Purpose -This study investigates the relative value relevance of accounting measures based on Chinese Accounting Standards (CAS) and International Financial Reporting Standards (IFRS) in relation to both A-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, we employ the price model to test for the association between CAS-and IFRSbased accounting information, and A-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, we find that for both the A-and B-share markets, both CAS-based and IFRSbased 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-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 CASbased accounting in China and contributes to the debate on the (ir)relevance of IFRS in emerging and transitional economies.
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