The Usefulness of Financial Statements under Chinese-GAAP vs. IAS: Evidence from the Shanghai Stock Exchange in PRC

Dan Hu
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Dan Hu: Kobe University

Kobe Economic & Business Review, 2004, vol. 48, 1-25

Abstract: Using a sample from the Shanghai Stock Exchange, this paper ana1yzes the information content of earnings and book value under two sets of accounting practice: IAS (International Acounting Standards) and Chinese-GAAP (Chinese General Accepted Accounting Principles). The rapid development of the Chinese economy, its accounting system and the requirement that two sets of accounting information are to be prepared to list B-Shares are the background of this study. This paper adopted the Ohlson (1995) model and used the Davidson-MacKinon J-test to test which one of these two competing sets of accounting information is more relatively with the stock fs prices. The results show that Chinese-GAAP amounts are more highly associated with the stocks prices than IAS amounts. The results of yearly regression analyses generally suggested that the exp1anatory power of these earnings for stock's prices decreased over time.

Keywords: Usefulness of financial statements; Chinese accounting; Information content; Value-relevance; Accounting harmonizaions; IAS (search for similar items in EconPapers)
JEL-codes: G14 M41 P20 (search for similar items in EconPapers)
Date: 2004
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