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The Usefulness of Financial Statements under Chinese-GAAP vs. IAS: Evidence from the Shanghai Stock Exchange in PRC

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  • Dan HU

    (Kobe University)

Abstract

Using a sample from the Shanghai Stock Exchange, this paper ana1yzes the information content of earnings and book value under two sets of accounting practice: IAS (International Acounting Standards) and Chinese-GAAP (Chinese General Accepted Accounting Principles). The rapid development of the Chinese economy, its accounting system and the requirement that two sets of accounting information are to be prepared to list B-Shares are the background of this study. This paper adopted the Ohlson (1995) model and used the Davidson-MacKinon J-test to test which one of these two competing sets of accounting information is more relatively with the stock fs prices. The results show that Chinese-GAAP amounts are more highly associated with the stocks prices than IAS amounts. The results of yearly regression analyses generally suggested that the exp1anatory power of these earnings for stock's prices decreased over time.

Suggested Citation

  • Dan HU, 2004. "The Usefulness of Financial Statements under Chinese-GAAP vs. IAS: Evidence from the Shanghai Stock Exchange in PRC," Kobe Economic & Business Review, Research Institute for Economics & Business Administration, Kobe University, vol. 48, pages 1-25, February.
    • Handle: RePEc:kob:review:feb2004::v:48:p:1-25
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    Cited by:

    1. Maroney, James J. & McGarry, Clodagh & Ó hÓgartaigh, Ciarán, 2008. "Familiarity, home bias and investors’ reactions to 20-F reconciliation gains and losses and perceptions of the quality of accounting principles," The British Accounting Review, Elsevier, vol. 40(2), pages 103-122.

    More about this item

    Keywords

    Usefulness of financial statements; Chinese accounting; Information content; Value-relevance; Accounting harmonizaions; IAS;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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