefore, could have affected the security of the Russian military, if not taken over.On 18March 2014, Crimea was claimed asa part of Russia and was taken over from Ukraine by the Russian government.This stimulated further conflict between Russia and Ukraine. Many countries around the world criticised this and imposed sanctions against Russia. In response, Russian officials claimed that, Crimea was a part of Russia, and Ukraine annexed the region after the collapse of the Soviet Union. However, Crimea has beenlocated on Ukraine’s border since 1954 and is globally recognised as part of Ukraine(Biersack & O’Lear, 2014).The request of PresidentPutin to deploy Russian armed forces in Ukrainian territory was unanimously approved by The Council of Federation of the Federal Assembly of the Russian Federation. This has violated several international laws, such asTreaty of Friendship and Cooperation between theRussian Federation and Ukraine(1997), violation of Article2(4) of the United Nations Charter that prohibits violation of territorial integrity, Principles 1-5 of the CSCE Helsinki Final Act (1975) and the Declaration on Principles of International Law (1970), which affirmed and guaranteed sovereignty and territorial integrity of Ukraine.This has encouraged Russian separatists based in Ukraine to engage in violence and conflict for further invasion. These separatists in Ukraine have emerged from some of the Russia-supporting Ukrainian people, with the aim to create a new Russia (Novorossiya) in Ukraine, allied with,and supplemented by,the Russian military in this conflict (O’Loughlin et al, 2017).
9In contrast, themajority of Ukrainians after this invasion have lost faith in friendly co-operation between Ukraine and Russia. According to Szostek (2017), around 80% of aresearch sample ofUkrainians shared negative opinionsabouttheRussian leadership. The long-held Russian ambition of a trade deal, and regional integration with Ukraine,completely disappeared from the Ukrainian agenda.The long-awaited trade deal of goods, services and foreign investment, called the ‘Association Agreement’,wasalso then signed by Ukraine and the EU in November 2017 (European Commission, 2019), whichwasopposed by Russia.4.0The impact of destruction in conflict on UkraineAlthough the Russian invasion in eastern Ukraine initiated in February 2014 and overwhelming evidence was identified supporting this, there were contradictory statements from Putin. Hepersistentlydenied presence of the Russian army in eastern Ukraine until 2015, admitting only military intelligence presence, not military troops (Walker, 2015). However, in another statement, Putin officially confirmed the annexation of Crimea, claiming it to be a permanent part of Russia; therefore, confirming presence of military troops (Biersack & O’Lear, 2014).The invasion began with deploying approximately 30,000 Russian soldiers, surrounding Ukrainian borders, which included around 7,600 soldiers seizing Crimea (Appendix 1) (Sutyagin, 2016).Pro-Russian separatists in Ukraine received vital assistancefrom the Russian government throughmilitary manpower and materials to seize and control the east(Mitrokhin, 2015). Therefore, easternUkraine’s core industries and infrastructure weremethodically and gradually destroyed by the alliance of pro-Russian separatists in Ukraine and Russian military (Appendix 2). In cities and towns, government offices, multi-storeyed buildings, private homes, hospitals, schools, railways, roads and bridges were demolished by heavy bombing. Water pipes and power stations were severely destroyed in Luhansk and neighbouring regions wereleft without water, sanitation and electricity for several months. Luhansk, along with Donetsk, were major industrial areas of the Donbass region that used to contribute 20% of Ukraine’s total export and 23% production of total mining and industrial output. However, these werecompletely shut down due to severe destruction (Ayres, 2014).
104.1 Hospitals andclinicsHealthcare is a crucial part for any nation’s infrastructure for survival and wellbeing. According to numerous treaties, codes and laws around the world, it is against the law of conflict to destroy civilian objects, including clinics and hospitals (ICRC, 2019). Ignoring around 6.6 million inhabitants in the Donbass region of eastern Ukraine, hospitals were destroyed by bombing. This not only exerted negative impact onthe wellbeing of these people living in the conflict zone, but also posedlife-threatsand future reconstructing expenses that is often deducted from the welfare expenditure, affecting people’s wellbeing. Between 2014 and2017, over one-third of clinics and hospitals in Donbass were either critically damaged or fully destroyed. More than three-quarters of these destructions occurred betweenmid-2014to early 2015, whichwas the heaviest period of this conflict (Appendix 3). The area that divided the pro-Russian separatists’territory and Ukrainian territory, such as Donetsk and surrounding areas,had the greatest healthcare destruction (Appendix 4) (Herron et al, 2019).Additionally, medicine supply lines wereshut down, which caused a strain onsupply compared to national demand; therefore, increasing the price of medicine, followed by increased difficulties for people of lower income to be able to afford medicines. On the other hand, large numbersof medical professionals left Ukraine due to fear of war, which resulted in a declineinthe quality of healthcare services (Hyde, 2018). The pre-war report by the World Health Organisation (WHO) (2012) suggests that, in 2012, Ukraine’s government spent 8.9% of the total annual government expenditure on healthcare, which fell to8.3% inthe2018 wartime period (WHO, 2018). The Ukrainian government could have increasedhealthcare expenditure during wartime to aid the quality of healthcare medicines and services.The United Nations Development Programme (UNDP) Reports(Malik, 2013) (Jahan, 2018) demonstrate pre-war and post-war scenarios in 2010 and 2017 respectively, where male life expectancy reduced from68.8% to 67.1%, children receivingvaccinationsfor diphtheria, tetanus and pertussis (DTP)declined from 96% to 65%, measlesvaccinations declined from 94% to 86%and the percentage of HIV infected adults increased from 0.3% to 0.9%. Hyde (2018) further added that, the number of unvaccinated children during 2018 was around
1180,000 and there were around 100,000 untreated cancer patients due to lack of medical instruments, professionals and medicines, affecting the overall healthcare in Ukraine.4.2 Water andsanitationWater supply infrastructuresand sanitation were severelydestroyed in eastern Ukraine, which affected millions of inhabitants living there and nearby regions (Gigova, 2019). According to theWHO’sreport (2012), approximately 98% of Ukrainian citizens had access to safe drinking water during the pre-war period; however, the WHO (2018) wartime report shows that, due tothedestruction, this has fallento 92%, a 6% fall, inpeople withaccess to safe drinking water. UNICEF(2017) provided a detailed report on the Ukrainian crisis stating that, the number of people whom require emergency support for safe drinking water and sanitation is staggering. Around 1,800,000people, including 250,000 children, are suffering fromthis crisis. UNICEFemphasised ashortage of $3,250,000offunding to support these people and urged for donations globally(Appendix 5). Moreover, thelevel of destruction doubledby 2019, and the situation has only worsened (UNICEF, 2019). The Organization for Security and Co-operation in Europe (OSCE, 2018) launched a mission in 2017 to help Ukraine repairtheir infrastructure of eastern Ukraine during war. This initiative was supported bya‘guarantee of security’, a commitment to refrain from firing in specific locations and periods, allowingrepair of infrastructuresbyworkers representing OSCE. OSCE identified, in eastern Ukraine, 1,200 destroyed water supply lines in Luhansk and 900 in Donetsk (Appendix 6).Although Russia invaded Crimea illegally (Bebler, 2015), Russian officials claimed that Crimea is better-offafter annexation; however, the region hasin factstruggled with inadequate infrastructure (Wilson & Urcosta, 2019). Before annexation, around 80% of Crimea’s water supply was provided by Ukraine (Hughes & Sasse, 2016). Since April 2014, this was completely cut off from Ukraine. When Ukrainian officials were asked whether this will createahumanitarian crisis, they claimed that, there is adequate water in Crimea for the Crimean population to survive but not enough water for Russian army bases to sustain (Kyiv Post, 2019). Crimea used to receive water supply from Ukraine through a 400kilometre long canal, built when it joined Soviet Socialist Republic in 1954. This was blocked by a dam,
12built in Ukraine’s Kherson region in 2014 (UIA, 2018a). This shows the conflicting attitude of Ukraine towards Crimea and Russia.According to satellite images obtained by the Ministry for Temporarily Occupied Territories and Internally Displaced Persons,Crimea is suffering from drought and the majority of green areasin 2016 (Appendix 7) is completely destroyed by 2018 (Appendix 8). Therefore, cutting down water supplyhas immensely affected the ecosystem of Crimea (UIA, 2018b). As Crimea is occupied by the Russian authority, they have responsibilities to find a resolution for the water supplycrisis. This therefore shows their negligent attitude towards the Crimean ecosystem.4.3 Electricity and gasCrimea was dependant on Kyiv, the capital of Ukraine, for sourcing approximately 90% of electricity (Hughes & Sasse, 2016). Shamanska (2015) stated thatthis was stopped by the Ukrainian government after the annexation. However, Lyushnevskaya(2015)blamedpro-RussianseparatistsfordestroyingcoalminesandpowerstationsineasternUkrainethatwereassociatedwithsupplyingelectricity,whichhasreducedelectricityproductioninUkraine;therefore,thesupplyofelectricitywasconsequentlycutdowninCrimea,causingapowerblackout.This hasled the region to numerousproblems, isolating it from the outside world. Numerous issues were faced, such asdisruption of mobile phone services, local people were left without hot water supplies and heating in cold nights and few choices forshopping and bankingwere available. After annexation, Crimea became forcibly a part of the Russian jurisdiction; therefore, the region could be facilitated by the Russian authority. However, Crimea is not connected with Russiaby landand supplying electricity without crossing Ukraine’s territory is difficult. During this crisis, Russian officials claimed that support will be provided so thatCrimea can generate its own electricity. However, Ukrainian officials argued that, under Russian authority, it would take around three years for Crimea to be energy-independent and until then, the crisis will remain (Shamanska, 2015).Compared to Crimea, people in eastern Ukraine have been experiencing greater sufferings becauseof the conflict between Russian-backed separatists and the Ukrainian army. As mentioned earlier, infrastructures of water, sanitation and healthcare have been heavily destroyed. Having similar infrastructure-crisis like Crimea, the standard of living in eastern
13Ukraine worsened whenpower supply lines for electricity were demolished. OSCE (2018) identified 260 electrical lines in Donetsk and 700 in Luhansk, covering the entire eastern region, were methodically bombed and destroyed during conflict (Appendix 6).Additionally, Russia completely cut down gas supply to Ukraine in 2015. Ukraine was highly dependent on Russian energy resources and over two-thirds of total gas demand of Ukraine was fulfilled by Russia, which gave Russiaastrategic advantage to weaken Ukraine’s energy strength in conflicts (Hughes & Sasse, 2016). Historically, Russia has utilised this strategy to exert political influence on Ukraine and neighbouring countries (Appendix 9 & 10). Gas prices were decreased by Russia when theUkrainian president,Yanukovych, decided to join Russian-backed Eurasian Economic Union. Gas supplywasthen disrupted with a price hikewhen the next president,Poroshenko,rejected this decision and supported western countries (Korteweg, 2018). Gas ismainly consumed by households, the public sector, industrial sector, religious organisations in Ukraine and a small percentage is required tobe reserved for emergency needs (Naftogaz Europe, 2014). The total gas consumption in Ukraine was around 65 bcm in 2011, the majority beingsourced from Russia. Due to the Russian sanction on Ukraine on gas supply, consumptiondramatically declined, with only 35 bcmof gas demand fulfilled by domestically generated gas in Ukraine and gas supplied bytheEU (Appendix 11) (Kucera, 2018). This was almost half of the national demand, which has immensely affected major national sectors and put Ukraine in urgent need of gas supply. Moreover, around 35 gas supply lines were destroyed in conflict intheeastern region (OSCE, 2018). Winter brings extreme low temperaturesin Ukraine and,without gas and electricity, heating and hot water is not available for people to survive thecold nights.It is risky for individuals to leavetheir homes tocollect wood, because of intensecold weather and militants firing in combat (Bauerová, 2019). OSCE (2018), the agency that was working on repairing infrastructure during wartime, urged to withdraw heavy weapons from the conflict as a final solution, as both parties in conflict failedtoprovide sustainable and comprehensive ceasefire. Although the ‘guarantee of security’ stopsmilitants from firing when repair work is conducted, the repaired infrastructures get damaged when battle recommences. This has disrupted people’s rights to have adequate standards of living and putsthem into a never-ending crisis of war.
