کیفیت درآمدهای گزارش شده توسط شرکت های چینی : تأثیر ساختار مالکیت

This paper examines the influence of ownership structure on earnings quality of firms listed on the Chinese Stock Exchanges. We empirically test four contemporary earnings quality measures, including volatility of earnings, variability of earnings over cash flows, correlations between accruals and cash flows, and level of discretionary accruals, for 1438 firms listed on Shenzhen Stock Exchange and Shanghai Stock Exchange. We find that although state-owned firms are bigger in size and appear more profitable based on reported earnings; privately-owned firms, foreign-owned firms and society-owned firms outperform the state-controlled firms in earnings quality; and foreign-owned firms have the highest earnings quality among all types of ownership groups. We find that there is not much difference in earnings quality between collectively-owned firms and state-owned firms and employee-owned firms exercise least discretion in earnings management. The findings in particular will have direct policy implications for the China Securities Regulatory Committee (CSRC).

The economy of China has undergone a significant transformation in the last three decades. Industries have been reorganized and corporations and many state owned enterprises have been partially or totally privatized. Chen, Firth, and Rui (2006) investigated the impact of the effectiveness of the privatizations on firms' operating efficiency and performance. They found an overall decline in efficiency and asset utilization in the 5 years after privatization. This finding is in stark contrast to similar studies from other countries where the results show a marked improvement in both profitability and efficiency. Some studies suggested that part of the reason for poor profitability could be due to the state retaining control in some companies. However, Chen, Firth, and Xu (2009) stated that these studies fail to properly identify and distinguish among the different types of owners or ownership structures. Chen et al. (2009) found that operating efficiency was a function of who controls the firm after its listing. In particular, when private investors control the firm, there is a marked improvement in efficiency relative to when the firm is state controlled. Jensen and Meckling (1976) argued that when private investors manage the business there is an incentive for them to increase the “wealth” of the firm. Is this wealth “increase” real or manipulated? This issue has not been examined with respect to Chinese firms. However, this is important because China currently attracts significant amounts of capital from western investors. Hence, any study contributing to knowledge about reported earnings quality by Chinese firms and factors that enhance or reduce reported earnings quality is relevant to investors and regulators. The objective of this paper is to examine the influence of ownership structure on earnings quality of firms listed on the Chinese Stock Exchanges. Limited research has been done on earnings quality and earnings management by Chinese firms. Chui, Lau, and Ip (2001), in one of the early studies, observed that there were many incentives and potential opportunities for earnings management during the process of corporatization. Subsequent research attempted to examine if earnings management existed and what factors contributed to earnings management (if any) including studies examining the association between earnings management and corporate governance (Liu & Lu, 2007), earnings management and regulatory requirements set by the Chinese government (Yu, Du, & Sun, 2006), local government intervention on earnings management (Chen, Lee, & Li, 2008) and even how different ownership structures influenced choice of auditor (Wang, Wong, & Xia, 2008). Finally, Wang, Wu, and Yang (2009) concluded that reported earnings numbers were not fully trusted by investors due to suspicions of poor quality. In summary, while papers have provided evidence of earnings management, and studied the impact of types of ownership on operating performance, no paper has examined if the type of ownership is associated with earnings management and/or earnings quality. Our paper, therefore, adds to the extant literature and attempts to fill this vacuum in the literature. Specifically, our paper contributes to the extant literature by examining if and how ownership structure influences potential earnings management behavior and, thereby, quality of reported earnings. By empirically testing four contemporary earnings quality measures for 1438 firms listed on Shenzhen Stock Exchange and Shanghai Stock Exchange during the period of 1999 to 2006, we find that although state controlled firms(which account for almost three quarters of the total listed firms in China), are bigger in size and more profitable based on reported earnings, private firms (firms owned predominantly by private investors), foreign firms (firms owned predominantly by foreign investors) and society owned firms outperform the state- controlled firms in earnings quality. Our results also indicate that predominantly foreign owned firms have the highest earnings quality among all types of ownership structure groups and the employee-owned firms exercise most discretion in earnings management and rank last in all earnings quality tests. In addition, although collectively-owned firms are claimed to be more efficiently operated, we do not find that this reflects on their earnings quality (possibly due to the heavy intervention of government). The findings in particular will have direct policy implications for the China Securities Regulatory Committee (CSRC).

The objective of this paper is to examine the influence of ownership structure on earnings quality of firms listed on the Chinese Stock Exchanges, an area in which there has been sparse research. By empirically testing four contemporary earnings quality measures for 1438 firms listed on Shenzhen Stock Exchange and Shanghai Stock Exchange during the period of 1999 to 2006, we find that although state-owned firms, which account for almost three quarters of the total listed firms in China, are bigger in size and appear more profitable, private firms, foreign firms and society owned firms outperform the state controlled firms in earnings quality as measured by volatility of earnings, variability of earnings over cash flows, correlations between accruals and cash flows, and discretionary accruals. This finding is not surprising since the controller of the state owned firms, State Assets Management Bureau (SAMB), has neither a strong incentive nor ability to monitor the listed firms whereas the non-state firms are operated based more on market mechanisms. The results also indicate that foreign-owned firms have the highest earnings quality among all types of ownership structure groups, and employee-owned firms exercise most discretion in earnings management and rank least in all four earnings quality tests. In addition, although collectively-owned firms are claimed to be more efficiently operated, we do not find any significant improvement in their earnings quality, possibly due to government intervention. In conclusion, our paper contributes to the extant earnings quality literature in accounting research by examining if and how ownership structure influences quality of reported earnings. The findings in particular will have direct policy implications for the China Securities Regulatory Committee (CSRC). References