scholarly journals Accounting internationalization and value relevance of accounting earnings in China

2009 ◽  
Vol 3 (2) ◽  
pp. 171-189 ◽  
Author(s):  
Jiaxing You ◽  
Shengqiang Luo
Keyword(s):  
Value Relevance ◽  
Accounting Earnings ◽  
Accounting Internationalization

scholarly journals Heterogeneity in earnings quality between different classes of companies after IFRS adoption: evidence from Brazil

2017 ◽  
Vol 28 (73) ◽  
pp. 113-131
Author(s):  
Roberto Black ◽  
Sílvio Hiroshi Nakao
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Value Relevance ◽  
Earnings Quality ◽  
Economic Incentives ◽  
Net Income ◽  
Accounting Earnings ◽  
Ifrs Adoption ◽  
Before And After

ABSTRACT This paper aims to investigate the existence of heterogeneity in earnings quality between different classes of companies after the adoption of the International Financial Reporting Standards (IFRS). IFRS adoption is generally associated with an increase in the quality of financial statements. However, companies within the same country are likely to have different economic incentives regarding the disclosure of information. Thus, treating companies equally, without considering the related economic incentives, could contaminate earnings quality investigations. The case of Brazil is analyzed, which is a country classified as code-law, in which tax laws determined accounting practice and in which IFRS adoption is mandatory. First, Brazilian companies listed on the São Paulo Stock, Commodities, and Futures Exchange (BM&FBOVESPA) were separated into two classes: companies issuing American Depositary Receipts (ADRs) before IFRS adoption and companies that did not issue ADRs until the adoption of IFRS. Then, this second class of companies was grouped, using cluster analysis, into two different subclasses according to economic incentives. Based on the groups identified, the quality of accounting earnings is tested for each class of the companies before and after IFRS adoption. This paper uses timely recognition of economic events, value relevance of net income, and earnings management as proxies for the quality of accounting earnings. The results indicate that a particular class of companies began showing conditional conservatism, value relevance of net income, and lower earnings management after IFRS adoption. On the other hand, these results were not found for the two other classes of companies.

scholarly journals The Different Changes Of Value Relevance Of Earnings Between SOEs And NSOEs After Adoption Of IFRS: Evidence From China

2016 ◽  
Vol 32 (3) ◽  
pp. 765-776
Author(s):  
Wanli Li ◽  
Hong Guo
Keyword(s):  
Empirical Evidence ◽  
Value Relevance ◽  
Accounting Standards ◽  
The State ◽  
Accounting Standard ◽  
Accounting Earnings ◽  
Financial Report ◽  
Empirical Results ◽  
Mandatory Adoption

This article studies changes of value relevance of earnings after mandatory adoption of new CAS (the Chinese Accounting Standards) which is substantially convergent with IFRS (the International Financial Report Standards) in China’s listed enterprises. We extend the previous research by examining the different impact on value relevance of earnings between SOEs (the State-Owned Enterprises) and NSOEs (the Non-State-Owned Enterprises) after adoption of new CAS, which is based on the samples consisting of 836 companies listed on A-shares market of China. The empirical results show that the value-relevance of accounting earnings significantly increased after 2007, and represent that value relevance of earnings increased significantly in SOEs while there are no significant changes in NSOEs after adoption of the new CAS. Our research has implications for China’s Accounting Standard setters who desire to reach expected consequences of convergence with IFRS, and provide empirical evidence for adoption of IFRS in different countries which have both SOEs and NSOEs.

Governance role of media coverage: from the view of accounting information value relevance and market value about share pledge firms in China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Li Gao ◽  
Jinnan Song ◽  
Jianxiao Guo ◽  
Jiajuan Liang
Keyword(s):  
Media Coverage ◽  
Information Disclosure ◽  
Value Relevance ◽  
Accounting Information ◽  
Market Value ◽  
Moderating Effect ◽  
Information Value ◽  
Accounting Earnings ◽  
Content Type

