خواص ارزیابی درآمد و ارزش دفتری گزارش شده تحت گاپ داخلی، آی آ اس و گاپ ایالات متحده : شواهدی از چین، هنگ کنگ، ژاپن، کره و سنگاپور

This paper examines whether earnings or book value is the dominant valuation accounting measure for companies reporting under alternative accounting standards — International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS), U.S. Generally Accepted Accounting Principles (U.S. GAAP) or domestic accounting standards of China, Hong Kong, Japan, Korea and Singapore. Our sample consists of domestic firms in the five Asian countries and firms from these countries cross-listed in the United States as American Depositary Receipts (ADRs) from 2002 to 2011. For domestic firms, book value is more informative than earnings for firms from Hong Kong, Singapore, China, Japan and Korea during 2002–2011 although their accounting standards are influenced by different systems. For the ADR sample, book value is more informative than earnings for U.S. GAAP reporters and reconcilers during 2002–2007. However, earnings are more informative than book value for U.S. GAAP reconcilers from China. After 2007, ADRs in our sample from Hong Kong, Japan and Korea continued to file under U.S. GAAP. Some ADRs from China filed under U.S. GAAP and some filed under IFRS. Earnings are more informative than book value for IFRS users; however, book value has higher incremental value relevance than earnings for U.S. GAAP users. We contribute to prior research by providing evidence on the valuation properties based on accounting measures reported under different GAAPs for the Asian countries.

This paper examines the valuation properties of earnings and book values reported by companies under alternative accounting standards — International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS), U.S. Generally Accepted Accounting Principles (U.S. GAAP) and domestic accounting standards of the five Asian countries of China, Hong Kong, Japan, Korea and Singapore. Ashbaugh and Olsson (2002) find that Earnings is the dominant accounting measure for valuation for cross-listed firms reporting under IAS, but Residual Income is the dominant accounting measure for valuation for cross-listed firms reporting under U.S. GAAP. Their sample consists of 26 non-U.S./non-U.K. firms that traded on International Stock Exchange Automated Quotations (SEAQ) in London. We obtain a broader sample consisting of domestic firms in the five Asian countries and firms from these countries cross-listed in the United States as American Depositary Receipts (ADRs) from 2002 to 2011. The objective of this paper is to examine whether earnings or book value is the dominant valuation accounting measure in these countries with different accounting practices. We use the models in Collins, Maydew, and Weiss (1997) to calculate incremental value relevance of earnings and book value. The firms in the domestic sample prepare their financial reports in accordance with domestic accounting standards, while the ADRs in the cross-listing sample report under or reconcile to U.S. GAAP during 2002–2007. After 2007, cross-listing firms can choose to file their reports using IFRS or U.S. GAAP (Securities & Exchange Commission, 2008). This offers us an opportunity to compare the valuation usefulness of accounting numbers reported under IFRS, U.S. GAAP and domestic accounting standards for these Asian countries. Our study is of interest for the following reasons: the rapid growth of Asian capital markets, differences in accounting practices with convergence towards IFRS, and an increase in the number of firms cross-listing in the U.S. market. First, the rapid growth of the Asian economies during the 1990s and 2000s has generated great interest among U.S. investors in the securities of Asian-based companies. Hong Kong and Singapore were ranked as the second and the fourth largest economies in Asia in terms of market capitalization (Stock Exchange of Hong Kong 1999).4 Japan is a developed market with a large market capitalization (Hoyer-Ellefsen, 2004). China's state-owned enterprises have been increasingly successful in raising capital (Zhang, 1998). Korea is one of the newly industrialized Asian economies, and had the highest GDP of the four newly industrialized Asian economies.5 A country that opens up its capital market is more likely to use IFRS to increase access and attract foreign investors (Hope, Jin, & Kang, 2006). Second, these Asian countries provide an opportunity to examine differences in their accounting practices on the valuation properties of accounting numbers. The accounting systems in Hong Kong and Singapore are highly influenced by the U.K. standards because they were under British rule for many years. These two countries were one of the first to implement International Financial Reporting Standards (IFRS) (Deloitte & Touche, 2008).6 On the other hand, Korea's accounting practice is strongly influenced by tax law (Graham and King, 2000 and Jang and Lee, 1997). Early adoption of IFRS was allowed for listed companies with the exception of financial institutions in 2009 and the full adoption of IFRS has been required since December 2011 (European Commission, 2011). Japanese accounting developments have been controlled by the government to serve economic expansion and tax collection (Shiba & Shiba, 1997). Japanese public companies are allowed to voluntarily use IFRS in 2010 (Deloitte & Touche, 2012), but the mandatory adoption has not yet been finalized. China revised regulations in 1998 to harmonize accounting practices with international practices. A new set of Chinese accounting standards that substantially converge to IFRS has been introduced in selected companies in 2007 (Ding & Su, 2008). As of 2010, standards and interpretations issued by IASB have been implemented in China; however, there are differences relating to alternative treatments and certain modifications which reflect China's unique circumstances (The European Commission's Report, dated July, 2011). Finally, many firms in these countries also cross-list on foreign stock exchanges, especially the U.S. stock market, to gain access to foreign capital.7 Cross-listing firms subject themselves to increased enforcement by the SEC, a more demanding litigation environment and increased level of disclosure (Lang, Lins, & Miller, 2003). Before the fiscal year ended November 15, 2007, the ADRs were required to reconcile to or report under U.S. GAAP for cross-listing in the United States. Our study further provides evidence on the cross-country comparability of financial reporting under U.S. GAAP, IAS/IFRS and domestic GAAP. As of 2010, full IFRS is applicable in Hong Kong, is partly adopted in Singapore, is permitted in Korea and Japan, and is substantially convergent in China (Deloitte & Touche, 2012). For domestic firms in our sample, book value and earnings perform well in explaining market capitalization; book value is more informative than earnings. Similar results are obtained for firms from Hong Kong, Singapore, China, Japan and Korea during 2002–2011 although their accounting standards are influenced by different systems. For the ADR sample, book value is more informative than earnings for U.S. GAAP reporters and reconcilers during 2002–2007. However, earnings are more informative than book value for U.S. GAAP reconcilers from China. After 2007, ADRs can choose to file under U.S. GAAP or IFRS. ADRs in our sample from Hong Kong, Japan and Korea continued to file under U.S. GAAP. We did not find filings for ADRs from Singapore. Some ADRs from China filed under U.S. GAAP and some filed under IFRS. Our results show that earnings are more informative than book value for IFRS users, consistent with Ashbaugh and Olsson (2002). However, book value has higher incremental value relevance than earnings for U.S. GAAP users, consistent with Collins, Pincus, and Xie (1999) who find that the value relevance of earnings has declined over time, having been replaced by an increased value relevance of book value. We contribute to prior research (e.g. Ashbaugh and Olsson, 2002, Collins et al., 1999 and Francis and Schipper, 1999) by providing evidence on the valuation properties based on accounting measures reported under different GAAPs for the Asian countries.

