The effects of corporate ownership structure on earnings conservatism: evidence from China

Kung, Fan-Hua and Cheng, Chia-Ling and James, Kieran (2010) The effects of corporate ownership structure on earnings conservatism: evidence from China. Asian Journal of Finance and Accounting, 2 (1:E3). pp. 47-67. ISSN 1946-052X

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Abstract

This paper investigates the incremental effects of corporate ownership structure on earnings conservatism, examining data of Chinese listed companies. We employ the concept of conditional conservatism to define earnings conservatism and adopt empirical models developed by Basu (1997) and Ball and Shivakumar (2005) to measure the degree of earnings conservatism. Our empirical results show that the earnings of companies with higher non-tradable shares have lower earnings conservatism. Consistent with prior studies, this point demonstrates that the companies with state and concentrated ownership structures are more likely to depend on private communication to reduce information asymmetry and to resolve agency problems internally, thereby creating a low demand for earnings conservatism. The results of this study contribute to our understanding of how companies’ ownership structures affect the properties of earnings in emerging markets and post-Communist markets.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Deposited in accordance with the copyright policy of the publisher - this work is licensed under a Creative Commons Attribution 3.0 License.
Depositing User: Dr Kieran James
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 30 Mar 2011 03:28
Last Modified: 03 Jul 2013 00:35
Uncontrolled Keywords: earnings conservatism; non-tradable shares; ownership structure; post-Communist studies; split-share structure; state ownership
Fields of Research (FOR2008): 15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150103 Financial Accounting
16 Studies in Human Society > 1608 Sociology > 160805 Social Change
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150102 Auditing and Accountability
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150101 Accounting Theory and Standards
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150104 International Accounting
Socio-Economic Objective (SEO2008): B Economic Development > 91 Economic Framework > 9104 Management and Productivity > 910402 Management
B Economic Development > 89 Information and Communication Services > 8999 Other Information and Communication Services > 899999 Information and Communication Services not elsewhere classified
URI: http://eprints.usq.edu.au/id/eprint/18776

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