Is cross-listing a panacea for improving earnings quality? The case of H- and B-share firms in China

Özgür Arslan-Ayaydin, Shimin Chen, Serene Xu Ni and James Thewissen
Additional contact information
James Thewissen: Université catholique de Louvain, LIDAM/LFIN, Belgium

No 2022009, LIDAM Reprints LFIN from Université catholique de Louvain, Louvain Finance (LFIN)

Abstract: This study examines whether cross-listed Chinese H- and B-share firms exhibit higher earnings quality relative to non-cross-listed A-share firms based on seven accounting- and market-based earnings quality attributes, including accrual quality, persistence, predictability, smoothness, conservatism, timeliness and value relevance. We find that earnings quality does not differ between cross-listed and non-cross listed firms in terms of accrual quality, timeliness and value relevance, and that H- and B-share firms report earnings with lower quality in terms of persistence and predictability. We also find that the B-firms report smoother earnings, while the H-firms report more conservative earnings. The results of a battery of cross-sectional, endogeneity and sensitivity analyses either confirm our primary findings of no earnings quality difference or reveal lower earnings quality for cross-listed firms than for non-cross-listed firms. Considering that cross-listing in China is primarily driven by government decisions, our findings suggest that, without proper incentives, cross-listing is not likely to be a panacea for higher quality financial reporting.

Keywords: Cross-listing; Earnings quality; Governance and bonding hypothesis; Chinese stock market (search for similar items in EconPapers)
Pages: 16
Date: 2022-03-10
Note: In: International Review of Financial Analysis, 2022, vol. 81, 102113
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Is cross-listing a panacea for improving earnings quality? The case of H- and B-share firms in China (2022)
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:ajf:louvlr:2022009

DOI: 10.1016/j.irfa.2022.102113

Access Statistics for this paper

More papers in LIDAM Reprints LFIN from Université catholique de Louvain, Louvain Finance (LFIN) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Séverine De Visscher ().