144.4 EducationAlthough a 0.3% improvement in adult literacy wasidentified between 2014 and2018, primary school dropout ratesincreased from 1.9% in 2014 to 4.5% in 2018 (UNDP, 2014, 2018). The education system in Ukraine had a devastating impact due to the conflict in the eastern region and annexation of Crimea. This includes, depriving nearly 220,000 children from education anddemolishing approximately700 educational institutions.143 higher educational institutions were in dangerous territories, which includes 107institutions in Donbass, eastern Ukraine,and 36 institutes in the city of Sevastopol and Crimea. 140 research institutions were also based in these regions, accounting 12% of the total number of research institutions in Ukraine. Therefore, a significant number of educational and scientific resources andteaching professionalswere lost, which hasa detrimentalimpact on the education system (Friedman & Trines, 2019). Additionally, the crisis of gas became worse in 2018, and to recover from shortage of gas, educational institutions, including kindergartens, schools, colleges and universities were closed for several days (UIA, 2018c).Despite the Ukrainian government’sclaim ofspending around 6% of Gross Domestic Product (GDP) on education, one of the highest rates of public spending on education globally, the overall standard of education is in decline. Educational institutions are struggling with inadequate facilities and weakened infrastructure. The total expenditureon education was 7.2% of total GDP in2013, which fellto 6% in 2017 (Kahkonen, 2018); therefore, this is an impact of the conflict in Ukraine (Friedman & Trines, 2019).Moreover,themajority of international students come from post-Soviet countries, such as Azerbaijan, Georgia and Turkmenistan to study in Ukraine. During 2012to 2014, thepre-war period, there was a28% increase in the number of these students. However, this number may decline in the future if conflictin Ukraine grows into a larger scale. When the conflict started, the Ukrainian government transferredat least 60% of international students from Russian separatists and Russian army occupied areas to central and other parts of Ukraine that were free fromthe conflict (Kavtseniuk et al, 2015). Inadequate safety and security in Ukrainemay damage its reputation and may reduce appeal as an international educational platform, which could be another crucial loss for this conflict.
154.5 TransportationUkraine hasgreat potential to become a central part ofthe transportation network, as ithas a geographical advantage. It would then be convenient and beneficial for surrounding countries to use these transportation facilities for trading purposes. Ukraine has one of the largest railway networks in Europe that handles a significant number of passengers and freight (CCIPU, 2018). Therefore, transportation plays a pivotal role as economic infrastructure in Ukraine.However, part of this infrastructure was critically damaged, intheeastern region,during conflict. As a consequence of military operations in 2014, around 166 railway infrastructures of Prydniprovsk, Donestsk and the southern railway have been destroyed. This includes the main route of Donetsk railway that was significant for shipping coal and coke from Dnipropetrovsk to metallurgical plants. Additionally, bridges in Orekhiv, Marianivka and Zugres that were crucial for transport and connecting regions were demolished (Appendix 12). Destructionin conflict affectsthese infrastructure’s contribution of approximately 5% of GDP to Ukraine’s economy. (Savchuk & Krasnikov, 2014).Vulnerable people, who were living in separatist armed forces occupied areas and were traveling to Ukrainian government controlled areas, crossing the line of conflict to collect pension and receive healthcare benefits facedhealth and safety risks. Since 2016, the number of people crossing theline of conflict has increased, and in recent times, weakened transport infrastructures have put more than 1,000,000people travelling across the eastern region to risk. Additionally, reconstruction efforts aredisrupted by the ongoing battle between armed forces (Human Rights Watch, 2018).4.6 How destruction in conflictaffected Ukraine’s economyApproximately 4,500 residential buildings, 4,700 power facilities, 217 educational institutions and 132 industrial facilities were destroyed. This is worth around 11,888 millionUkrainian hryvnia worth of economic loss for damage tobuildings and infrastructure facilities in eastern Ukraine (Euromaidan Press, 2014). The entire eastern region accounted around 16% of GDP ofUkraine and contributed a quarter of Ukraine’s total exports, which waslost due to this conflict (Wigglesworth & Olearchyk, 2014).
16The annexation of Crimea also caused Ukraine to lose more than 1.4 hectares of agricultural land worth $1.8 billion, Krymenergo, an energy company,lost $1billion and almost $1.9 billion worth of assets were lost by Ukrainian banks that had branches in Crimea. This has affected approximately $14 billion worth of trade relations with Russia (UIA, 2018d) and the annexation of Crimea has cut down 3.7% of GDP of Ukraine (Wigglesworth & Olearchyk, 2014).The economic problem in Ukraine intensified since 2014, undermining consumer and investor confidence. Exports and industrial production were disrupted, increasing broader costs associated with trade. Hence, the real GDP declined 6.8%in 2014, with a larger decline of7.5% in 2015 (Moorty et al, 2015). Additionally, the Ukrainian currency, hryvnia,started gradually declining against the United States dollar (USD) since the beginning of the conflict and sharply declined in 2015 losing more than half of its value.This increased the price of imported goods, which mainly affected the local people and businesses in Ukraine (Appendix 15) (Kolyandr & Marson, 2015).Additionally, Ukraine’s military expenditure sharply escalated; the value of military expenditure was2.393%of total GDP in 2013, 3.021%in 2014 and 3.973% in 2015. This slightly declinedto 3.669% in 2016 and 3.241% in 2017, butagainsharply rose to3.783% in 2018 (Appendix 13) (The World Bank, 2019a). Therefore, in 2018, Ukraine was ranked 39 among top 40 countries withthehighest military expenditure in the world (SIPRI, 2019a).Three UNDP reports (Malik, 2013) (Malik, 2014) (Jahan, 2018)were compared on the information about pre-war and wartime human development condition in Ukraine. In 2013, Ukraine was ranked 78 among 186 countriesin human development, which declined to 83 among 187in 2014.In 2018, this further declined to 88 among 189 countries; therefore, Ukraine was better off before the conflict and human development in Ukraine dramatically declined during wartime.In 2012, Ukraine’s gross national debt to GDP was 37.5%. This sharply inclined over the years to 40.5% in 2013, 70.3% in 2014, 79.5% in 2015 and 81.2% in 2016. Although there wasa small decline inthe followingthree years, 71.9% in 2017, 63.9% in 2018 and 62% in 2019, the percentage of debt to GDP of Ukraine is far from the percentage of 2013, the pre-
17warperiod (IMF, 2019). Therefore, Ukraine is struggling with debts andthe economy has broken down inconflict with large debt payments that are pilingup until 2023 (Appendix 14) (Wigglesworth & Olearchyk, 2014). According to Pinchuk (2016), Ukraine will require 15-20 years to stabilise damaged infrastructure, generate adequate economic growth and recover their financial systems.5.0The impact of the conflict in Ukraine on RussiaThe conflict did not take place in Russia and was limited to the Ukrainianborder. However, Russia isactively involved in this conflict; it invaded Crimea and eastern Ukraine and supplied resources to Russian separatists (BBC, 2019). Therefore, this war has affectedthe Russian Federation in several ways, where costs outweighedthebenefits.5.1Russian military spendingduring the period of conflict in UkraineSince the annexation of Crimea, and the conflict in eastern Ukraine started, the percentage of Russian military expenditure in total government expenditurerapidly increased(Appendix 16). In 2014, this was 11.77%, growing rapidly to 13.81% in 2015, 14.82% in 2016, followed by a reduction in 2017 to 12.13%(The World Bank, 2019b). During thistimelarge numbersof military personnel were recruited (Appendix 17); in 2014 this was around 1,300,000, which sharply rose to 1,500,000in 2016, remainingsteady in 2017 (The World Bank, 2019c). According to the estimation of Stockholm International Peace Research Institute (SIPRI, 2019b), Russian military expenditure was$66,682 millionUSDin 2013, risingsharply to $71,467 million in 2014, $77,023 million in 2015 and $82,576 million in 2016. This was the period of time when Russia deployed armed forces with heavy weapons to annex Crimea in eastern Ukraine. Thisfacilitated Russian separatists in eastern Crimea by providing resources for war (BBC, 2019).In general, military spending is highly influenced by a country’s economic performance. This is because a country, whichis economically performing well,is solvent and can afford to spend large amountsof money on its military. However, annual GDP analysis as an economic performance indicator shows thatthe Russian economy hardly grew between2014 and 2017. Despite this, the Russian government paid 800 billion ruble, as a one-offpayment in 2016, to reduce its constantly piling military debt, which substantially increased their