Purpose Share pledge is a popular way to raise funds in China, but it aggravates information asymmetry. As an indispensable information intermediary in the financial market, media coverage affects asset price and pricing efficiency and impacts information asymmetry. This study aims to explore the governance role of media coverage as an information intermediary in the share pledge context in China. Design/methodology/approach Moderating effect and mediating effect analyses are the primary methods used to test the governance role of media coverage. The ordinary least squares model was used to test the relationship between share pledge and market performance and then proved the moderating effect of media coverage toward the corporate market value of pledge firms. Accounting earnings value relevance models were explored to test the path of media coverage on firm market value by mediating effect analysis. At last, subgroup tests were used to verify the heterogeneity of the moderating effect of media coverage. Findings In the context of share pledge in China, the higher the share pledge ratio, the higher is the market value of listed firms, which verifies the motivation of controlling shareholders to avoid the transfer of control right and the motivation to tunneling. Media coverage has a significant negative moderating effect on the relationship between share pledge rate and corporate value and has a significant impact on the accounting earnings value relevance of share pledge firms. From the perspective of long-term earnings, media coverage reduces the market performance of share pledge firms by reducing the value correlation of accounting earnings information. From the short-term price point of view, media coverage reduces the market performance of share pledge firms by improving the value correlation of accounting earnings information. Furthermore, media coverage has a more significant moderating effect in state-owned share pledge firms and low information transparency and low information disclosure quality firms. Research limitations/implications This paper does not distinguish the mode difference of spreading news and the impact of non-pledge media coverage. Also, this paper does not consider factors other than accounting information value relevance when exploring how media coverage affects the corporate market value. Share pledge firms should use media for publicity and play a role in media governance and should actively improve their information disclosure quality, strengthen communication with investors and reduce information asymmetry fundamentally. Practical implications This paper diversify the governance choices for share pledge firms and has important implications for firms, investors, information intermediaries and regulators. Media reports play an increasingly important role today, and any reports and predictions of major events may profoundly affect investors’ decisions. Although media reports can make up for the weakness of accounting information disclosure of equity pledge companies in some sense, it is still not a long-term strategy. Equity pledge companies should not only make use of media for publicity and play a role of media governance but also actively improve their information disclosure quality. Originality/value This paper focuses on share pledge firms to carry out in-depth research. Based on exploring the influence mechanism of share pledges, the authors find the importance of media governance. This paper expands the literature about the economic consequences of share pledges and provides empirical data for media governance of share pledge firms. This paper innovatively proves the governance role of media coverage from the view of accounting information value relevance. The main innovation point is the long and short-term perspective analysis of the influence of media coverage on the correlation of accounting earnings value. The heterogeneity effect analysis of media coverage also reflects the depth and strong practical guiding significance of this study.

scholarly journals The impact of the Law on Strengthening the Security of Financial Relations on the value relevance of accounting information in Tunisian Stock Exchange

2013 ◽  
Vol 3 (1) ◽  
pp. 42
Author(s):  
Mohamed Rafik Ben Ayed ◽  
Ezzeddine Abaoub
Keyword(s):  
Stock Returns ◽  
Value Relevance ◽  
Stock Exchange ◽  
Explanatory Power ◽  
Accounting Information ◽  
Financial Statements ◽  
Accounting Earnings ◽  
The Law ◽  
Security Returns ◽  
The Impact

This paper empirically investigates the value relevance of accounting earnings measures in the emerging capital market of Tunisia. The issue is tested by estimating the regression of annual security returns on different earnings measures extracted from income statements. In Tunisia, firms prepare their financial statements in accordance with Tunisian Accounting Standards (TAS) which are inspired from International Financial Reporting Standards (IFRS). Based on a sample of 389 firm years for firms listed on the Tunis Stock Exchange (TSE) during the period 1997-2008 and using pooled regressions, we find that accounting earnings measures are weakly related to security returns. However, we find that earnings before taxes has the higher explanatory power for stock returns. This is perhaps due to the fact that financial statements are often influenced by taxation rules (ROSC, 2006; section 42). Further, we find that cash flow from operations and Total accruals are not value relevant for valuation. We tested whether the value relevance of each measure of performance improved after the adoption in October 2005 of the Law on Strengthening the Security of Financial Relations (LSSFR). Consistent with prior US and other international findings, results show that the explanatory power and the magnitude of the slope coefficient of each measure increased when we take into account for the impact of this enactment. However, the increase is not statistically significant. This is perhaps due to the employed specification of the relation between security returns and accounting information.

