Regulations, earnings management, and post-IPO performance: The Chinese evidence

Kao, Jennifer L.; Wu, Donghui; Yang, Zhifeng

doi:10.1016/j.jbankfin.2007.03.016

Cited by 160 publications

(90 citation statements)

References 25 publications

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“…In addition, given that the China Securities Regulatory Commission (CSRC) applies bright-line accounting-based regulatory criteria to screen firms for public offerings and delisting, Chinese listed firms have strong incentives to manage reported earnings to meet these specific targets (e.g., Aharony et al 2000;Chen and Yuan, 2004;Haw et al, 2005;Kao et al, 2009). 3 Subject to the pressure of achieving these earnings targets to access the equity market, managers are well motivated to request an auditor that does not challenge their discretionary reporting decisions.…”

Section: Financial Reporting Incentives Of Chinese Listed Firmsmentioning

confidence: 99%

Do school ties between auditors and client executives influence audit outcomes?

Guan

et al. 2016

Journal of Accounting and Economics

Self Cite

291

148

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Section: Financial Reporting Incentives Of Chinese Listed Firmsmentioning

confidence: 99%

Do school ties between auditors and client executives influence audit outcomes?

Guan

et al. 2016

Journal of Accounting and Economics

Self Cite

291

148

View full text Add to dashboard Cite

“…In fact, widespread earnings management can have serious and detrimental effects on the investors as well as future prospects of companies as prior studies show such evidence of negative long-run performance of companies (Teoh et al 1998a;Kao et al 2009). Over the last decade or so, the high profile corporate collapse worldwide, such as Enron, WorldCom, Parmalat etc.…”

Section: Introductionmentioning

confidence: 99%

Exploring the Impact of Internal Corporate Governance on the Relation Between Disclosure Quality and Earnings Management in the UK Listed Companies

Katmon

Farooque²

2015

J Bus Ethics

117

102

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This study investigates the impact of internal corporate governance on the relation between disclosure quality and earnings management in the UK listed companies, in particular whether governance mechanisms have deterrent effect on earnings management similar to firms' disclosure quality. Unlike prior literature, we measure a number of board and audit committee-related governance instruments, three disclosure quality proxies (i.e. Investor Relation Magazine Award, Forward-Looking Disclosure and Analyst Forecast Accuracy) and the Modified Jones Model to test the hypotheses of the study on a matched-pair sample data of Investor Relation Magazine Award winning and non-winning firms. Our findings in the OLS and sensitivity analyses using Heckman Procedure and 2SLS regressions consistently report a significant negative association between earnings management and disclosure quality for all proxies in restraining earnings management. In contrast, corporate governance variables are mostly insignificantly related to earnings management. This provides an emerging trend of the outperformance of disclosure quality over internal governance mechanisms in lessening earnings management. These findings warrant due attention of the policy makers, investors, corporate firms and other stakeholders in shaping a high-quality disclosure and governance regime in corporate settings to mitigate managerial manipulations of earnings across the countries in the world.

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“…Before 1999, a quota system was used: Central government determined the overall size of the IPO market on a yearly basis, and each province received its IPO quota and identified prospective candidates on the basis of applications made by firms under its jurisdiction. Since IPO regulations are a function of accounting performance, firms manipulated earnings to meet the requirement in the pre-IPO period, and IPO firms that reported better pre-IPO accounting performance had larger declines in post-IPO profitability, lower first-day stock returns, and worse long-run post-IPO stock performance (Kao, Wu, and Yang 2009). In addition, the tight quota system left almost all listed firms undercapitalised and hungry for the privilege of rights offering.…”

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

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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Regulations, earnings management, and post-IPO performance: The Chinese evidence

Cited by 160 publications

References 25 publications

Do school ties between auditors and client executives influence audit outcomes?

Do school ties between auditors and client executives influence audit outcomes?

Exploring the Impact of Internal Corporate Governance on the Relation Between Disclosure Quality and Earnings Management in the UK Listed Companies

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

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