18defence expenditure (Appendix 18).This was a sudden decision, rather than a planned and sustained increase in expenditure (Radin et al, 2019). In 2017, Russia was ranked fourthamong top 40 countries in the world with the highest military expenditure (SIPRI, 2019a).5.2Welfare expenditureOn one hand, Russian military expenditure gradually increased since the conflict started in 2014; however, expenditure on welfare, such as healthcare and education, remained low. Between 2014 and2018, Russia was identified as one of the lowestspending countries on healthcare amongthe Organisation for Economic Co-operation and Development (OECD)countries (Appendix 19) (OECD, 2019). Moreover, the 2013 UNDP report (Malik, 2013) shows that, the average life expectancy in Russia was 69.1 years. However, the 2018 UNDP report shows thatthis fellto 65.6 years for malesin Russia. This could be an effectof low healthcare facilities resultingfrom low government expenditure on healthcare and may have been as a result of higher rate of early death of men in war. The Russian government’s total expenditure on education as a percentage of GDP was the lowest among OECD countries in 2015 (Appendix 20).The OECD average of total expenditure on education was 3.5%. The Russian government spent lower than 2% on education, with Norway spending the highest at 4.5%(OECD, 2018). During 2018, the World Bank advised Russia to increase their consistentlylow expenditure on education and healthcare to enhance the quality of social welfare (Ostroukh, 2018).In the European Parliament’s (2018) report, it was identified that there is shortage of skills in Russia. It was argued that, workers in Russia are not well prepared, by the education system, for the labour market. Although a large number of students become university graduates every year, shortage of skills remain. Skills’shortage has impactedinnovation in Russia, with round 8.4% Russian companies engaged in innovation in 2016, the lowestpercentage in several years. Contrastingly, 49%companies engaged in innovation in the European Union. Additionally, compared to 522 patents registered by the US, 234 by Korea and 177 by Germany, Russia registered only 32. This shows a comparatively lower progress in innovation in Russia, which may have stemmed from inadequate expenditure on the education system by the government.The Global InnovationIndex (2018) report shows thattheRussian Federation’s ranking in global innovation declined over theyears with it being
19ranked 43 in 2016, 45 in 2017 and 46 in 2018; therefore, this is an indicator of declining innovation in Russia.Around $7.2 billion was spent to annex Crimea from the Russian pension fund (Bershidsky, 2014). As a result, pensioners suffered with the pension reform initiative taken by the government, which raised the female and male retirement age from 55 to 60 and 60 to 65 years, respectively. This reform delayed eligibility of people to become pensioners and receive pension payments. The average pension payment is around 13,000 rubles a month and millions of pensioners without financial support from relatives are dependent on them (Bennetts, 2018).5.3 Economic sanctions for the Ukrainian conflict The withdrawal of financial relations and customary trade for foreign and security purposes are defined as economic sanctions (Masters, 2019). It is considered as one of the most powerful strategies in foreign affairs, and in case of disputes,ifall other techniques fail to prevent undesired behaviour of foreign countries, economic sanctions are exploited by governments. The main aim of this strategy is to enhance international security and peace (Tyll et al, 2018). In response to the Russian invasion in Crimea and involvement in the conflict in Ukraine, EU and western countries started imposingsanctions on Russia since 2014, as theywanted Russia to withdraw forces from Crimea and eastern Ukraine. In reaction, counter-sanctions were imposed by Russia (Kholodilin & Netšunajev, 2019). Although the Russian military is self-sustained, western arms sanctionswere put in place, such as the Italian ban on armoured vehicle supply, cancellation oftheFrench contract to supply helicopter carriers, ban on supply of precision machine tools, electronic and optical equipment and a delayinthe Russian naval modernisation programme by around 18 months. Russia’s ability to develop new gas and oilfield was affected bythesesanctions. Almost halfof Russia’s new gas and oilfield development technology is supplied by western oil service companies, such as Halliburton and Schlumberger. Therefore, cooperation on deep-water, shale-oil and Arctic projects have ended due toimposed sanctions. Additionally, thetop five Russian banks that account60% of the banking sector, were restricted by the western capital market. Therefore,
20these banks were forced to pay back $60 billion within 12 months and foreign loans were not extended (Russell, 2018).In 2012, during the pre-war period, the European Unionwas the largest trading partnerof Russia,withUkraine being the thirdlargest(Appendix 21) (BBC, 2014). According to the European Parliament’s (2017) report, total exports from the EU to Russia has significantly declined since 2014. In 2014,exports fell by 17.8% worth$66.5 billion. Reduction inexports intensified during the end of 2014 and throughout 2015. This is when there was around a 45% decrease in EU exports to Russia, which steadily continued in 2016 (Appendix 22). From 2013 to 2016, export of textiles reduced by $3.6 billion, agricultural food by $9.5 billion, raw materials$7.6billion, mining and chemicals by $10.8 billion and manufacturing products by $46.3 billion.As a result, in average, the total GDP of EU is expected to have been affected by 0.5%due to the total impact of the sanctions. In contrast, Russia is expected to have beenaffected by around 8%of GDP.Although counter sanctions were imposed by Russia against westernand EU countries, thesewere not on exports, but ratheron imported goods and foreign officials entering and staying in Russia. Most of these imported goods were food items and were banned since August 2014. In recent times, these bans extend until the end of 2019 and could be extended further (Gutterman & Grojec, 2018). The import ban on food has dramatically affected the Russian food market. In 2014, when the Russian economy was already struggling with highinflation and currency crisis, shiftingconsumption towards domestically produced food, as a result of theimport ban, increasedtheprice of food in the local market. Therefore, there was a 10% price increase in 2015, which rose to 21%in 2016.The average consumer income declined by 7.4%in 2015 and a further 0.2%in 2016.Increased pricesand lower incomeshavethus reduced affordability forRussian consumers (Appendix 23) (Liefert et al, 2019).Russia has been Ukraine’s largest trading partnersince the collapse of the Soviet Union. Ukraine and Russia formed the Commonwealth of Independent States Free Trade Area (CISFTA) with eight other post-Soviet countries in 2011, which enabledthem to implement a zero tariff on the majority of imports and exports. After two years ofthe conflict, Ukraine and Russia abolished trade preferences introduced by the CISFTA agreement; thus, tariffs increased (Export.gov, 2019). Additionally, the conflict enormously affected trade betweenUkraine and Russia. In 2012 and 2016, imports from Ukraineto Russia declined from 25.7%
21to 9.9%,withexports from Russiato Ukraine decreasing from 32.4% to 13.1%, respectively (Makarin & Korovkin, 2018). Although Russia remains the largest trading destination for Ukraine, Ukraine’s imports from Russia plummeted from $24.5 billion in 2013 to $5.6 billion in 2016; therefore, since the conflict started, Russia has lost billions of dollars’ worthof trade each year(Melkozerova et al, 2017).5.4Cost Russia paid for the annexation of Crimea After annexing Crimea, Russia took onthe responsibility of maintaining the region that added coststo the Russian economy. Building the Kerch Bridge cost $2.6 billion and the cost of Tavrida highway to Sevastopol, which is expected to be built in 2020, increased from $0.6 billion to $2.2 billion in five years. In comparison, a reduced number of roadways were built in Russia and many projects associated with constructing roads and bridges were stopped, prioritising construction in Crimea.The water crisis however remained thesame, since the water supply was blocked by Ukraine. Although the local authority tried to resolve this by extracting water from the ground, ground water in Crimea is found to be salty, making it inedible (Wilson & Urcosta, 2019). The agricultural lossin Crimea, as a result of the water crisis,is to be compensated by Russia, which is an additional $16 million (Makarenko, 2018).To mitigate the electricity crisis stemmed from this conflict, the Russian government built twopower stations in Sevastopol and Simferopol areas in Crimea, worth around $1.1 billion (RTNews, 2019).Approximately 77% oftheCrimean annual budget is paid by the Russian government, which is around $2.3 billion annually (Wilson & Urcosta, 2019). Despite Russian economic contribution to the region, consumer price inflation(CPI)in Crimea rose from41.5% in 2014to44% in 2015, with the Russian CPI rising from11.4% in 2014 to15.5%in 2015. Due to the inflation rate in Crimea substantiallyincreasingunderRussian jurisdiction,whenRussia had comparatively lower inflation, food prices in Crimea increased at a faster rate than Russia. This thereforenegativelyaffectedthe affordability and consumption of Crimean residents after annexation(The Economist Intelligence Unit, 2016).Therefore, due to the inflation rate in Crimea becoming higher under Russian jurisdiction and during this time, Russia had comparatively lower inflation, food prices in Crimea increased at
22a faster rate than Russia, affecting affordability and consumption of residents at a greater level. Therefore, Crimea was not better off after annexation.5.5Russian economic crisis Between 2014 and2016, one of the major reasons why the Russian economy suffered with crisis was due to itgetting actively involved in conflict with Ukraine. In 2014, the Ukrainian conflict costRussia1% of thecountry’stotal GDP, worth €20 billion. Due to lower GDP growth, inward foreign investments declined in Russia, compared to the pre-war period (Appendix 24) (Havlik & Astrov, 2014).Additionally, the real GDP dropped by 2.5% in 2015 and a further 0.2% in 2016 (Appendix 25). During this time, Russian GDP growth was the second lowest among other BRICS (Brazil, Russia, India, China and South Africa) nations.TheRussian Federation faced a currency crisis and one of the reasonsbehind this was its involvement in the Ukrainian conflict. The Russian ruble depreciated by 55%against the USD in the 2014 to 2015 fiscal year. By 2015, the Central Bank of the Russian Federation (CBRF) lost more than $150 billion of foreign currency reserves andtherublecontinued to constantly fluctuateagainst the USD (Appendix 26); therefore, becoming unstable. This instability created high inflation; an 11.4%inflationwas noted in 2014 with an increase to 12.9%in 2015, resulting in higher priceof commodities (Dabrowski & Collin, 2019).Russian economic growth has also been falling behind global economic growth. In 2016, when the global economic growth was 2.4%, Russian growth wasonly0.3%. Similarly, in 2017 and 2018, when growth was 3.1% and 3%globally, this was only 1.6%and 2.3% in Russia, respectively(Appendix 27). One other significant change relates to the poverty rate. This increased from 11.2% in 2014 to 13.3% in 2015 and a significant increase was seen in quarter one of 2017 to 15%. During this time, the percentage of poor people in Russia remained higher than the pre-war period. (The World Bank, 2019d).
