Impact of Foreign Strategic Investors on Earnings Management in Chinese Banks

Meng-Wen Wu, Chung-Hua Shen, Chin-Hwa Lu and Chia-Chung Chan

Emerging Markets Finance and Trade, 2012, vol. 48, issue 5, 115-133

Abstract: Chinese authorities hoped that participation of foreign strategic investors (FSIs) could improve the profitability of Chinese banks both quantitatively and qualitatively. While past studies have typically focused on the effect of FSIs on banks' quantitative performance, this paper investigates the quality of profits through earnings management. We use matching theory to consider the selection bias. Our results demonstrate that banks with FSIs have improved the quality of their financial reports because they conducted less loss-avoidance management of earnings, but they engaged in as much management to avoid earnings growth decreases as non-FSI banks did.

Keywords: earnings management; foreign strategic investors; matching theory (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://mesharpe.metapress.com/link.asp?target=contribution&id=V8N76M211R5720H3 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:48:y:2012:i:5:p:115-133

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().