The evolution of internet has led to new ways of communications. The social media revolution has transformed the marketing communication landscape drastically. Web 2.0 has accelerated the popularity of Social Networking Sites (SNSs) and many corporations have leveraged this opportunity to enhance their brand equity and ascertain their public sentiment. The main objective of this study is to examine the causal relationship between Facebook engagement factors and brand trust as well as word of mouth through the influence of perceived quality as the mediating variable and the presence of Corporate Social Responsibility content as the moderator. A Pilot Study in the format of face-to-face and one-on-one interviews have been conducted to help inform the design of the experiments. In the subsequent Main Study, the six hypotheses in the theoretical model are tested through a series of experiments by manipulating different independent variables against the backdrop of the energy utility industry in Hong Kong, which is basically a government regulated monopoly. In order to minimise any potential bias or preconception towards CLP Power Hong Kong and Hong Kong Electric which are the two incumbent electricity companies locally, special experiments have been designed under the name of YY Electricity Company, which is a fictitious brand as the service provider.

Dr Ho Ming Wai Celine 2022 DBA Graduate Honorary Advisor The Hong Kong Advertisers Association Supervisor: Prof. Flora Gu

My research provides empirical evidence to support the proposed conceptual model. Contrary to the conventional wisdom that bigger is always better, a bigger follower size in the Facebook community of the energy utility industry in Hong Kong does not necessarily lead to better brand trust and word of mouth. Through the statistical analysis, it is validated that comment negativity on the brand’s Facebook page is negatively related to its brand trust and word of mouth. Besides, the number of followers and the proportion of negative comments on the brand’s Facebook page negatively interact to affect the two dependent variables. Moreover, perceived quality mediates the interaction effect of the follower size and comment negativity on its brand trust and word of mouth. Furthermore, the presence of Corporate Social Responsibility content positively moderates the effect of comment negativity on perceived quality, which subsequently affects brand trust and word of mouth.

Since most of the extant literatures focus on examining the causal relationship between Facebook engagement factors and purchase intention in competitive business, this thesis helps address the research gap by analysing the correlation between Facebook engagements and brand related attributes including brand trust and word of mouth in the context of a monopolistic business environment. Apart from the theoretical implications, there are also managerial and practical contributions to the field of marketing and management. The empirical findings not only help inform board decisions related to social media management but can also be applied to certain government sectors and eradicate the misconception that the bigger the follower size the better for reinforcing brand value. Instead of chasing more followers, more resources should be invested to manage negative comments properly on the official Facebook brand pages. Social media revolution offers both opportunities and challenges for business entities. In the monopoly domain, social networking sites is like a double-edged sword. Social media should not be embraced by firms only because it is “seen to be” associated with modern and progressive image. Marketing teams should establish clear brand goals that support company’s vision and mission by optimising the value of both social and traditional media as integrated marketing. Limitations and future research directions have also been discussed.

Background and motivation: The Stock Exchange of Hong Kong Limited (HKEX) published a Consultation Conclusion to listed issuers (listed companies) with disclaimer or adverse audit opinions on financial statements after a 2-month consultation period carried out in 2018. This Consultation Conclusion empowered HKEX to suspend trading securities of listed companies if preliminary annual results announcements carried the severest modified audit opinions, namely, disclaimer or adverse audit opinions expressed by the incumbent auditor. My observation was triggered from a strong intention of listed companies to make decisions on auditor switch to address disclaimer or adverse audit opinions during the remedial period. Literature: Auditor switch can be generally observed in the form of dismissal, rotation, resignation, or audit tenure. Regardless of the forms of switching, auditor switch behaviors were induced for numerous real-world practice reasons. Findings in academic studies demonstrate many influencing factors of auditor switch based on empirical evidence or analysis involving different markets, countries, selected business sectors, and timing for observations. Some literature explain the auditor switch decision using the opinion shopping theory (Teoh, 1992). However, it seems that no unity model or theory can explain all these behaviors. Nevertheless, auditor switch behavior is more frequent (has higher probability) in firms with qualified opinions instead of expressed clean audit opinions (Chow & Rice, 1982; Gul, Lee, & Lynn, 1992). This idea provides a conceptual groundwork that links auditor switch to classical agency theory (Jensen & Meckling, 2009).

Dr Kung Wai Chiu Marco 2022 DBA Graduate Co-Founder and Director WinPark CPA Company Limited (Certified Public Accountants, Practising) Supervisor: Dr Mike Fung

Research value: Auditor switch has long been an important study topic in accounting research. A research value arose from the auditor switch literature while exploring some implications from agency theory or other corporate governance considerations, particularly those on modified audit opinions. This study contributes to and enriches literature on auditor switch by discussing the new suspension trading regime and some related implications, such as a 1-year time lag or the moderating effect of some key control variables—a consequence of modified audit opinions.

Despite a potential suspension consequence of securities under the newly announced regime, it is vital to understand the change in probability and timing (1-year time lag) of auditor switch to be significantly influenced by different levels of modified audit opinion severity.