236.0The impact of the conflict in Ukraine on flight MH17 On 17 July 2014, Boeing 777-200ER, an aircraft of Malaysian Airlines that was serving the MH17 flight from Amsterdam to Kuala Lumpur carrying 298 people on board (MIP, 2018), was shot down over Hrabove in Donestsk (Sienkiewicz, 2015). Armed separatists who controlled this region wereresponsible for shooting down the aircraft (Abeyratne, 2014). All 298 people on flight MH17 were killed and international prosecutors, after five years’of investigations, charged foursuspects to be actively involved in this, which includedthreepeople whom hadties withtheRussian military. Moreover, Russia was blamed for providing resources to the armed separatists that caused this destruction, showing that Ukraine was not alone suffering for destruction since the conflict started (Marson, 2019).The 777-200ER aircraft model was one of the best-selling aircrafts of Boeing. It has been serving the airlines’industry since 1995 and is well-known for durability and performance. The estimated price of the aircraft in 2014 was approximately $261.5 million (Ausick, 2014). The Montreal Convention 1999, an international treaty signed by the International Civil Aviation Organization member states to compensate death or injury caused by aircraft accidents (IATA, 2019), applies to this incident to evaluate the total amount of compensation. According to this treaty, approximately $150,000 worth of compensation should be paid per passenger (Ferdman, 2014). Therefore, two years after the incident, mostfamilies were compensated by Malaysian Airlines as per the guidance of this treaty (Deutsche Welle, 2016); asignificant financial burden that the company had to bear for this destruction.Despite having a minor aviation market, Ukraine’s airspace is strategically significant for connecting some of the most important destinationsaround the world. Prior to the MH17 incident, around 400 commercial flights, including150 international flights, were flying over eastern Ukraine daily. Therefore, the air route over eastern Ukraine was approved for commercial use by the authority. After the incident, around 25% of airline companies started avoiding this air route during their flights. Additionally, overflight fees are paid by foreign airlines to governments to fly over their countries. If an increasing number of airline companies avoid the Ukrainian airspace, overflight fees will declinefor the country, which will negatively affect the Ukrainian airlines’ industry. Moreover, airlines may have to choose a longer route to reach their destinations, which may increasefuel costs (Wall & Steinhauser, 2014).
24Prior to the MH17 incident, Malaysian Airlines’ profit was declining. After theincident, its stock price sharply fell, and, as a resultofthe companyfacing significant losses, itbecameprivatised and delisted from the stock exchange (Grant & Parker, 2014). According to the Centre for Aviation report (2014), in quarter threeof the 2014 financial year, Malaysian Airlines lost approximately $180 million and was restructured as a private company from 15December 2014, aiming to recover from the financial crisis stemmed from the destruction of flight MH17.7.0Concepts that a complete accounting for war should includeA complete accounting for war should includethe opportunity cost, which is the cost of the next best alternative foregone. Although opportunity cost is not considered in financial statements, as it is not a real cost, it is commended by business enterprises as one of the most effective elementsof the decision-making process.It is an essential concept in investment to select the most desirable choice among otherchoices and it plays a vital role in allocatingresources efficiently. This is not available in accounting; in accounting terms, the production cost for rentis zero whena business has no rent to pay, if it owns amanufacturing unit. In economicshowever, thisbusiness couldrent their manufacturing premisesand receive money, which is the alternative that is foregone, as the business ownstheir premises for manufacturing. Therefore, losing the amount of money that could have been received from renting the premises, if not used by the business foritsown manufacturing, is called the opportunity cost and is considered as one of the costs of production in economics (Vahid et al, 2013). To put the Ukrainian conflict into the opportunity cost concept, when military expenditure rose for both Russia (SIPRI, 2019b) and Ukraine (The World Bank, 2019a) during wartime, this affected their education, healthcare and pension funds (Kahkonen, 2018) (Jahan, 2018) (OECD, 2018). Both governments could have avoided expenditure on conflict and utilised these funds on the welfare of citizens, which would have brought peaceand enhancedquality of life.Moreover, the Net Present Value (NPV) analysis, a concept of finance, should be included in accounting to predict the cost of war. NPV is measured to find out whether investment in a projectisprofitable. To find the return on investment, the cash flows expected to be
25generated by a project each year is discounted by the required rate of return; the sum of these discounted cash flowsis called the NPV. In other words,theNPV is expressed inthepresent value of a currency. If the NPV of a project is positive, it will generate more money than the initial investment; therefore, it would be aworthwhileinvestment. However, if the NPV is negative, it will generate a net lossoverall (Gallo, 2014).Accounting methods are widely appreciated to be effective for short-term decisions,such as production planning and pricing. However, the NPV is widely acknowledged as an effective method formeasuring the worth of long-term financial investments. Combining both accounting andtheNPV would play an effective rolein providing both short and long-term overview of expenditures,which would enhance efficiency and reduce risk (Magni, 2016). Analysing this concept in terms of the Ukrainian conflict, ifthe Russian government had estimated the NPV of the monetary investment in the conflict with Ukraine, invasion in Crimea and expenditure to back up the armed separatists, a negative NPV may have discouraged the government to initiate war wherecostsoutweighedthe benefits.Furthermore, Chwastiak (2008) suggested that, accounting lacks real-life scenarios of war. For example, accounting should include the estimated number of people that became homeless, suffered with disruption in routines,uncertainty, violence, fear, dehydration, hunger, insecurity, post-traumatic disorder, physical abuse, disability, disease and death. These are costs that are incurred because ofwar, which cause severe damage to both the aggressor and victim countries and are not economic. Therefore, including these concepts in accounting will inform analysts aboutwar in practice and discourage war and war-like behaviour, which may reduce further conflicts and bring peace around the world. This was suggestedby Chwastiak in 2008,more than ten years ago, and these suggestions could have been taken into consideration throughout the past decade. However, in recent times, Diaconu (2017) stated that, the issue of accounting encouraging war and war-like behaviour remains unsolved; this is because accounting remains economic and the consequences of war, in practice,are still not taken into consideration. 8.0ConclusionTraditional accounting makes destruction of war invisible through limiting financial analysis to profit and loss, using dehumanising language to hide the severity of war and excluding
26non-economic consequences of war in practice. These weaknesses tend to facilitate governments to engage in war and war-like behaviour.To implement this into areallife example, this paper focusedon the conflict in Ukraine. The background of this conflict wasexplained, where Russia and Ukraine have been facing political turmoil since the collapse of the Soviet Union and in recent times, the contest between Russia and the EU to have Ukraine as a trading partner, transformed into a contest of political influence for Russia. When Russia started losing its influence over Ukraine, it facilitated locally emerged separatists in Ukraine with military resources, to provoke awar, and invaded theeastern region of Ukraine and annexed Crimea illegally. As a result, both Russia and Ukraine suffered negative consequences. Infrastructures in the eastern region were severely destroyed.People inthis region have been suffering fromlack of healthcare facilities, safe water, sanitation, electricity, gas, transportation and education, which triggered a humanitarian crisis. Compared to the pre-war period, the standard of living has declined in Ukraine during wartime. Moreover, since the beginning of the conflict, the Ukrainian military expenditureand national debt has simultaneously increased in a constant manner. Industrial contribution to trade, and GDP from eastern Ukraine and Crimea, was lost due to this conflict. Hence, the Ukrainian economy is severely damaged and is in decline, which has further resulted in lower expenditure on healthcare and education, worsening the standard of living. In contrast, the impact of this conflict on Russia was inevitable. The Russian military expenditureduring this war has rapidly increased at the expense of social-welfare expenditure.The magnitude of the effectof this conflict expanded whenforeign trade partners,who opposed this invasion, imposed trade sanctionson Russia; in response, Russia imposed counter sanctions. This resultedinloss of billions of dollars’ worth of trade annually, affecting the Russian economy.Economic responsibility of reconstructing electricaland water supplies in Crimea that was cut down by Ukraine for conflict, became a financial burden for the Russian economy. This was paid at the expense of slowing the growth of infrastructure development in Russia. As a result, the conflict in Ukraine became one of the major reasons behindthe 2014-2016 fiscal years’ recession. This caused the poverty rateto increase, a decline in annual GDP and lower economic growth.
