Earnings Management and Capital Resource Allocation: Evidence from China's Accounting-Based Regulation of Rights Issues

Chen, Kelvin C.W.; Yuan, Huijuan

doi:10.2308/accr.2004.79.3.645

Cited by 501 publications

(304 citation statements)

References 8 publications

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“…In addition, the majority of previous studies have investigated Chinese listed companies (Aharony, Lee, & Wong, 2000;Chen & Yuan, 2004;Ding, Zhang, & Zhang, 2007;Liu & Lu, 2007;Wang & Yung, 2011). Ding et al (2007) and Wang and Yung (2011) have found that state-owned companies manage earnings less than privately-owned companies.…”

Section: State Ownership and Earnings Managementmentioning

confidence: 99%

Do Ownership Structure Characteristics Affect Italian Private Companies’ Propensity to Engage in the Practices of “Earnings Minimization” and “Earnings Change Minimization”?

Poli¹

2015

IJEF

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The study aims to verify whether and how ownership structure (with specific reference to ownership concentration and identity) affects Italian private (unlisted) companies' propensity to engage in practices of "earnings minimization" and "earnings change minimization". Companies that engage in these practices have been identified following the "earnings frequency distribution" approach suggested by Burgstahler and Dichev (1997). The influence of ownership structure, together with that of a set of control variables mainly aiming to control for tax, financial, and size incentives, is tested by logit analysis models. Ownership concentration does not have a statistically significant influence. Conversely, institutional, state, and foreign ownership has a statistically significant influence. In the first and third cases, the influence is negative, in the second case the influence is positive. The study extends the current knowledge on the relationship between aspects of corporate governance and earnings management practices in private companies, especially SMEs. It also expands what is known about the earnings management practices undertaken by companies in countries, like Italy, in which a code law system is in force and accounting and tax systems are closely aligned.

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Section: State Ownership and Earnings Managementmentioning

confidence: 99%

Do Ownership Structure Characteristics Affect Italian Private Companies’ Propensity to Engage in the Practices of “Earnings Minimization” and “Earnings Change Minimization”?

Poli¹

2015

IJEF

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“…The overwhelming demand for rights offering forced the China Securities Regulatory Commission (CSRC) to use the return on equity (ROE) requirement to set the threshold. As a result, not only did a majority of firms manipulate earnings to meet the ROE requirement (Chen and Yuan, 2004;Haw et al, 2005;Yu, Du, and Sun, 2006;Liu and Lu, 2007), but also local governments provided subsidies to help listed firms, especially those firms largely held by local governments, to boost their ROE (Chen, Lee, and Li, 2008).…”

Section: Structural Changes In Firms' Access To the Capital Marketmentioning

confidence: 99%

“…Specifically, contractual terms in government regulations create strong incentives for firms to manage earnings to maintain their listing status relative to incentives to provide investors with transparent information. For example, several studies document the phenomenon that firms manage their earnings to meet the regulatory ROE benchmark for rights issue (Chen and Yuan, 2004;Haw et al, 2005;Yu, Du, and Sun, 2006). Moreover, the delisting regulation that states that a firm will be delisted if it reports a loss for three consecutive years gives managers another strong incentive to manipulate earnings upward.…”

Section: Financial Reporting: Accounting Standards Reform and Firms' mentioning

confidence: 99%

Structural Changes in the Chinese Stock Market: A Review of Empirical Research

2014

China Account Financ Rev

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China’s stock market has gone through major structural changes since its inception in the early 1990s. In this survey article, we review the empirical literature published in 15 leading accounting and finance journals from 1998 to 2013 that documents these important structural changes. In analysing this literature, we focus on the ‘distinctiveness’ of the Chinese stock market compared with developed stock markets (e.g. US) and the research opportunities generated by the China setting. Key themes include China’s share issue privatisation (SIP) reforms, the political connections in privately owned companies, the characteristics of Chinese listed companies and their governance, the regulatory environment reforms in China, and the evolving role played by auditors and other information intermediaries.

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“…They also typically raise further funds through rights issues after IPO (Chen & Yuan, 2004;Wang, Wei, & Pruitt, 2006).…”

Section: Leveragementioning

confidence: 99%

Leverage, Profitability and the Ownership Structures of Listed Firms in China

Hovey

2007

SSRN Journal

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The relationship between leverage, profitability and a firm's ownership structure in China is investigated in this paper. It is an exploratory study based on all firms listed on the Shanghai and Shenzhen stock exchanges from 1999 to 2005. The results of the empirical analysis are reported in this paper.The most significant result is that foreign holdings are found to have a significant relationship with the leverage of listed firms in China. Whereas, somewhat unexpectedly, institutional ownership, through legal person holding companies, state ownership and private holdings are not found to have a significant relationship with the capital structure choices of firms in China. The results also suggest that some firm-specific factors that are relevant for explaining firm leverage generally referred to in studies in developed economies, such as profitability, growth opportunities, size and tax shields, are also relevant in China. The age of the firms and the industry t o which they principally belong also has significant bearing. Yet direct government grants and the use of an internationally renowned auditing firm do not show a significant relationship.

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Earnings Management and Capital Resource Allocation: Evidence from China's Accounting-Based Regulation of Rights Issues

Cited by 501 publications

References 8 publications

Do Ownership Structure Characteristics Affect Italian Private Companies’ Propensity to Engage in the Practices of “Earnings Minimization” and “Earnings Change Minimization”?

Do Ownership Structure Characteristics Affect Italian Private Companies’ Propensity to Engage in the Practices of “Earnings Minimization” and “Earnings Change Minimization”?

Structural Changes in the Chinese Stock Market: A Review of Empirical Research

Leverage, Profitability and the Ownership Structures of Listed Firms in China

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