State ownership and the market pricing of accruals quality

Shinong Wu, Yaping Wang, Liansheng Wu and Xianhui Bo

China Journal of Accounting Studies, 2017, vol. 5, issue 2, 155-172

Abstract: This paper examines the effect of state ownership on the market pricing of accruals quality. We find that the market pricing effect of accruals quality is larger for non-state-owned enterprises than for state-owned enterprises in China. The results still hold when we divide accruals quality into innate and discretionary accruals quality. Further analyses reveal a higher level of expropriation and a greater fundamental risk in non-state-owned enterprises, leading to a larger market pricing effect of accruals quality. This paper is the first to study the governance role of state ownership from the perspective of market pricing of accruals quality. It also adds to the literature on the market pricing of accruals quality by studying its link with state ownership.

Date: 2017
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DOI: 10.1080/21697213.2017.1339432

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