Title
Investor legal protection and earnings management : a study of Chinese H-shares and Hong Kong shares
Document Type
Journal article
Source Publication
Journal of Accounting and Public Policy
Publication Date
9-1-2013
Volume
32
Issue
5
First Page
392
Last Page
409
Publisher
Elsevier Inc.
Abstract
Under the unique "one country, two systems" arrangement, the more stringent investor protection rules in Hong Kong are not enforceable in firms that are incorporated in China but listed on the Hong Kong stock exchange (H-shares). As such, H-shares and other local Hong Kong firms are subject to different investor protection regimes in the same stock market. We find that H-shares are associated with higher earnings management than local Hong Kong firms after controlling for disparity in economic development, types of controlling shareholders and other factors. More importantly, this relationship is weaker after China implemented the Securities Law in 1999. The results are robust after considering the dual-listing status of H-shares and board characteristics. These results provide direct evidence showing the effect of investor legal protection on financial reporting quality.
DOI
10.1016/j.jaccpubpol.2013.06.004
Print ISSN
02784254
E-ISSN
18732070
Publisher Statement
Copyright © 2013 Elsevier Inc.
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Fung, S. Y., Su, L. N., & Gul, R. J. (2013). Investor legal protection and earnings management: A study of Chinese H-shares and Hong Kong shares. Journal of Accounting and Public Policy, 32(5), 392-409. doi: 10.1016/j.jaccpubpol.2013.06.004