Purpose: My study analyzes the relationship between modified audit opinions and auditor switch implemented under the new trading suspension regime (regime) based on conceptual groundwork and previous literature. This study also investigates whether and how the new regime has fundamentally changed listed companies’ behavior in terms of auditor switch with the interactive effects of various control variables in audit characteristics.

Methodology: Using the logistic regression approach, this study evaluates the impact of the new listing rules concerning the trading suspension regime, concluded in May 2019, on the relationship between various levels of modified audit opinion severity given to a firm on one hand and the firm’s auditor switch decision on the other. I employ modified audit opinions as a key determinant on auditor switch. The dependent variable is the probability of auditor switch. A dichotomous (binary case) variable indicates whether to switch auditor in the base year.

This is an empirical study comprising a sample of 627 observations covered in 302 companies listed on the HKEX, covering the relevant three financial years ending from 2017 to 2019. I categorized all observations according to nine types of modified audit opinions in treatment and control groups. I also coded 3-score scales to indicate the severity level of modified audit opinions concerning the new requirements under the new policy change. The treatment group includes all samples with the severest modified audit opinions, with an assigned level 3 score and subject to trading suspension; other samples have been classified as the control group.

Findings: The baseline empirical results show that the auditor switch probability is positively related to modified audit opinions, particularly disclaimer or adverse opinions that are the most severest forms of modified audit opinions. Moreover, the findings reveal a 1-year time lag between the year receiving modified audit opinions and the year of switching auditors. This finding is indeed consistent with the observed real-world phenomenon.

Statistical tests for structural breaks suggest that the likelihood of switching auditors in the presence of modified audit opinions has become stronger after implementing the new regime. With obtaining modified audit opinions, the auditee is more likely to switch auditor in the forthcoming financial year after the newly purposed and concluded regime. Therefore, the new regime offsets the 1-year time lag of auditor switch in case a modified audit opinion is given to the firm. The findings also suggest that large and loss-making firms are more sensitive to the regime shift in terms of their probabilities of auditor switch.

This study’s findings and results also reflect a positive moderating role of the new regime on the relationship between engaging a BIG-N auditor and the probability of auditor switch. However, this result does not capture the situations when shifting results to the succeeding auditor is a BIG-N or non-BIG-N auditor due to limited data availability.

In summary, both my design univariate and multivariate test findings and robust results support each of my proposed hypotheses and are consistent with the results of prior literature on auditor switch.

Contributions: A large body of research has investigated modified audit opinions as a key determinant of auditor switch. Nevertheless, studies concerning and conducted in the Hong Kong capital market are lacking. Moreover, past research addressing the possible impacts of policy changes on auditor switch is scant. In particular, the relationship between the audit switch and the severity of modified audit opinions and the timing of auditor switch under the new policy regime in Hong Kong is still unclear.

This study contributes to the auditor switch literature as well as the accounting and auditing profession in three aspects. First, it enriches the existing literature on auditor switch and opinion shopping incentives with the possible impacts of a significant policy shift. Likewise, my study contributes some new insights or input (pertaining to knowledge gaps in prior studies) resulting from the evidence-based policy change in Hong Kong. To the best of my knowledge, this study is the first to consider the effects of a significant policy (regulatory) regime change on the relationship between auditor switch and modified audit opinions.

Second, this study uses the counterfactual impact evaluation method to compare the reaction of auditor switch after the new regime is concluded and executed. It applies the difference in difference (DiD) regression augmented with a varying level of modified audit opinions, allowing firms within the treatment group to react differently to the same intervention. It further examines the impact of various interactions between control variables and the newly imposed regime on auditor switch. This research design makes methodological contributions with regard to counterfactual impact evaluation and the effectiveness of the newly introduced policy.

Finally, my study contributes new insight related to practical knowledge benefiting our accounting and audit industries and various practice professions. These practicing professions should also pay more attention to exploring the influence of modified audit opinions on the market and entire listed companies. Similarly, I investigate how this significant policy change affects listed companies’ decisions by analyzing policy changes from a scholar’s perspective. The results are expected to have important implications on how policy change affects the registered auditing profession, namely public interest entity (PIE) under the Hong Kong Institute of Certified Public Accountants (HKICPA), regulators, and all listed companies in Hong Kong.

Disclaimer: The empirical results and opinions expressed in this study do not represent the official views of HKEX and HKICPA.