Comparative value relevance of accounting information among Asian countries

2018 ◽  
Vol 44 (2) ◽  
pp. 110-126 ◽  
Author(s):  
Gee-Jung Kwon
Keyword(s):  
Cash Flow ◽  
Value Relevance ◽  
Accounting Information ◽  
Asian Countries ◽  
Accounting Earnings ◽  
Content Type ◽  
Operating Income ◽  
Book Value ◽  
Operating Cash Flow ◽  
Japan And China

Purpose The purpose of this paper is to compare the value relevance of various accounting information disclosed in financial statements of manufacturing companies listed on the stock markets of Korea, Japan, and China over ten years from 2006 to 2015. Design/methodology/approach The study uses Ohlson (1995) valuation model for empirical investigation and the financial data extracted from the OSIRIS DB to analyze the enterprise value relevance of accounting information for Korean, Chinese, and Japanese companies and to investigate the differences among them. Findings The results of the empirical analysis are as follows. First, the coefficient of accounting earnings is the highest in the samples of all firms in Korea, Japan, and China, followed by the coefficients for operating income, net cash flow, book value, and net operating cash flows. Next, Japan has the largest book value, followed by Korea, but China has a negative value. Japan has the largest coefficient of accounting earnings and net operating cash flow, followed by Korea and China. Japan has the largest coefficient of net cash flow and operating income, followed by China and Korea. The results show that the value relevance of accounting earnings is the largest among independent variables related to firm value, but the net operating cash flow is the smallest. In addition, the authors observe that the coefficient of Japan is the largest of all independent variables when compared by country. Originality/value The contribution of this study is that it shows the comparative value relevance of accounting information in most economically developed Asian countries such as Korea, Japan, and China. In addition, it is worth showing the characteristics of the national value decision variable by showing different incremental value relevance levels among the three countries.

The impact of earnings management on the value relevance of earnings

2017 ◽  
Vol 32 (1) ◽  
pp. 50-74 ◽  
Author(s):  
Wael Mostafa
Keyword(s):  
Earnings Management ◽  
Value Relevance ◽  
Operating Performance ◽  
Accounting Earnings ◽  
Content Type ◽  
Earnings Response Coefficient ◽  
Response Coefficient ◽  
Data Limitations ◽  
Earnings Response ◽  
The Impact

Purpose This paper aims to examine the association between earnings management and the value relevance of earnings (the latter is operationalized by earnings response coefficient). Specifically, this study examines whether opportunistic earnings management has a negative impact on the value relevance of earnings for a sample of firms listed on the Egyptian Stock Exchange. Design/methodology/approach Different from prior work and due to data limitations in the Egyptian market, this paper first examines for the existence of earnings management based on the whole operating performances of the firms by testing whether firms with low/poor operating performance are more likely to choose income-increasing actions (strategies) than firms with high operating performance. After confirming that low operating performance firms manage earnings upward, the authors then assess whether this opportunistic earnings management by these low operating performance firms reduces the value relevance of earnings. This is performed by estimating a model of the relationship between stock returns and accounting earnings with a dummy variable that allows parameter shifts for earnings of low operating performance firms. Findings The results show that discretionary accruals are positive and significantly higher for firms with low operating performance than those for firms with high operating performance. These results indicate that low operating performance firms increase the earnings management practices by probably increasing their reported earnings opportunistically to mask their low performance. Furthermore, the results show that the earnings response coefficient is significantly smaller for earnings of low operating performance firms than that for earnings of high operating performance firms. These results suggest that earnings of firms with low operating performance (that are engaged in opportunistic earnings management strategies) have less value relevance than earnings of firms with high operating performance, i.e. the informativeness of managed earnings is lower than that of non-managed earnings. Practical implications Based on these results, it is plausible that the presence of opportunistic earnings management adversely affects the value relevance of accounting earnings. Originality/value Consistent with previous results from developed countries, this study shows that earnings management is a significant factor that affects value relevance of earnings in Egypt.

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