27Furthermore, it was not only Ukraine and Russiathat have been suffering from the consequences of this conflict. Flight MH17 of Malaysian Airlines that wasflying over eastern Ukraine was destroyed during this conflict. This caused the death of all passengers on board, destruction of a multi-million-dollar aircraft, financial loss for the Ukrainian government and airline companies avoiding the air route andreputational damage. Malaysian Airlines had to pay a significant amount of compensation for the loss of all passengers. These financial burdens led to the company losing the status of a public limited company and becoming delisted from the stock market.This paper then explores the potential solutions for the weaknesses in traditional accounting for war, where it offers opportunity cost, NPVand non-economic consequences of war in practice to be included in accounting.Firstly, when analysing the war budget prior to war, if an opportunity cost analysis was applied, opportunities that were beneficialto the country, in this case, spending on social welfare and trade, could have been explored in detail instead of war, which couldhave potentiallydiscouragedwar and preventedthe decline in economic growth.Secondly, if aNPV analysiswas carried outbefore war, both countries would have been able tofind out ifcosts outweighedthe benefits for this investment; therefore, excessive spending onthis conflict could have been avoided. Lastly, including the potential non-economic damageof war would provide a cleareroverview of war and prevent dehumanising language in accounting. Countries, other than Ukraine and Russia,have also spent significant amountsof money on war and have severely destroyed other countries in the past. This has happened in Iraq (Stiglitz &Bilmes, 2006), has been happening in Syria in recent times (Daher, 2018) and may happen in Iran in future (Gordon et al, 2019). Therefore, these suggested solutions for accounting may contribute to the discouragement ofwar and war-like violent behaviour.In doing so, this could prevent economic loss, enhance the quality of life and ensure peace around the world.
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34AppendicesAppendix 1 (Sutyagin, 2016)Appendix 2 (Doug, 2017)Appendix 3: Quarterly individual bombing reports for specific Donbass hospitals(Herron et al, 2019)
35Appendix 4: Reported hospital attacks in eastern Appendix 5Ukraine,2014-2017 (Herron et al, 2019)(UNICEF, 2017)Appendix 6 Appendix 7(OSCE, 2018)(UIA, 2018b)Appendix 8(UIA, 2018b)
36Appendix 9 (Korteweg, 2018)Appendix 10 (Korteweg, 2018)
37Appendix 11 (Kucera, 2018)Appendix 12 (Savchuk & Krasnikov, 2014)Appendix 13Appendix 14 (The World Bank, 2019a) (Wigglesworth & Olearchyk, 2014)
38Appendix 15 (Kolyandr & Marson, 2015)Appendix 16 (The World Bank, 2019b)Appendix 17 (The World Bank, 2019c)Appendix 18 (Radin et al, 2019)Appendix 19 (OECD, 2019)
39Appendix 20 (OECD, 2018a)Appendix 21 (BBC, 2014)Appendix 22 (Fritz et al, 2017)Appendix 23: Russian Macroeconomic development (Liefert et al, 2019)
40Appendix 24 Appendix 25(Havlik & Astrov, 2014)(Dabrowski &Collin, 2019)Appendix 26: US dollar growth against Russian ruble (Dabrowski & Collin, 2019)Appendix 27 (The World Bank, 2019d)
The influence of culture on the accountability of Chinese enterprises
ContentIntroduction………………………………………………………………………………………………………………………………3Research Question………………………………………………………………………………………………………………….3Outline…………………………………………………………………………………………………………………………………….4Literature Review…………………………………………………………………………………………………………………….4Accountability and Chinese Enterprises………………………………………………………………………………..4Organizational Culture…………………………………………………………………………………………………………..6Power Distance and Individualism-Collectivism………………………………………………………………….6Culture and Accountability…………………………………………………………………………………………………….8Research Method………………………………………………………………………………………………………………………9Case Study……………………………………………………………………………………………………………………………….10Culture and corruption………………………………………………………………………………………………………….10The direction of corporate accountability……………………………………………………………………………15Accountability improvements………………………………………………………………………………………………16Discussion and conclusion……………………………………………………………………………………………………..18Reference…………………………………………………………………………………………………………………………………20Appendix………………………………………………………………………………………………………………………………….22
IntroductionThe concept of accountability comes from the Western economy and society. It has basically taken shape as early as 2000 BC. The early definition of accountability was to delegate the resources belonging to others to a group of people who were therefore responsible for this. Accountability is a collection of institutions and processes. It actually contains an economic relationship, and some scholars are more focused on the establishment and maintenance of inter-responsibility, rather than the system itself. Accountability is a power and obligation that gives accountability to the authorized person to recourse, which includes rewards and punishment. Therefore, in essence, the economic relationship contained in the accountability system is the relationship between the power subject and the power executor; from the economic point of view, it is the relationship between the resource owner and the resource agent. On the other hand, accountability has a regulatory role for power executives. Under normal circumstances, the emergence of accountability can avoid the abuse of power.Surprisingly, however, according to a survey by Transparency International, the Asia-Pacific region in 2017 was highly corrupt, with approximately one quarter of the total population involvedin bribery. This result reflects that the accountability system did not achieve the expected performance. Although the accountability system already exists in every country in the Asia-Pacific region, “powers” still use the power in their hands to carry out bribery activities. In contrast, in Europe, corruption is low in almost all countries. In fact, accountability is used in countries in two different regions, but accountability is quite different in both regions.Frink and Klimoski (1998) argue that environmental factors (regulators and legal systems) have a significant impact on the dynamics of corporate accountability. The study by Gelfand (2004) describes the specific manifestations of accountability under the influence of three cultures (individualism and collectivism, intensive culture and loose culture, and distance of rights), revealing the relationship between organizational culture and accountability. It can be seen that the differences between different cultures seem to affect the performance ofaccountability. Gelfand&Realo (1999) argues that the nature of accountability is highly culturally specific. China is part of the Asia-Pacific region. According to a survey by Transparency International, nearly three-quarters of people in China believe that corruption is very serious. Accountability is a tool to control corruption, but it does not improve corruption in China. In this context, this paper decided to study the negative impact of Chinese culture on China’s accountability system.ResearchQuestionThe research question in this paper is to study the solution to the problem of China’s accountability by exploring the link between culture and China’s accountability. This paper argues that culture exists objectively in every organization and society, guiding and shaping individual behavior through values transfer, institutional requirements and behavioral norms. The “organizational culture” as an organization’s “invisible” rules, the impact on each individual behavior is invisible but quite significant. From this perspective, organizational culture affects China’s accountability
system, and it is also one of the main reasons for China’s accountability problems.OutlineThe next part is a literature review. In this section, first, the theory related to accountability will be described and discussed. Then, through the accountability theory, the status quo of the accountability system of Chinese enterprises is analyzed. After this, the article will describe the theoretical knowledge of culture, including the concept of organizational culture. Finally, a theoretical description of the relationship between culture and accountability. The latter part is a case study. This article uses Denmark as a reference (Denmark is the least corrupt country). It explains the relationship between Chinese culture and China’s accountability through the study of cultural differences and corruption levels in China and Denmark. This is followed by an analysis of the accountability system in China. The last part is the discussion and conclusion of the research results.LiteratureReviewAccountabilityandChineseEnterprisesAccountability is a collection of accountability systems, a key guarantee for the implementation of responsibilities, and an important role in the promotion of accountability. The impact of accountability on accountability is mainly reflected in two aspects: first, through the formulation of rules, guidelines and systems, to guide and constrain the psychology and behavior of members of the organization; second, accountability is a multi-layered construct of meso. It manifests itself as a responsibility at the macro level and as a responsibility at the micro level. Accountability first appeared in financial accounting, similar to “accounting”, focusing on how to keep accounts, save books, spend funds and so on. Today, accountability not only exists in financial accounting, it has entered other areas, such as management. Various regulators frequently pay attention to accountability in business management. Corporate accountability is seen as a corporate policy and practice, and as a way for companies to control,constrain, and monitor the actions of stakeholders (suppliers, customers, etc.) (Brown and Moore, 2001).For the concept of accountability, Kovach (2003) pointed out that accountability is a process in which individuals and organizations are responsible for their actions and the consequent consequences. Accountability research is primarily about corporate governance and organizational citizenship behavior. Here, the role of accountability is to constrain and control. For organizations, accountability can be divided into three directions. First, accountability can be seen as organizational policy and practice. Here, the accountability system is mainly embodied in the agency theory, and the organization owner relies on the agent to achieve its goal. However, the agent’s goals and behavior may differ from the organization’s owner’s goals. Therefore, accountability was introduced. The purpose of introducing accountability is to monitor the agent’s behavior and allow the owner to control the agent’s goals and behavior. Second, organizational accountability controls and monitors the organization’s stakeholder needs. The
importance of maintaining a good relationship between the organization and its stakeholders has been confirmed. And accountability is the key to maintaining this good relationship. Third, accountability plays an important role in the organization’s connection with society. Today, there are more and more social issues, and organizations need to comply with stricter social rules. On the other hand, organizations need to take on more corporate social responsibility.Schlenker (1994) argues that the core issue of accountability is based on the evaluation of responsibilities. However, the responsibilities between the internal departments of Chinese state-owned enterprises are not clear enough and the authority is not clear enough. When investigating responsibility, the relevant departments chose to avoid responsibility as much as possible, so there was a situation where the responsibility was not clear. So in accountability, the accountability of the accountable person becomes very vague.Chineseaccountability process is not sound. At present, China does not have a clear accountability initiation procedure. How to start the state-owned enterprise accountability mechanism often depends on the will of the superior management department, and there is no standard for compliance. The current accountability process is not sound. For example, although the accountability functions of some organizations have legal provisions, there is still a serious lack of operational procedures. For example, the law does not stipulate how to implement some more specific accountability after the accountability process is initiated. At present, the accountability system still lacks help from the legal side.Frink (2008) believes that accountability is mainly composed of three parts. They are accountability (formal and informal), accountability (responsibility and accountability), and accountability (focus on process and outcome). However, the current accountability body is narrow. The existing accountability is limited to the higher level of internal accountability of state-owned enterprises, lack of accountability of laws, people and other groups. Of course, there is also a lack of accountability for the management of state-owned enterprises. Just the superior to the lower level, such an accountability system is obviously difficult to achieve the expected performance of the accountability system. In the scope of accountability, state-owned enterprise accountability is generally only targeted at major accidents and is limited to the field of security incidents. At the same time, accountability only stays on the economic side, and ignores the negligence of other areas such as politics. The accountability link is mostly limited to the implementation link.In addition, the identity of the “monopoly” invalidates the market’s accountability penalty mechanism. The reform of state-owned enterprises for many years has caused state-owned enterprises to take off the “coats” of state-owned enterprises, and the state-owned enterprises that have survived have a certain monopoly. Monopoly means that the market can be controlled to a certain extent. Therefore, the market often fails to make accurate judgments on the performance of these companies, and the objective accountability mechanism of the market does not work well. In fact, the accountability system of the operators of state-owned enterprises has not been established. Although most state-owned enterprises have now undergone the transformation of the modern enterprise system, they have established a system of separation of powers between the board of directors and the management level. However, the implementation effect is not ideal, and even these systems have lost their role. Worse, it is sometimes a tool to shirk responsibility. At the management
