| Summary: | Nowadays, as lots of investors make investment both at home and abroad, accounting harmonization has significant effects on the adoption of a uniform set of accounting standards to reduce divergence between different states’ regulations. Take China as an example. As an emerging market, China plays an important role in world economic and finance. However, China has a complex stock market and financial reporting regulations under different accounting standard versions between A-shares and B-shares. The finical reporting of A-shares is based on Chinese Generally Accepted Accounting Principles (GAAP) when B-shares are required on International Financial Reporting Standards (IFRS). Changing from a centrally planned economy to a market oriented economy, China has realized that financial infrastructure was important for market oriented economy. Thus, China changed its domestic accounting standards close to international accounting standards. Furthermore, with the fast development of globalization, quality of accounting data has become important for investors. Previous studies show accounting harmonization has reduced the quality of accounting data and the relevance of accounting information in different nations.
This dissertation focuses on China Stock market and provides empirical evidence on the effect of accounting harmonization on accounting quality. Using the available data of listed A-shares and B-shares from 2004 to 2009, the accounting quality is compared among accounting standard versions-- Chinese GAAP 2001, Chinese GAAP 2006 and IFRS. Four metrics of accounting quality measurement are applied in this dissertation: earning smooth, managing towards positive earnings, timely loss recognition and value relevance. The empirical results indicate that the promulgation and practice of Chinese GAAP 2006 has significantly improved the quality of accounting amounts compared with Chinese GAAP 2001. Moreover, results show some evidence that accounting quality based on Chinese GAAP 2006 is close to accounting quality based on IFRS. Although China does not directly adopt IFRS, these findings are consistent with previous empirical results that accounting harmonization has a positive impact on accounting quality.
Keywords: accounting harmonization, accounting quality, Chinese GAAP, IFRS
|
|---|