We examine the valuation properties of earnings and book values reported under IFRS, U.S. GAAP and domestic accounting standards for the domestic and ADR firms fromthe five Asian countries. For domestic sample, we find that book value and earnings perform well in explainingmarket capitalization, but book value has higher incremental value relevance than earnings. Although accounting standards are influenced by different environments, the results are consistent for firms using IAS-based accounting (Hong Kong and Singapore) and domestic accounting (China, Japan and Korea). For the ADR sample,we consistently find that book value ismore informative than earnings for U.S. GAAP reporters and U.S. GAAP reconcilers from most of the countries. However, earnings have higher incremental value relevance for Chinese ADRs preparing reconciliation during 2002–2007. After 2007, ADRs may choose to file under U.S. GAAP or IFRS. Accounting numbers filed under U.S. GAAP from 2008 to 2011 have lower explanatory power for most of valuation models than accounting numbers filed by U.S. GAAP reporters from 2002 to 2007, but book value remains more informative than earnings. Interestingly, we document that accounting numbers filed by Chinese ADRs under IFRS have higher explanatory power for all valuation models than those filed under U.S. GAAP during 2008–2011. Our findings support the SEC's requirement allowing foreign firms to file their reports using IFRS. The IFRS earnings of Chinese ADRs have higher incremental value relevance than book values, consistentwith Ashbaugh and Olsson (2002). But fordomestic firms using domestic accounting tandards and ADRs reporting under or reconciling toU.S. GAAP, book value has higher value relevance than earnings, consistent with Collins et al. (1999). Overall, differences in accounting practices across countries impact the valuation usefulness of accounting numbers. In general, book value has higher incremental value relevance than earnings. Our study is subject to a limitation. The results of IFRS users are only available for cross-listing firms from China. Future research can be extended to include IFRS users from other countries.