Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 2023 International Conference on Management Research and Economic Development
Series Vol. 18 , 13 September 2023
Open
Access | Article
The Differences in Accounting Quality between Chinese Companies and American Companies Listed in the United States
* Author to whom correspondence should be addressed.
Abstract
This research paper investigates the difference between Chinese listed companies in the US and US companies regarding the quality of accounting information from companies’ annual reports. After a careful review of literature, researchers decided to apply classic M-score model for information processing and one sample t-test to determine the relationship between accounting quality and the country of the company. There are two hypotheses, and the first one is that the difference between the mean M-score of U.S. listed Chinese companies and the mean M-score of U.S. companies is not significant. The second one is the difference between the mean M-score of U.S. listed Chinese companies, and the mean M-score of U.S. companies is significant. This research result turned out to support the first hypothesis, indicating that the difference between the accounting qualities of the two types of companies is not significant.
Keywords
disclosure quality, financial reporting quality, quality measures, investors’ perceptions
References
1. Liu, Huadong. “Analysis of the Differences and Linkage between Chinese and American Stock Markets.” American Journal of Industrial and Business Management, vol. 8, no. 3, 8 Mar. 2018, www.scirp.org/journal/paperinformation.aspx?paperid=83326, 10.4236/ajibm.2018.83047.
2. Lu, Hai. “Information Quality in China’s Capital Market and the Information Transparency Index White Paper.” Pku.edu.cn, 2020, news.pku.edu.cn/wyyd/dslt/5bafd6243bf94fcda1d18db4f215d9c0.htm. Accessed 28 Sept. 2022.
3. Dechow, P., Ge, W., & Schrand, C. (2010). Understanding Earnings Quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2-3), 344–401. https://doi.org/10.1016/j.jacceco.2010.09.001.
4. Ball, R., & Shivakumar, L. (2005). Earnings quality in UK private firms: Comparative loss recognition timeliness. Journal of Accounting and Economics.
5. Basu, S. (2005). Discussion of ‘Conditional and unconditional conservatism: Concepts and modeling’. Review of Accounting Studies, 10(2/3), 311−321.
6. Francis, J., & Wang, D. (2008). The joint effect of investor protection and Big 4 audits on earnings quality around the world. Contemporary Accounting Research, 25(1), 157−191.
7. Diamond D., and R. Verrecchia. 1991. Disclosure, liquidity and the cost of equity capital. The Journal of Finance.
8. Clarkson, P., Guedes, J., & Thompson, R. (1996). On the diversification, Observability, and measurement of Estimation Risk. jstor. Retrieved November 27, 2022, from https://www.jstor.org/stable/2331387.
9. Botosan, C. A. (1997). Disclosure Level and the Cost of Equity Capital. The Accounting Review, 72(3), 323–349. http://www.jstor.org/stable/248475
10. Graham JR, Harvey CR, Rajgopal S (2005) The economic implications of corporate financial reporting. J Account Econ 40(1–3):3–73.
11. Brown, S., Hillegeist, S.A., 2007. How disclosure quality affects the level information asymmetry. Review of Accounting Studies 12, 443–477.
12. Cohen, D.A., 2008. Does information risk really matter? An analysis of the determinants and economic consequences of financial reporting quality. Asia Pacific Journal of Accounting and Economics 15, 69–90.
13. Nikolaev, V. V. (2014, August 23). Identifying accounting quality. SSRN. Retrieved November 27, 2022, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2484958.
14. Beneish’s M-Score | Accounting Ratio | GMT Research. Gmtresearch.com. (1999). Retrieved 22 September 2022, from https://www.gmtresearch.com/en/accounting-ratio/beneishs-m-score/.
15. D. Beneish, M. (1999). The Detection of Earnings Manipulation. Retrieved 27 September 2022, from https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.195.3676&rep=rep1&type=pdf.
16. University, I. (2022). Kelley professor’s M-Score model remains most viable means of predicting corporate fraud. Kelley School of Business. Retrieved 27 September 2022, fromhttps://blog.kelley.iu.edu/2022/02/17/kelley-professors-m-score-model-remains-most-viable-means-of-predicting-corporate-fraud/.
17. Yeh, D., Sha, S., Zhou, J., Ni, S., & Qu, P. (2022). The HFCAA and consequences for US-listed China-based companies | White & Case LLP. Whitecase.com. Retrieved 28 September 2022, from https://www.whitecase.com/insight-our-thinking/hfcaa-and-consequences-us-listed-china-based-companies.
Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open Access Instruction).
- Volume Title
- Proceedings of the 2023 International Conference on Management Research and Economic Development
- ISBN (Print)
- 978-1-915371-79-9
- ISBN (Online)
- 978-1-915371-80-5
- Published Date
- 13 September 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/18/20230055
- Copyright
- 13 September 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited