Title

Evidence from China on whether harmonized accounting standards harmonize accounting practices

Document Type

Journal article

Source Publication

Accounting Horizons

Publication Date

9-1-2002

Volume

16

Issue

3

First Page

183

Last Page

197

Abstract

While international harmonization of accounting is gaining momentum in recent years, there is little empirical evidence on whether the harmonization of accounting standards leads to harmonized accounting practices and comparable financial reports. Benefiting from a unique research opportunity in China, this study provides such evidence. Since January 1, 1998, a newly promulgated Accounting Regulation for Listed Companies is in effect. This new regulation is the most comprehensive effort at harmonizing Chinese generally accepted accounting standards (GAAP) with International Accounting Standards (IAS). Based on a sample of listed companies required to reconcile accounting earnings from Chinese GAAP to IAS, we find no evidence that the Chinese government's efforts eliminated or significantly reduced the gap between Chinese and IAS earnings despite harmonized accounting standards. We explore reasons for the continued earnings gap after the 1998 regulation and find that a lack of adequate supporting infrastructure, manifested in excessive earnings management and low quality auditing, may explain the gap.

DOI

10.2308/acch.2002.16.3.183

Print ISSN

08887993

Publisher Statement

Copyright © 2002 American Accounting Association. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Language

English

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