Stock market liberalization and earnings management: Evidence from the China–Hong Kong Stock Connects

Guang Chen and Min Wang

Finance Research Letters, 2023, vol. 58, issue PB

Abstract: In this paper, we use the China-Hong Kong Stock Connects (the connects) as exogenous shocks of the liberalization of Chinese stock markets to examine the effects of the connects on firm earnings management. We find that the stock market liberalization of capital market significantly reduces firms’ earnings management. The decrease of asymmetric information is the underlying driving force behind our findings. Overall, this study provides policy implication that the stock market liberalization reduces the earnings management.

Keywords: China-Hong Kong Stock Connects; Earnings management; Asymmetric information (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007894

DOI: 10.1016/j.frl.2023.104417

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