level, there are always two types of behaviors in state-owned enterprises. The first is “disorder”, that is, privately making decisions without democratic decision-making, not acting according to the system, or even taking the lead in violating the rules. The second is “no action”. Whether it is management or ordinary employees, they all think that “inaction” can reduce the probability of their mistakes. In state-owned enterprises, the accountability system for ordinary employees has not been effectively implemented. Due to the particularity of the state-owned enterprise system, it is difficult for companies to dismiss unqualified employees. In fact, this also reflects that the accountability of employees does not actually play a good role. Employees are the foundation of corporate activities. If corporate activities cause a vicious incident, they cannot be held accountable. Thoms (2002) argues that there isa positive correlation between accountability and job satisfaction. This means that if accountability is not implemented well, employee job satisfaction will also decline. In this case, the accountability system has actually lost its value. At the same time, economic punishment alone is not able to act as a warning, and it does not play the most important preventive role.Organizational CultureOrganizational culture has always been a hot topic in management research. It is considered a key factor in the success of an organization. Organizational culture is like an invisible rule that guides organizational behavior and employee management. Its impact on individual behavior is quite significant. Organizational culture exists objectively in each organization, guiding and influencing employee behavior through values, institutional requirements and behavioral norms, and providing guarantees for achieving organizational goals. A good organizational culture is one of the reasons why companies win competition and continue to succeed. Hofstede (2001) defines organizational culture as an “organizational psychology” or “organizational subconsciousness.” It stems on the one hand from the behavior of the members of the organization, and on the other hand as a “standard”that affects the behavior of the members of the organization.Schein (2004) proposes that organizational culture is a shared, widely accepted system of values that are held by individuals in an organization and determine how to perceive, understand, and react. In general, organizational culture has three basic characteristics. First, organizational culture is passed through the interaction between members. Second, organizational culture affects the work behavior of members of the organization. Third, culture can operate at different organizational levels. Previous organizational culture studies have shown that a culture can control the behavior of members. Looking at the characteristics and connotation of organizational culture, this paper believes that organizational culture is formed in long-term practice activities,which is different from other organizations. Through a series of values system and behavioral norms, it affects members’ cognition, thinking and The way it feels, prompts the members of the organization to reach a consensus expectation.PowerDistanceandIndividualism-Collectivism
Hofstede (2001) argues that power distance refers to the acceptability of social members’ inequality in power in organizations. It can reflect the values of different groups in society. Power is considered to be the foundation of high power away from society. Power owners are privileged and should be as strong as possible.In a society with low power distance, everyone is independent and has the same power. The level is only used to distinguish between identity and role. The lower level regards the superior as the same person as himself, and the superior and the lower level respect each other. People of different levels rarely feel threatened and try to trust others. The relationship between strong members and vulnerable members is harmonious, and cooperation between vulnerable members is stable. According to hofstede’s research, East Asian countries (such as China, Japan) belong to a high-power distance culture. European and American countries (such as Denmark, the United States)belong to a low power distance culture. In a high-power distance culture, members of the organization easily accept unequal points of social resources (such as power and wealth). In this culture, it is easy to form a hierarchical and centralized organizational structure. In a low-power distance culture, members of the organization believe in fairness and democracy. They think that everyone is equal.More than 20 dynasties have emerged in the history of China, and the values of “advocating power” have long been formed. On the other hand, power distance is an important part of Chinese cultural tradition, and high power distance is in line with traditional Chinese cultural characteristics. People have accepted and become accustomed to “inequality of power” and “bureaucracy.” The behavior of the lower level is strongly constrained by the superior leadership, and the views and ideas of the superior leadership have a great influence on the lower level. Chinese society has such a hierarchical gap in the system, and the enjoyment of privileges is regarded as a kind of glory. Power and wealth are seen as signs of success, which gradually deepen the power distance of Chinese society. However, in order to break the concept of “worship of power”, it is necessary to cultivate and strengthen the awareness of citizens’ rights. Democracy is the basic direction of the development of human political civilization. From the perspective of the realization of democratic politics, the democratic system of each country is basicallya representative system. What is commonly practiced in Western countries is the parliamentary system. Representative democracy is a typical indirect democracy. Under this indirect democracy, voters delegate their decisions and the power to manage nationalevents to their elected representatives (government officials). Thus, after the generation of representative government, there is a contradiction between the owner of state power and the actual manipulator of state power. The Constitution solemnly declares that all powers of the state belong to the people. It merely shows the ultimate attribution of power in the democratic political system, but in reality it is impossible for most people to directly manipulate and exercise state power. However, in China, citizens do not even have the power to choose officials. The appointment and dismissal of officials is entirely within the internal election of government agencies. This is a manifestation of China’s high power distance. In this case, the regulation of power can only rely on accountability.Barkema (2015) believes that among the many cultural values, individualism-collectivism can best distinguish the differences between Eastern and Western cultures. Bond and Smith (1996) argue that this cultural dimension has a very important impact on individual thinking and behavior. In an individualistic culture, individuals emphasize the need to be able to take care of themselves,
appreciate and declare their uniqueness. This is closely linked to the characteristics of Western culture, that is, people have always believed in the idea of discovering and expressing their unique advantages, characteristics and values. Consistent with this cultural philosophy, people demand that their behavior be consistent with their innerthoughts and feelings, rather than with other people’s ideas and social expectations. In a collectivist culture, individuals emphasize integration into the organization. At this point, the individual’s self-expression does not seem important. It is a priority for orders that are subject to the collective. In addition, individuals in this dimension have also changed his values. From pursuing personal interests to pursuing collective interests, the collective has become the “core.” From another perspective, for members of society under collectivism, only by integrating into the collective in time can we adapt to the social environment and realize its own value. Therefore, under the collectivist culture, individuals hope to establish good relations with other members of society. They want those who build relationships with themselves to help themselves achieve their goals with the same or greater rewards.China is a country of collectivist culture. In Chinese companies, the ability to build relationships is important. In a sense, this ability is a necessary condition for members of society to survive in Chinese companies. However, this is one of the reasons why Chinese corporate accountability is frequently corrupt. If most of the people in the group are engagedin corrupt activities, the remaining small group will choose to acquiesce to this situation because of collective pressure. In addition, the accountability system of Chinese companies does not seem to be related to the accountability of the accountables in accordance with the rules. For example, the fault of an event does not have too much negative impact on the stability of the organization and society. If accountability according to the rules will affect stability, the regulator will not ask the “really”of the accountable. responsibility. In this case, the accountability system will not achieve the expected performance, and the accountability system is only a kind of “tool” to maintain the stability of the enterprise and society.Culture and AccountabilityVelayutham (2004) argues that accountability is often presented as a rational approach that can and should be implemented in all civil society, economic institutions and organizations. However, the main weakness of Asian political and economic institutions is accountability, especially during the Asian economic crisis.In his research, Velayutham (2004) shows that accountability is a cultural practice closely related to guilty emotions. Guilt is more likely to appear in individualism and small power distance culture. What is easy to appear in the power distance and collectivist culture is humiliation. In such cultures (such as China, Japan), responsibility is not so important, people usually actively evade responsibility rather than take responsibility. For example, people often conceal and block disclosure of information that can have a negative impact.This shows that the guilty culture will show a preference for responsibility. In this culture, people pay more attention to responsibilities and will take responsibility actively. Shame culture (such as China, Japan) will show a preference for face(mianzi).In China, shame is related to “lost face”. Lin (1935) refers to face (mianzi) as “abstract and intangible, and it remains the most subtle standard forthe supervision of social interactions in China”. People in shame culture are more conservative and confidential, and
they are more likely to conceal or prevent damage to face (mianzi). As pointed out by Velayutham (1999), in Asian countries, Western accountability may not produce the expected results.In addition, Gao et al. (1996) found that in China the weight of one’s voice milk depends on his/her social position. In fact, there is a kind of value in China called “Worship of Power”. This social value encourages people to pursue and blindly follow power. For the Chinese, power and avoiding negative consequences may be the direct benefits they can get. (Yip, K. S, 2004). In the traditional feudal political system of China for more than 2,000 years, the pyramid-like bureaucratic system with the king’s apex as the apex is based on the reality of power size and official position, and it has a direct sensory stimulation to the members of society, and thus among the members of society. Form a deep-rooted cult of power. Today, most Chinese citizens still maintain the idea of supremacy of power. Since the whole society worships power and power is in a supreme position, it is impossible to create a culture of accountability for groups with power.ResearchMethodReview the relevant literature and clarify the theory of accountability and culture (accountability and the cultural dimension of Hofstadter). Based on the theory, the research questions of this paper are proposed -the connection between culture and China’s accountability system and the solution to the problem of China’s accountability. This paper also uses qualitative research methods to analyze and discuss research issues. In the case study section, the research objects of this paper are Denmark and China. The first is to analyze and compare the differences in cultural dimensions between Denmark and China (only involving power distance and individualism). Due to the limitations of the results of analysis and comparison, this result cannot be directly usedto study the relationship between accountability and culture. Therefore, this article introduces second-hand data on the extent of corruption in Denmark and China. The study uses corruption as an intermediary between accountability and culture to validatethe hypothesis and research issues of the article by analyzing secondary data related to the extent of corruption.Second-hand data for cultural dimension research comes from Hofstede-Insights. This is a website about Hofstede’s research data, which contains research data on cultural dimensions in all countries. The comprehensive data is also the reason why this article selects these second-hand data. Second-hand data related to corruption comes from Transparency International and The Global Economy. The second-hand data from Transparency International is the ranking of corruption in Denmark and China. The second-hand data of The Global Economy is about the Rule of Law index (Control of corruption). This article considers the product of culture to be corrupt. Culture influences the values and behaviors of a group, and the behavior of the group is the direct cause of corruption. Accountability is a tool used to control corruption, and accountability is also affected by corruption. Therefore, in the case studysection, the hypothesis of the article can be confirmed by studying the degree of culture and corruption. The hypothesis of the article is that culture has a certain impact on the accountability system. After that, it is the thinking and analysis of the accountability system of Chinese enterprises.
