How do accounting standards and insiders' incentives affect earnings management? Evidence from China

Yuyang Zhang, Konari Uchida, Hua Bu

Research output: Contribution to journalArticle

19 Citations (Scopus)

Abstract

Chinese listed companies recently experienced two important institutional changes: split share structure reform (SSSR) and the mandatory adoption of IFRS-convergent new accounting standards (NAS). We find that the introduction of NAS significantly increased earnings management. Although we do not find evidence that SSSR directly decreased earnings management of the average firm, the increase in earnings management surrounding the introduction of NAS is negatively related to the reduction in non-tradable shares. These results suggest that accounting standards are the more important factor associated with the level of earnings management. Insiders' incentives affect earnings management given a specific set of accounting standards.

Original languageEnglish
Pages (from-to)78-99
Number of pages22
JournalEmerging Markets Review
Volume16
DOIs
Publication statusPublished - Sep 1 2013

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics and Econometrics

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