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Value relevance of accounting information in China pre- and post-2001 accounting reforms

Chalmers, Keryn, Navissi, Farshid and Qu, Wen 2010, Value relevance of accounting information in China pre- and post-2001 accounting reforms, Managerial auditing journal, vol. 25, no. 8, pp. 792-813.

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Title Value relevance of accounting information in China pre- and post-2001 accounting reforms
Author(s) Chalmers, Keryn
Navissi, Farshid
Qu, Wen
Journal name Managerial auditing journal
Volume number 25
Issue number 8
Start page 792
End page 813
Total pages 22
Publisher Emerald
Place of publication Yorks, England
Publication date 2010
ISSN 0268-6902
1758-7735
Keyword(s) China
Accounting standards
Governance
Stock markets
Summary Purpose – This paper aims to investigate whether the accounting reform in China has improved the relevance of China's accounting information. It seeks to investigate the association between earnings and book value of equity to share returns before and after the introduction of the Accounting System for Business Enterprises (ASBE) in 2001 for A- and A&B-share firms.

Design/methodology/approach – The paper employs the return regression model. The pre-ASBE period is designated as 1997 through to 2000, and the post-ASBE period is designated as 2002 through to 2004. All firms listed on the Chinese stock market during the investigation period constitute the sample.

Findings – It is found that accounting information better explains share returns for both A-share firms and A&B-share firms in the post-ASBE period. The paper also finds that the book value of equity for A&B-share firms is incrementally value relevant to that of A-share firms in the post-ASBE period.

Research limitations/implications – Further studies will contribute to understanding how governance mechanisms and liquidity influence the association between accounting information and share returns in the Chinese A-share market.

Practical implications
– The findings provide empirical evidence regarding the relevance of accounting information in emerging markets.

Originality/value – The paper contributes to the extant value relevance literature by investigating time periods surrounding the issue of ASBE in 2001 in the Chinese stock market.
Notes Reproduced with the specific permission of the copyright owner.
Language eng
Field of Research 150101 Accounting Theory and Standards
150104 International Accounting
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2010, Emerald Group Publishing Limited
Persistent URL http://hdl.handle.net/10536/DRO/DU:30035694

Document type: Journal Article
Collections: Faculty of Business and Law
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.