CaseStudyThis paper argues that accountability and corruption are closely related. When discussing the accountability of a country or region, the degree of corruption cannot be ignored. On the other hand, whether a country is corrupt or not is the main reason why the accountability of the country can bring about the expected results. The degree of corruption in a country is also a direct manifestation of the effectiveness of the country’s accountability. According to Hofstadter’s theory of cultural dimensions, the culture of the country determines the values of members of society. The subject of national corruption is also a member of society. Therefore, this article discusses the relationship between culture and accountability by using the factor of corruption as an intermediary between culture and accountability. Since Denmark is number one in the ranking below, this article compares Denmark to the standard (in terms of corruption and accountability) and compares China and Denmark. Through the cultural dimension theory of Hofstadter, the author analyzes the cultural differences between the two countries and analyzes the problems of corruption and accountability based on the cultural differences between the twocountries.Culture and corruptionTable1.Table2This is a set of pictures of the national public sector corruption rating. This set of images is from Transparency International. They rank countries and regions around the world to measure public sector corruption in different countries and regions. Country or region scores are inversely related to their level of corruption. 0 is the lowest score and represents a high degree of corruption. And 100 points is the highest score, which means very clean.
Table3. Hofstede’s cultural dimensions(CHINA)Table4. Hofstede’s cultural dimensions(DENMARK)The first is the power distance, Denmark in this part is 18. This is a very low score, which means that the Danes attach great importance to equality.The Danes believe that their powers should be equal, whether they are ordinary employees or management. Respect for people is a necessary condition for communication. They also believe that anyone is equal before law and rules, and no one can use power toundermine rules.And China is 80 in this dimension. High scores in this dimension mean that the inequality that Chinese members of society consider to be acceptable. For a long time, Chinese people have
become accustomed to accepting the roles arranged bythese societies and fulfilling their obligations. For example, a society with a low status respects and obeys a person with a high status. The protection and pity of the subordinates in power. The performance of these obligations actually shows the fact that the power inequality has been accepted by the Chinese. For thousands of years, many dynasties have been replaced in China, but the organizational structure of Chinese society has not changed fundamentally, and there are not many changes in social ideals and philosophies. It cannot be said that high power distances have maintained good relations and coordinated social relations. The role. However, in today’s society, high power distance also brings many problems to Chinese society.Then there is individualism. Denmark is 74 in this part. This is a high degree of individualistic culture. Everyone in the society values their own value needs and relies on individual efforts to seek benefits for themselves. China is in this part 20. China tends to collectivism. Chinese citizens believe that collective interests are the basis of personal interests, collective interests should be higher than personal interests, and individuals should be loyal to the collective. In this cultural atmosphere, some people will carryout corruption activities with the collective interest as a “slogan”. For example, many state-owned enterprises in China have serious corruption problems, but they are not effectively supervised. The reason is that the owner of the enterprise is the collective of all the people, but in fact the state-owned enterprises are controlled by a few senior executives. In addition, many people will acquiesce in corruption and even participate in corruption under the pressure of collective corruption. Therefore, thecollectivist culture will increase the degree of collective corruption in China.Table5. Governance, institutions, corruption (DENMARK)
Table6.Governance, institutions, corruption (CHINA)Table 5 is a score sheet on Danish governance, institutions,and corruption. Table 6 is a score sheet on China’s governance, institutions, and corruption. Both tables are from The Global Economy. The rule of law index reflects the country’s perception of the government’s trust and adherence to social rules. Controlling corruption reflects the perception of the extent to which public power exercises private interests. The quality of regulation reflects the government’s ability to formulate and implement policies and regulations. Voice and accountability reflect the level of citizen engagement in accountability and politics. Among them, -2.5 is the weakest, on the contrary, 2.5 is the strongest. According to Table 5, the Danish legal index is 1.86. This means that Danes trust their government and laws. They believe that social rules and laws are well observed. On the contrary, China’s score is only -0.26, which also shows that in Chinese society, people believe that the law has not been fully observed and social rules have been destroyed.In terms of controlling corruption, the Danish score is 2.19. This is a very high score, which reflects the Dane’s ability to control corruption. China scored only -0.27 in this section. This shows that in Chinese society, this relatively serious corruption problem does exist.The thirdis the quality of supervision. According to the chart, the Danish regulatory quality index is 1.62. This section reflects the Danish government’s strong ability to formulate and enforce regulations. Combining this part with the rule of law index shows that Denmark is a “real” country ruled by law. The regulatory quality index for China is -0.15. The Chinese government lacks the ability to formulate and implement regulations. This also makes the laws and rules of Chinese society not be well observed. On theother hand, China is not a country ruled by law.Finally, the voice and accountability index, Denmark scored 1.52. The Danes are very active in accountability and politics. China is -1.50. Chinese citizens’ attitude towards accountability and politics isnegative.In this section, some conclusions can be drawn from the analysis. First, China lacks the ability to formulate and enforce laws, and China’s laws and social rules are not fully respected. Second, there are serious corruption problems in Chinese society(This result is confirmed in Table 7.). Third, Chinese citizens are negative when they are involved in accountability.Tables 7 and 8 are from Transparency International. Table 7 shows the degree of corruption in various fields of Chinese society. Table 8 shows data on the number of civil society organizations in China. China is owned by more than 3 million NGOs, but only 15% of organizations are legally registered.
Table7. Degree of corruption in various fieldsTable 8. Number of civil society organizations in ChinaFailure to comply with laws and regulations is the result of High Power Distances. In Chinese society, power has replaced the role of laws and rules, and citizens believe in power rather than law. In fact, in China, some rules and even some laws can be changed according to the actual situation, it is “flexible.” In social practice, the person who controls power is the “core” rather than the rules or laws. So many officials and corporate executives are willing to violate the rules and even modify the rules in order to achieve their goals. However, ignoring rules and laws is prone to corruption. In this case, the normal operation of the accountability system depends on the sense of
responsibility of the “powers”. The fact that there is aserious problem of corruption in China shows that the “powers” have chosen interests between responsibilities and interests. They have power but neglect responsibility. On the issue of power and responsibility, focus on power and neglect responsibility.Power and responsibility are always accompanied by each other, and each kind of power carries a corresponding responsibility. However, some powers in the conscious or unconscious often overlook and separate the correspondence between power and responsibility. They talk about power and demand that subordinates obey more; stress responsibility and take less responsibility for their work. In their conception, they only know how much authority a large official has, but they have not thought of how much responsibility they have to bear. They have never thought that they will be investigated for failing to fulfill their responsibilities.Collectivism is one of the reasons why Chinese citizens are passively involved in accountability. Chinese citizens consider theinterests of their collectives and they feel indifferent to other groups. So they are not willing to hold accountable to unrelated people. When they were asked to have the consciousness of “accountability” and “supervision”, many people did not pay attention to it. So the Chinese public is believed that when their survival is not threatened, they do not care about the accountability situation, they are just “watchers.” In real life, when China is accountable to state-owned enterprise executives, it is mainly carried out by relevant regulatory authorities for accountability activities, and citizen participation is rarely accountable. The power of state-owned enterprises can be said to be a kind of public power, ensuring that the minority who hold public power must be supervised by the whole society in the whole process of power operation to prevent him from abusing power. On the other hand, when a minority who has mastered public power abuses power, if there is no strong social supervision, the power in his hands loses its restraint and inevitably leads to abuse of power. However, the vast majority of the public in China lacks extensive participation and effective supervision of accountability activities and has no sense of accountability.The direction of corporate accountabilityAccording to the case study, three factors that caused the failure of China’s accountability system were proposed. The first is that the “powers” lack a sense of responsibility. The second is that Chinese citizens are not actively involved in accountability. The third is the lack of laws related to accountability. This article has been thinking about and analyzing the problems of China’s accountability and methods of improvement.In China, state-owned enterprises seem to have been synonymous with corruption. At present, the performance of the accountability system in state-owned enterprises is also disappointing. Therefore, establishing a new corporate accountability system is urgent and necessary. This also has a positive impact on improving the sense of responsibility of managers and strengthening the overall management of the company. It can make enterprise management more standardized and transparent, and it can also mobilize the enthusiasm of each employee to a greater extent. It is possible to clarify the business objectives that the leader or the management team needs to change
