How do accounting standards and insiders' incentives affect earnings management? Evidence from China

Yuyang Zhang, Konari Uchida and Hua Bu

Emerging Markets Review, 2013, vol. 16, issue C, 78-99

Abstract: Chinese listed companies recently experienced two important institutional changes: split share structure reform (SSSR) and the mandatory adoption of IFRS-convergent new accounting standards (NAS). We find that the introduction of NAS significantly increased earnings management. Although we do not find evidence that SSSR directly decreased earnings management of the average firm, the increase in earnings management surrounding the introduction of NAS is negatively related to the reduction in non-tradable shares. These results suggest that accounting standards are the more important factor associated with the level of earnings management. Insiders' incentives affect earnings management given a specific set of accounting standards.

Keywords: Split-share structure reform; IFRS; Corporate governance; Earnings management; China (search for similar items in EconPapers)
JEL-codes: G34 G38 M10 M40 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:16:y:2013:i:c:p:78-99

DOI: 10.1016/j.ememar.2013.04.002

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