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Cross-Border Regulatory Enforcement and the Accounting Information Quality of Chinese Firms

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  • Miao Yu
  • Jie Sun
  • Albert Tsang
  • Ambrose Wong

Abstract

This study examines the impact of China’s 2007 accession to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation, Cooperation, and the Exchange of Information (MMoU) on the financial reporting quality of Chinese firms cross-listed in the US. We find that after China joined the MMoU, these firms engaged in significantly lower earnings manipulation, particularly those audited by Big 4 firms and state-owned enterprises (SOEs). Our findings suggest that enhanced regulatory cooperation and stronger cross-border enforcement reduce firms’ incentives to manipulate earnings, improving reporting quality. Unlike prior studies that focus on global MMoU effects, we provide firm-level evidence on how regulatory changes influence financial reporting in emerging markets. Our results highlight the role of international agreements in strengthening investor protection and corporate transparency.

Suggested Citation

  • Miao Yu & Jie Sun & Albert Tsang & Ambrose Wong, 2025. "Cross-Border Regulatory Enforcement and the Accounting Information Quality of Chinese Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 61(12), pages 3858-3877, September.
    • Handle: RePEc:mes:emfitr:v:61:y:2025:i:12:p:3858-3877
    DOI: 10.1080/1540496X.2025.2495976
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