Title

The usefulness of earnings and book value for equity valuation in emerging capital markets : evidence from listed companies in the people's republic of China

Document Type

Journal article

Source Publication

Journal of International Financial Management and Accounting

Publication Date

1-1-1999

Volume

10

Issue

2

First Page

85

Last Page

104

Abstract

This paper examines the relative value relevance in equity valuation of two sets of accounting information of listed Chinese companies which issued the so-called B shares to foreign investors on the Chinese stock exchanges. These firms are required to prepare two sets of financial statements: one based on China's accounting regulations (domestic GAAPs) and the other based on International Accounting Standards (IASs). The study adopted the Ohlson (1995) model and used the Davidson-MacKinnon J-test to assess which one of these two competing sets of accounting information is more closely associated with the share prices. The results showed that earnings and book value reported based on IASs have greater information content than those based on domestic GAAPs. The results of yearly regression analysis generally suggested that the explanatory power of these earnings and book values for share prices increased over time.

DOI

10.1111/1467-646X.00045

Print ISSN

09541314

Publisher Statement

Copyright © Blackwell Publishers Ltd. 1999. Access to external full text or publisher's version may require subscription.

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