Relative value-relevance of accounting measures based on Chinese Accounting Standards and International Financial Reporting Standards

CHAMISA, E., MANGENA, M. and YE, G., 2012. Relative value-relevance of accounting measures based on Chinese Accounting Standards and International Financial Reporting Standards. Journal of Accounting in Emerging Economies, 2 (2), pp. 162-187. ISSN 2042-1168

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Abstract

Purpose – The purpose of this paper is to investigate the relative value relevance of accounting measures based on Chinese Accounting Standards (CAS) and International Financial Reporting Standards (IFRS) in relation to both A-share and B-share markets during three distinct phases (1994-1997, 1998-2000 and 2001-2004) over which CAS were progressively harmonized with IFRS. Design/methodology/approach – Using data for 86 Chinese listed companies which issued both A- and B-shares, the authors employ the price model to test for the association between CAS-based and IFRS-based accounting information, and A-share and B-share prices. The J-test was employed to determine the relative value relevance of the information based on the two sets of accounting standards. Findings – Overall, the authors find that for both the A-share and B-share markets, both CAS-based and IFRS-based accounting information are value relevant, but IFRS-based information is more value relevant than the CAS-based information. However, the magnitude of the differences between the explanatory powers of the CAS- and IFRS-based accounting information narrowed significantly in the 2001-2004 period in both the A-share and B-share markets. The results are robust to the deflator used and the stock exchange on which the companies are listed. Practical implications – The results have implications for China and other transitional economies attempting to integrate IFRS with a uniform accounting system. Originality/value – The paper provides the first comprehensive empirical evidence as to whether or not the progressive harmonization of CAS with IFRS improved the value relevance of CAS-based accounting in China and contributes to the debate on the (ir)relevance of IFRS in emerging and transitional economies.

Item Type: Journal article
Publication Title: Journal of Accounting in Emerging Economies
Creators: Chamisa, E., Mangena, M. and Ye, G.
Publisher: Emerald
Place of Publication: Bingley
Date: 2012
Volume: 2
Number: 2
ISSN: 2042-1168
Identifiers:
NumberType
10.1108/20421161211229826DOI
Divisions: Schools > Nottingham Business School
Depositing User: EPrints Services
Date Added: 09 Oct 2015 09:57
Last Modified: 09 Jun 2017 13:15
URI: http://irep.ntu.ac.uk/id/eprint/5310

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