Accounting Quality, Earnings Management and Cross-Listings: Evidence from China

Li Li Eng () and Ying Chou Lin ()
Additional contact information
Li Li Eng: Missouri University of Science and Technology, Department of Business and Infomation Technology, 301 W. 14th Street, Rolla, MO 65409, USA
Ying Chou Lin: Missouri University of Science and Technology, Department of Business and Infomation Technology, 301 W. 14th Street, Rolla, MO 65409, USA

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2012, vol. 15, issue 02, 1-25

Abstract: This paper examines the quality of financial reporting of Chinese firms cross-listed in the United States, Hong Kong and noncross-listed Chinese firms. We examine quality of financial reporting based on measures of earnings management, timely loss recognition and price-earnings association. We find that both cross-listings and noncross-listings show significant earnings smoothing and use accruals to manage earnings, and are not timely in loss recognition. We surmise that cross-listing in the United States or Hong Kong has not changed the accounting choices of Chinese cross-listing firms. However, our findings show that the market considers earnings and book value data of cross-listing firms to be more informative than those of noncross-listing firms in the event of good news. Our contribution is to show that in contrast to previous literature, firms from China do not have better reporting quality when they cross-list in the United States. There are still significant accounting deficiencies in many Chinese firms cross-listed in the United States (Financial Times, 2011).

Keywords: Cross-listings; accounting quality; earnings management; earnings smoothing; China (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2012
References: View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091512500099
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:wsi:rpbfmp:v:15:y:2012:i:02:n:s0219091512500099

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091512500099

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().