or improve, avoid the situation that “everyone talks about the goal, everyone is not responsible”; it can avoid the abuse of power by the enterprise manager and reduce the decision mistakes of the enterprise manager; Various problems faced by sexual warning companies to avoid causing more serious problems. In addition, the accountability of state-owned enterprises should pay more attention to the process than the results. Consider social benefits while pursuing economic benefits. In general, accountability can make state-owned enterprises more focused on reality. Punishing the wrong person has not been the main purpose of accountability, it is only a means. The purpose of the accountability system is to restrain, alert and increase the sense of responsibility of the employees of the company. Therefore, the fundamental meaning of the accountability system is not only to investigate the responsibility of the accident, but more importantly, to prevent the behavior of employees by preventing the behavior.In almost all state-owned enterprises in China, leading cadres can never get rid of bureaucracy and focus on their own social image. They usually have the characteristics of “low performance, blind decision-making”. In a sense, these leaders have become the key to corporate management and the “shackles” of the sound development of enterprises. In general, this can be roughly divided into two situations: First, “power abuse”, that is, personal decision-making replaces democratic decision-making, does not act according to systems and procedures, and even takes the lead in violating rules; second, “zero contribution”, many leaders are afraid To take responsibility for decisions or management mistakes, they often avoid making key decisions to evade responsibility from the “roots”. In their opinion, making mistakes means being accountable, being demoted, and making mistakes so that they can occupy the position of manager for a long time. For the company, it is no longer their purpose to seek benefits. In this sense, the object of accountability refers not only to negligent behavior but also to serious inaction. Therefore, companies must establish a culture of accountability that includes “performance accountability”.In addition, the accountability system is not “person” but “system”. There has always been a phenomenon in China. The superior can ask the responsibility of the lower level. As the “power” of the superior, it is sometimes inevitable to make mistakes, but no one is accountable to the “powers.” Only by establishing and complying with complete accountability and law can we constrain the “powers”. Under this condition, all employees and managers of the company can be questioned and accountable. Only the lower level is willing to be accountable to the higher level, and the culture in which employees can be accountable to the boss is a truly good accountability culture. Therefore, the true accountability system must achieve institutional accountability, mass accountability, and democratic accountability, rather than merely referring to the boss’s accountability to employees or superiors. This requires mobilizing the enthusiasm of the employees to supervise the managers, building a large supervision network within the enterprise to help enterprises avoid risks and reduce losses.Accountability improvementsThe first is to strengthen and innovate the internal governance model of enterprises and establish a
mechanism for handling and evaluating vicious incidents. Before appointing and appointing managers, state-owned enterprises can try to train managers in their sense of responsibility. It is required to conduct regular management personnel and key personnel to improve the ability of enterprises to cope with various types of vicious incidents. The training of “responsibility awareness” is regarded as a necessary condition for personnel management of state-owned enterprise cadres, and this is assessed and rewarded and punished. Large state-owned enterprises can implement corporate major incident investigation systems and set up professional institutions to assess incident responsibility. These agencies are responsible for assessing the social impact of the incident, proposing treatment opinions, assessing the level of responsibility of managers at all levels involved in the incident, and how to prevent such incidents from happening again. At the same time, the agency should also be responsible for the daily supervision of theresponsibility of each position of the managed enterprise.The second is to improve the legal supervision system for state-owned enterprises. Its key is to be accountable according to law. There is no complete law on the supervision of state-owned enterprises in China. The main basis for the supervision of state-owned enterprises is some binding regulations and departmental regulations. Not only are the objectives of legal supervision unclear, but also the handling of many incidents lacks a legal basis. It is undeniable that state-owned enterprises are the most important part of China’s current market economy. The relevant regulatory law gap is not conducive to the sound development of state-owned enterprises. Therefore, Chinese society needs relevant lawsto impose restrictions on state-owned enterprises. This enables state-owned enterprises to be held accountable according to legal provisions after a vicious incident, which not only enables the public to better understand the intent and result of accountability, but also enables the accountable person to accept the fact of being punished. This can avoid many unnecessary problems. For example, it is difficult to satisfy the public after the current accountability, and the accountable object is not satisfiedwith the result of accountability.The third is to clearly define the boundaries of powers and responsibilities and clarify the subject of responsibility. Clear responsibility and clear responsibilities are the premise and basis for accountability. To this end, we must give priority to solving the long-standing functional problems of state-owned enterprises. For example, the powers of different departments are repeated, which leads to unclear responsibility for overlapping parts. Therefore, on the basis offormulating departmental functions and rationally arranging powers, we should refine the responsibilities to every position and everyone within the organization, so that powers and responsibilities are clear and transparent. This will also help all departments and staff to know their specific authority and responsibilities, and effectively solve the problem of unclear accountability. At the same time, we must focus on solving the problem of unequal power and responsibility. Under the current Chinese corporate structure, managers who are specifically responsible for a vicious incident may not have complete powers, and thus there is a situation of “limited power, unlimited liability”. The result is a very big problem. For example, many staff members do not have complete powers and are subject to various constraints. It is very likely that powers are irresponsible and responsible people have no power. Therefore, it is necessary to establish the principle of equality of “how much
power is there and how much responsibility is there”. Constantly optimize the relationship between power and responsibility, so that the corporate powers controlled by the managers at all levels are closely related to their responsibilities. At the same time, negative phenomena in which power and responsibility are not equal need to be eliminated.The fourth is to promote the disclosure of state-owned enterprise incident handling information and attract public participation in the event assessment and processing process. The disclosure ofevent processing information not only helps to alleviate the anxiety of the public, but also helps to ensure the fairness of the incident process and results. Often, because state-owned enterprises do not openly deal with information in the handling of vicious incidents, causing doubts from public opinion, they have to increase their accountability to calm the “anger” of the public. In fact, this is not fair to the object of accountability. Moreover, in the process of event evaluation and processing, social forces and professionals can be actively involved in the assessment of responsibility and handling of opinions, actively listen to the ideas of the public, hire independent third parties for professional responsibility, and set up a special tracking event development. Position, timely release of information on event handling. Positive information disclosure can also display a responsible corporate image and win the trust of the public.Fifth, Chinese citizens prefer to express their views on the Internet and Weibo. These emerging media can be used as a platform for the public to oversee state-owned enterprises. Weibo is a network platform in China, similar to Facebook. The “Bohai Bay Oil Spill” incident was first revealed by a person familiar with the matter through Weibo. Sinopec’s bribery incident was also revealed by informed sources through Weibo. This shows the unique monitoring role of emerging media such as the Internet and Weibo in state-owned enterprises. This series of events was first exposed through the Internet, which shows that the emerging media has played a very effective role in the supervision of state-owned enterprises. In the process of supervising state-owned enterprises, the power of the masses plays a positive role in the supervision of state-owned enterprises. This also makes the managers of all levels of state-owned enterprises always vigilant in the operation of the company, keeping in mind their responsibilities.DiscussionandconclusionIn the above section, this article presentsseveral specific recommendations for improving the accountability of Chinese companies. These improvements are based on an analysis of China’s accountability system, and these are not the best ways to solve problems. China’s traditional culture has shapedChina’s accountability system, and accountability culture is the soul of accountability. To change the current status of China’s accountability system from the root cause, we must improve or establish a good culture of accountability. Advanced theories and cultures are instilled rather than spontaneously produced. In China, the idea of a feudal monarchy with thousands of years of history must occupy a dominant position in China. Chinese traditional culture has created the concept of “worship of power”, andit is impossible for China to spontaneously generate and form accountability concepts and culture. Therefore, as an advanced
culture, accountability culture must also be shaped through indoctrination, that is, education through accountability culture.Cultivate and strengthen citizens’ rights awareness through the education of accountability culture. Transfer the values and codes of conduct related to accountability to the public and officials, and guide and restrict their behavior through social public opinion. It is impossible for the people or the majority of the people to directly manipulate and exercise state power. Therefore, in the case of such separation, it is necessary to ensure that the minority who actually grasps and applies power always represents the will and interests of the people throughout the process of power operation. The key to it is to be supervised and accountable by the whole society in the whole process of power operation. This kind of supervision and accountability is precisely the basic rights of citizens.Therefore, on the one hand, it is necessary to educate the public about accountability, so that the accountability body (the core is ordinary citizens) knows that they have the right to hold the government and its officials accountable, arouse the enthusiasm of citizens to participate in politics, and change the political indifference of citizens. Thereby forming a positive, healthy and upward accountability atmosphere in the whole society. On the other hand, it is necessary to conduct accountability education for government staff, so that the accountability object (the core is the official) understands the meaning and basis of accountability, so that they can correctly treat and consciously accept the supervision and accountability of the public. Through accountability education, we must create an atmosphere of accountability in the whole society, so that the whole society understands that accountability is not a problem for an official, not a factor that affects social stability,but it is a kind of social harmony and human progress. Political behavior.Only in this way can accountability become a social norm rather than an accountability “storm.” In addition, a sound accountability system makes the foundation of a culture of accountability. Only on the basis of a sound accountability system can a good accountability culture be cultivated. From the perspective of Western countries’ practice, accountability relies on laws and other systems. Without a system, it is impossible to holdaccountable to those in power.In recent years, many provinces in China have successively issued accountability systems, but there are great differences in accountability procedures, responsibility methods, accountability, and accountability consequences.Differences in accountability systems inevitably lead to differences in accountability practices. For example, the same behavior for civil servants may be accountable and pursued in one place, while in another place it may not be accountable and pursued. From a fair perspective, regional differences should not be a condition for civil servants to be held accountable. A sound accountability system should point to all civil servants. Similarly, the accountability of civil servants in different regions shouldbe uniform. This determines that the accountability system should be nationally unified and requires the support of a unified legal system. Therefore, the establishment of a relevant legal system is the key. This is the institutional basis for building a culture of accountability.
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AppendixSource: Transparency International(Website:https://www.transparency.org/)Table 1（PAGE.9）Table 2(PAGE.9)Table7. Degree of corruption in various fields(PAGE.13)
Table 8. Number of civil society organizations in China(PAGE.13)Source:TheGlobalEconomy(Website: https://www.theglobaleconomy.com/)Table 5. Governance, institutions, corruption (DENMARK)(PAGE.11)Table 6. Governance, institutions, corruption (CHINA)(PAGE.11)Source:Hofstede Insights(Website:https://www.hofstede-insights.com/)
Table 3. Hofstede’s cultural dimensions (CHINA)(PAGE.10)Table 4. Hofstede’s cultural dimensions (DENMARK)(PAGE.10)
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