The digital economy, enabled by big data technologies, artificial intelligence, the Internet of Things, and other new information and communication technologies, has become a mainstream economic form of today’s society and is among the most dynamic sectors in China’s economic growth. Under these new circumstances, digital economy has risen to become a new engine to optimize and upgrade China’s industrial structure. In addition, the global outbreak of Covid-19 has accelerated the explosive expansion of the digital economy, forcing traditional industries to embrace digital transformation. Hence, on this basis, investigating the connection between the digital economy and industrial structure upgrading is of great practical significance for exploring new paths and directions to ensure industrial structure upgrading and boosting growth that emphasizes quality. Taking the promoting role of “the digital economy on the upgrading of industrial structure” as the main focus, this study examines how digital economy development influences industrial structure upgrading based on the theoretical analysis and by measuring them. Following the research perspective of “province—city—pilot zone,” this study takes the specific digital economy policies first released as a quasi-natural experiment. It deploys a multi-period difference-in-differences (DID) method to evaluate the effect of the digital economy on the regional industrial structure using panel data that consists 31 Chinese provinces (including centrally “administered autonomous regions and municipalities”) over 2001-2020. To make the research conclusion more reliable and scientific, this study also adopts the panel data of 285 Chinese cities at the prefecture level and above over the period of 2011-2019 to further discuss the connection that digital economy has with the industrial structure by exploring the mediating effect and the threshold effect. Moreover, it analyzes the spatial relationship of these two from a spatial perspective. Finally, this study conducts a comprehensive case study of a digital economy-led, urban artificial intelligence and digital economy pilot zone (Pazhou Core Area) built in Guangzhou — a city based on industries — and powers the synergetic development of 21 industry chains through digital empowerment. Thus, it offers practical insights into how the digital economy upgrades industrial structure, summarizes findings and implications, and proposes recommendations with regard to China’s industrial structure upgrading.

Dr Li Zhijian 2022 DBA Graduate Chairman Guangzhou Bizdao Consulting Co., Ltd. General Director Asia-Pacific Innovation Economic Research Institute of Guangdong Supervisors: Prof. Wilson Tong and Dr Steven Wei

Based on panel data at the city level, the measuring results of the digital economy and industrial structure upgrading indicate that the industrial structure of Chinese cities shows an upward trend during the research period, and the level of the digital economy shows a trend of accelerated growth. There is a severe regional imbalance in urban industrial structure optimization and digital economy development; cities with the highest level mainly cluster in the Beijing, Tianjin and Hebei Region (hereafter referred to as “the Jingjinji Metropolitan Region”), “the Yangtze Delta city belt” and “the Greater Bay Area” that consists of Hong Kong, Macau and nine cities in Guangdong province. The pattern shows a “stepped” feature and is characterized by an economic landscape of “strong south and weak north.”

The multi-period DID results at the provincial level show that the first released specific digital economy policies have elevated the rationalization, optimization and diversification of regional industrial structure remarkably. The results stay robust and reliable by changing estimation methods, changing core explanatory variables, using randomly selected experimental group, changing the timing of policy shocks and considering spatial relationships among provinces. In addition, the introduction of specific policies on the digital economy has a more evident impact on the diversification of regional industrial structure than the rationalization and optimization of industrial structure.

The regression results using panel data at the city level and above reinforce the multi-period DID findings that digital economy has significantly enhanced the rationalization, optimization and diversification of urban industrial structure and are strongly robust. From a heterogeneity perspective, urban digital economy has different effects on the industrial structure across regions and time. In terms of time, all stages of the digital economy development can significantly promote the rationalization, optimization and diversification of industrial structure, and that impact is stronger in recent years than in early times. In terms of region, digital economy development upgrades industrial structure in all regions except in the eastern region. In terms of urban energy level, digital economy has a significantly bigger impact on industrial structure upgrading in non-capital cities than in capital cities. In terms of economic growth, the impact of digital economy development on the industrial structure is smaller in economically developed cities than in economically lagging cities. These findings prove that regions with insufficient economic growth momentum can achieve leapfrog development by leveraging the digital economy. In addition, the digital economy assists in optimizing and upgrading regional industrial structure mainly by increasing innovation capabilities, accelerating labor force agglomeration, leading government strategic investment, and enhancing financial development. The linear relationship between the two shows that the digital economy and urban innovation capability have a significant positive, descending non-linear “marginal effect” on the rationalization and optimization of industrial structure, and a significant positive, increasing non-linear “marginal effect” on the diversification of industrial structure.

Furthermore, urban industrial structure and digital economy development have been clustering spatially, with their spatial autocorrection continuing to rise. After further considering the spatial relationship, the spatial econometrics model results also show that digital economy has enhanced the rationalization, optimization and diversification of the industrial structure in China and that industrial structure has apparent spillover effects; that is, the improvement of urban structure in a city constantly optimizes the industrial structure in neighboring cities. This study also conducts a case study of how the digital economy promotes industrial structure in the Guangzhou Artificial Intelligence and Digital Economy Pilot Zone (Pazhou Core Area) from a micro perspective. It summarizes findings and implications in terms of government priorities, chain length system, development planning, investment attraction, business environment and talent retention.

Lastly, this study provides important policy implications regarding the role of the digital economy on China’s industrial structure upgrading from multiple dimensions, including making the digital economy a continuous engine to upgrade industrial structure, formulating differentiated regional policies on digital economy based on local conditions, boosting the coordinated growth of digital economy through regional synergy, exploring the multi-dimensional paths of the digital economy to upgrade regional industrial structure, and allowing consumption to come into play in upgrading industrial structure.