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How do accounting standards and insiders' incentives affect earnings management? Evidence from China

Listed author(s):
  • Zhang, Yuyang
  • Uchida, Konari
  • Bu, Hua
Registered author(s):

    Chinese listed companies recently experienced two important institutional changes: split share structure reform (SSSR) and the mandatory adoption of IFRS-convergent new accounting standards (NAS). We find that the introduction of NAS significantly increased earnings management. Although we do not find evidence that SSSR directly decreased earnings management of the average firm, the increase in earnings management surrounding the introduction of NAS is negatively related to the reduction in non-tradable shares. These results suggest that accounting standards are the more important factor associated with the level of earnings management. Insiders' incentives affect earnings management given a specific set of accounting standards.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1566014113000344
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    Article provided by Elsevier in its journal Emerging Markets Review.

    Volume (Year): 16 (2013)
    Issue (Month): C ()
    Pages: 78-99

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    Handle: RePEc:eee:ememar:v:16:y:2013:i:c:p:78-99
    DOI: 10.1016/j.ememar.2013.04.002
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620356

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