ارزش نسبی هماهنگ سازی استانداردهای بین المللی حسابداری: شواهدی از بازارهای سهام نوع A و B چین
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|10202||2005||25 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of International Accounting, Auditing and Taxation, Volume 14, Issue 2, 2005, Pages 79–103
Applying both the price-levels model and the lagged-price-deflated returns model, we investigated the incremental value relevance of the reconciliation of accounts from the Chinese Accounting Standards (CAS) to the International Accounting Standards (IAS) by those Chinese listed companies that have simultaneously issued A-shares and B-shares. In addition, we examined the usefulness of accounting numbers (earnings and book values) and their value relevance to the A- and B-share markets in China. The study finds that earnings and book values of owners’ equity determined under CAS are more relevant accounting information for the purpose of determining the prices of A- and B-shares. The CAS-based earnings changes were reflected in stock returns in the B-share market, while the CAS-based earnings were closely associated with stock returns in the A-share market. However, the study found that the reconciliation of earnings and book values from CAS to IAS basis is partially value-relevant, mainly to stock prices in the B-share market, while the earnings reconciliation is generally not value-added to stock returns in either the A- or the B-share market. The study results suggest that accounting numbers based on domestic accounting standards, in contrast to IAS, are more value-relevant in the Chinese stock market at present.
Stock companies reappeared in the Chinese economy in the late 1980s. Two stock exchanges, the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE), were established in late 1990 and early 1991, respectively, followed by a rapid expansion of capital market in the country since then (Karmel, 1994 and Mookerjee and Yu, 1999; Fung, Lee, & Leung, 2000; Chen & Thomas, 2003). Nonetheless, the Chinese stock market is still far from standardized with respect to its regulatory framework. In particular, financial reporting and information disclosure is underdeveloped compared with the standards in most industrialized countries. A major problem lies in the lack of transparent and reliable accounting information to assist investors and other market participants to effectively make decisions (Chan & Rotenberg, 1999; Aharony, Lee, & Wong. 2000). In the absence of a sound regulatory system, some Chinese listed companies have released unreliable or even fraudulent information to the market (Holmes, 1997, Zhang, 1998 and Chen et al., 2002). Concerns have been raised on the quality of accounting and reporting practices in China, owing to the increasing exposures of accounting scandals in the listed companies in recent years (Li, 1999, Tang, 2000 and Chen and Thomas, 2003).1 As a result of the increasing public demand for improving the relevance and reliability of corporate disclosure, it has become widely accepted that the Chinese accounting system, which was developed to serve the government's centralized planning and control over the economy, should be overhauled and internationally accepted accounting standards and practices should be adopted (Ge & Lin, 1993; Mills & Cao, 1996; Lin & Chen, 1999). The internationalization of Chinese accounting is driven by a rapid progress of economic restructuring towards a market-oriented economy and the government's intention of attracting more foreign capital. In particular, following China's official entry to the World Trade Organization (WTO) in late 2001, the Chinese economy has become increasingly integrated with world markets. This development, again, calls for the harmonization of Chinese accounting standards (CAS) and practices with the internationally accepted norms since accounting serves as the language of business. The International Accounting Standards (IAS) promulgated by the International Accounting Standards Board (IASB)2 are widely regarded as the internationally accepted rule of accounting practice, and the need to adopt it in China has been gradually recognized (Winkle, Huss, & Chen, 1994; Xiao & Pan, 1997; Lin, Chen, & Tang, 2001). In fact, since the mid 1980s, the Chinese accounting system has been undergoing continuing reforms aimed at creating a set of accounting standards to replace the original rule-based accounting regulations (Davidson, Gelardi, & Li, 1996; Lin & Chen, 2000). At the same time as the Accounting Standards for Business Enterprises (ASBE) was introduced in 1993, the Chinese government also formulated the Accounting Regulation for Companies Adopting Share-Capital Systems (amended in 1998), which applies exclusively to listed companies. Since 1997 the government has further promulgated several transaction-based Practical Accounting Standards (PASs). These new accounting standards or regulations are modeled on the IAS, although a substantial gap remains between the Chinese accounting standards and IAS (Xiao & Pan, 1997; Chen, Gul, & Su, 1999; Lin et al., 2001).3 The stock market in China is segmented. There is one market for A-shares, which are traded among domestic investors, and another for B-shares, which are issued exclusively to overseas investors.4 The segregation of the two markets reflects the government's motivation of having a more standardized market, although at a small scale, to directly attract foreign investors. The B-share market is also treated as a reform experimentation in order to provide references for the development of the immature A-share market.5 The government regulatory authorities have set out different accounting rules and information disclosure requirements for the A- and B-share markets. Companies issuing A-shares must prepare their financial statements based on CAS. B-share companies should prepare their financial statements following IAS and be audited by the Big 5 international auditing firms. In practice, those companies issuing both A-shares and B-shares are allowed to release their primary financial statements based on CAS and, simultaneously, the reconciled key accounting figures from CAS to IAS (Bao & Chow, 1999; Abdel-Khalik, Wong; & Wu, 1999; Jiang, 2001). The segregation of A- and B-share markets and the different accounting and disclosure requirements provide an opportunity to test the value relevance of accounting numbers prepared under the two sets of accounting standards and, further, to evaluate empirically the effectiveness of harmonizing CAS with IAS.6 Such kind of studies should be able to examine the necessity and feasibility of adopting IAS in China. We thus, investigated the value relevance of accounting figures determined by CAS and IAS in the emerging Chinese stock market. Regressions were run to test the association of accounting numbers (earnings and book values of owners’ equity) and market variables (price levels and stock returns) for those Chinese listed companies that issued both A-shares and B-shares during 1995–2000, in the unique context of the Chinese stock market. By employing price-levels and price-deflated returns models, we tested empirically whether CAS or IAS is more closely associated with stock prices and returns in the A-share and B-share markets in China, and whether the IAS reconciliation has incremental information content. We found that, at the aggregate level, earnings and book values determined under CAS are relevant accounting information to both A- and B-share markets. Although the IAS reconciliation of book values is incrementally value-relevant to stock valuation, the reconciliation of earnings is generally not value-added for determining stock returns in the Chinese stock market. In the subsample comparison of companies listed in the two stock exchanges (i.e., SHSE and SZSE), we observed that SHSE is more sensitive to the IAS reconciliation than SZSE. In addition, our study results indicate that the association of book values with equity valuation is relatively stable in the B-share market, while the usefulness of earnings has significantly fluctuated and deteriorated over time in both A- and B-share markets. It is argued that the empirical findings of this study are determined by the unique features of the emerging Chinese stock market and the specific corporate structures of the Chinese listed companies. The rest of this paper is organized as follows. A brief description of the development of the capital market and the financial reporting environment in China is presented in the next section, and some relevant prior studies are reviewed as the theoretical framework of our study design. The research method, model specification, and sample selection are then described, followed by a presentation of the empirical results and the analysis. Finally there is a short conclusion.