Overseas listing and accounting conservatism: evidence from Chinese H-share companies

Kung, Fan-Hua and James, Kieran and Cheng, Chia-Ling (2011) Overseas listing and accounting conservatism: evidence from Chinese H-share companies. Asian Review of Accounting, 19 (3). pp. 266-278. ISSN 1321-7348


Purpose – The objective of this paper is to examine the incremental effects of overseas listing on earnings conservatism. In particular, it investigates whether mainland Chinese companies listed 'overseas' in Hong Kong exhibit a higher degree of earnings conservatism than companies without overseas-listing.
Design/methodology/approach – The paper employs the concept of 'conditional conservatism' and adopts Basu’s (1997) conservatism model, examining data for Chinese companies overseas listed on the Stock Exchange of Hong Kong as H-shares, to test hypothesis concerned with the difference in the speed with which economic gains and losses are captured in accounting earnings.
Findings – The empirical findings indicate that both overseas-listed and China-only-listed Chinese companies demonstrate a minimal degree of earnings conservatism in the earlier sample sub-period. However, companies listed overseas provide a higher degree of earnings conservatism overall. Furthermore, this conservatism becomes statistically significant in the 2006 to 2008 sub-period.
Originality/value – The evidence in this study shows that differences in earnings conservatism arise from differential information demands and differential regulations. Hence the findings have direct policy implications for the regulatory agencies in China and Vietnam and in the ex-communist countries further afield such as Russia, the former Soviet Union, and Eastern Europe.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to published version due to publisher copyright policy.
Faculty / Department / School: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 15 Nov 2011 07:35
Last Modified: 25 Aug 2014 22:39
Uncontrolled Keywords: accounting conservatism; accounting regulation; Basu model; accounting; communism; earnings conservatism; earnings quality; Maoism; China
Fields of Research : 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150199 Accounting, Auditing and Accountability not elsewhere classified
14 Economics > 1402 Applied Economics > 140210 International Economics and International Finance
Socio-Economic Objective: B Economic Development > 91 Economic Framework > 9101 Macroeconomics > 910103 Economic Growth
Identification Number or DOI: 10.1108/13217341111185164
URI: http://eprints.usq.edu.au/id/eprint/19959

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