Institutions and Information Environment of Chinese Listed Firms

This paper describes the financial reporting practices and information environment of Chinese listed firms and documents the influence that local and country-level institutions have on reporting incentives and the resultant information environment. We identify four key institutional arrangements that influence the supply and demand for information about Chinese listed firms: the State’s controlling ownership of listed firms, the government’s control of capital markets, the limited protection of property rights and weak market institutions, a lack of independence of local auditors, and the importance of social networks and political connections. The paper concludes by discussing how actual and potential changes in these institutional arrangements would likely influence China’s information environment.

[1]  Joseph D. Piotroski,et al.  Capital Allocation and Timely Accounting Recognition of Economic Losses , 2011 .

[2]  Li Jin,et al.  What Does Stock Ownership Breadth Measure? , 2010, Review of finance.

[3]  Paul Chaney,et al.  The Quality of Accounting Information in Politically Connected Firms , 2010 .

[4]  T. Wong,et al.  Propping through related party transactions , 2010 .

[5]  Martin T. Bohl,et al.  Do Foreign Institutional Investors Destabilize China’s A-Share Markets? , 2010 .

[6]  O. Guedhami,et al.  Auditor choice in privatized firms: Empirical evidence on the role of state and foreign owners , 2009 .

[7]  Jeong‐Bon Kim,et al.  Ownership Concentration, Foreign Shareholding, Audit Quality, and Stock Price Synchronicity: Evidence from China , 2009 .

[8]  Zhongzhi He,et al.  Price Manipulation and Industry Momentum: Evidence from the Chinese Stock Market , 2009 .

[9]  Lei Gao,et al.  Chinese institutional investors’ sentiment , 2008 .

[10]  T. Wong,et al.  State ownership, the institutional environment, and auditor choice: Evidence from China , 2008 .

[11]  Jonathan M. Karpoff,et al.  The Cost to Firms of Cooking the Books , 2008, Journal of Financial and Quantitative Analysis.

[12]  Cameron Truong,et al.  Momentum strategies and stock returns: Chinese evidence , 2008 .

[13]  Guohua Jiang,et al.  Tunneling in China: The Remarkable Case of Inter-Corporate Loans , 2008 .

[14]  Jonathan M. Karpoff,et al.  The Consequences to Managers for Financial Misrepresentation , 2008 .

[15]  Joseph P. H. Fan,et al.  Public Governance and Corporate Finance: Evidence from Corruption Cases , 2008 .

[16]  Tianyu Zhang,et al.  Political Incentives to Suppress Negative Financial Information: Evidence from State-Controlled Chinese Firms , 2007 .

[17]  Donghui Wu,et al.  Regulations, Earnings Management, and Post-IPO Performance: The Chinese Evidence , 2007 .

[18]  Joseph P. H. Fan,et al.  Politically connected CEOs, corporate governance, and Post-IPO performance of China's newly partially privatized firms , 2007 .

[19]  Mark L. DeFond,et al.  Investor Protection and the Information Content of Annual Earnings Announcements: International Evidence , 2007 .

[20]  Qian Sun,et al.  Earnings management at rights issues thresholds—Evidence from China☆ , 2006 .

[21]  Ferdinand A. Gul,et al.  Auditors' response to political connections and cronyism in Malaysia: Management of slipped adjustable gastric bands , 2006 .

[22]  Felix Oberholzer-Gee,et al.  Political Relationships, Global Financing and Corporate Transparency: Evidence from Indonesia , 2006 .

[23]  Chenchuramaiah T. Bathala.  R2 Around the World: New Theory and New Tests , 2006 .

[24]  R. Watts.  What Has the Invisible Hand Achieved , 2006 .

[25]  Miguel A. Ferreira,et al.  Corporate Governance, Idiosyncratic Risk, and Information Flow , 2005 .

[26]  A. Khwaja,et al.  Unchecked Intermediaries: Price Manipulation in an Emerging Stock Market , 2005 .

[27]  Hongbin Li,et al.  Relative Performance Evaluation and the Turnover of Provincial Leaders in China , 2005 .

[28]  Wei Xiong,et al.  Speculative Trading and Stock Prices: Evidence from Chinese A-B Share Premia , 2005 .

[29]  Joseph D. Piotroski,et al.  Financial Reporting Incentives for Conservative Accounting: The Influence of Legal and Political Institutions , 2005 .

[30]  Katherine Schipper,et al.  Costs of Equity and Earnings Attributes , 2004 .

[31]  Craig Doidge.  U.S. cross-listings and the private benefits of control: evidence from dual-class firms , 2004 .

[32]  Franklin Allen,et al.  Law, Finance, and Economic Growth in China , 2004 .

[33]  Kevin C. W. Chen,et al.  Earnings Management and Capital Resource Allocation: Evidence from China's Accounting‐Based Regulation of Rights Issues , 2004 .

[34]  Joseph D. Piotroski,et al.  Insider Trading Restrictions and Analysts' Incentives to Follow Firms , 2003 .

[35]  Joseph D. Piotroski,et al.  What Determines Corporate Transparency? , 2003 .

[36]  Jean-Francois Richard,et al.  Economic Development, Legality and the Transplant Effect , 2003 .

