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Accounting internationalization and value relevance of accounting earnings in China |
YOU Jiaxing1(), LUO Shengqiang2() |
1. Planning & Statistics Department, School of Economics, Xiamen University, Xiamen 361005, China; 2. Accounting Department, School of Management, Xiamen University, Xiamen 361005, China |
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Abstract Using financial reports of AB-share listed companies in China from 1996 to 2003, this paper attempts to evaluate the impact of accounting internationalization in China by comparing time serial value-relevance differences between Chinese Accounting Standards (CAS) and International Accounting Standards (IAS). Empirical evidence from relative information content test indicates that unexpected earnings reported under IAS have more information content to A-share investors than those under CAS. However, the relative value-relevance of IAS is weakened through the accounting internationalization process. Moreover, empirical evidence from incremental information content test shows that the incremental value-relevance of IAS is also weakened through the accounting harmonization process. Further empirical evidence demonstrates that CAS earnings appear to substitute for CAS earnings in the valuation process to the extent to which CAS is harmonized with IAS.
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Keywords
Chinese Accounting Standards
International Accounting Standards
information content
accounting internationalization
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Corresponding Author(s):
YOU Jiaxing,Email:xmuyou@sina.com; LUO Shengqiang,Email:luoshengqiang@126.com
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Issue Date: 05 June 2009
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