[37]  Chi-Wen Jevons Lee,et al.  Chinese Tango: Government Assisted Earnings Management , 2003 .

[38]  Peter D. Wysocki,et al.  Earnings Management and Investor Protection: An International Comparison , 2002 .

[39]  Hazem Daouk,et al.  The World Price of Earnings Opacity , 2002 .

[40]  Joseph Kang,et al.  Contrarian and momentum strategies in the China stock market: 1993–2000 , 2002 .

[41]  Utpal Bhattacharya,et al.  The World Price of Insider Trading , 2002 .

[42]  Jere R. Francis,et al.  Investor Protection Laws, Accounting and Auditing Around the World , 2001 .

[43]  Qingliang Tang,et al.  AUDITOR-GOVERNMENT ASSOCIATIONS AND AUDITOR INDEPENDENCE IN CHINA☆☆☆ , 2001 .

[44]  R. Morck,et al.  Does Greater Firm-Specific Return Variation Mean More or Less Informed Stock Pricing? , 2001 .

[45]  Joseph P. H. Fan,et al.  Do External Auditors Perform a Corporate Governance Role in Emerging Markets? Evidence from East Asia , 2001 .

[46]  R. Rajan,et al.  The Great Reversals: The Politics of Financial Development in the 20th Century , 2001 .

[47]  Ashok Robin,et al.  Incentives Versus Standards: Properties of Accounting Income in Four East Asian Countries, and Implications for Acceptance of IAS , 2000 .

[48]  Joanna S. Wu,et al.  Accounting standards, the institutional environment and issuer incentives: Effect on timely loss recognition in China , 2000 .

[49]  Joseph P. H. Fan,et al.  Corporate Ownership Structure and the Informativeness of Accounting Earnings in East Asia , 2000 .

[50]  M. E. Ellis.  Globalization, Corporate Finance, and the Cost of Capital , 2000 .

[51]  T. Wong,et al.  Financial Packaging of IPO Firms in China , 2000 .

[52]  Joseph Chen,et al.  Forecasting Crashes: Trading Volume, Past Returns and Conditional Skewness in Stock Prices , 1999 .

[53]  René M. Stulz,et al.  GOLBALIZATION, CORPORATE FINANCE, AND THE COST OF CAPITAL , 1999 .

[54]  Mark L. DeFond,et al.  The Impact of Improved Auditor Independence on Audit Market Concentration in China , 1999 .

[55]  S. P. Kothari,et al.  The Effect of International Institutional Factors on Properties of Accounting Earnings , 1999 .

[56]  James S. Ang,et al.  Transparency in Chinese stocks: A study of earnings forecasts by professional analysts , 1999 .

[57]  Mark H. Lang,et al.  Corporate Disclosure Policy and Analyst Behavior , 1998 .

[58]  Mark L. DeFond,et al.  The Effect of Audit Quality on Earnings Management , 1998 .

[59]  Barry R. Weingast,et al.  Federalism as a Commitment to Reserving Market Incentives , 1997 .

[60]  Ilia D. Dichev,et al.  Earnings Management to Avoid Earnings Decreases and Losses , 1997 .

[61]  Luigi Zingales,et al.  Financial Dependence and Growth , 1996 .

[62]  Josef Lakonishok,et al.  Momentum Strategies , 1995 .

[63]  Narasimhan Jegadeesh,et al.  Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency , 1993 .

[64]  R. C. Merton,et al.  Presidential Address: A simple model of capital market equilibrium with incomplete information , 1987 .

[65]  Stephen J. Brown,et al.  Differential Information and Security Market Equilibrium , 1985, Journal of Financial and Quantitative Analysis.

[66]  E. Fama,et al.  Agency Problems and Residual Claims , 1983, The Journal of Law and Economics.

[67]  M. C. Jensen,et al.  Harvard Business School; SSRN; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit , 1976 .

[68]  T. Wong,et al.  The value of relationship-based and market-based contracting: Evidence from corporate scandals in China , 2012 .

[69]  F. Du.  Political connections and access to bond capital: Reputation or collusion? , 2011 .

[70]  Lin Tan,et al.  Herding behavior in Chinese stock markets: An examination of A and B shares , 2008 .

[71]  Jiwei Wang,et al.  Accounting-Based Regulation in Emerging Markets: The Case of China's Seasoned-Equity Offerings , 2007 .

[72]  Craig Doidge,et al.  U.S. Cross-Listings and the Private Benefits of Control: Evidence from Dual Class Shares , 2003 .

[73]  Thomas G. Rawski.  What is happening to China's GDP statistics? , 2001 .

[74]  Kevin C. W. Chen,et al.  Earnings management and resource allocation: Evidence from China’s accounting-based regulation of rights issue. , 2001 .

[75]  Christine Botosan.  Disclosure level and the cost of equity capital , 1997 .

[76]  Barry R. Weingast,et al.  Federalism as a commit-ment to preserving market incentives , 1997 .

[77]  Siew Hong Teoh,et al.  Perceived Auditor Quality and the Earnings Response Coefficient , 1993 .

[78]  R. Cyert,et al.  Theory of the Firm , 1966 .