Asia-Pacific Journal of Accounting & Economics
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Volume 7, Issue No. 2, December 2000

Table of Contents

Foreword from Co-Editors

Research Note

  • Yinqing Zhao , Dividend payment and ownership structure in the Chinese stock market


Accounting standards, the institutional environment and issuer incentives: Effect on timely loss recognition in China

Ray Ball a , Ashok Robin b and Joanna Shuang Wu c
a University of Chicago
b Rochester Institute of Technology
c University of Rochester


Accounting income of Chinese companies reporting under both domestic ASBE accounting standards and International Accounting Standards (¡§IAS¡¨) is shown to lack timely incorporation of economic losses. This is less surprising for ASBE-compliant income, because although ASBE standards are based on IAS, they lack important asymmetric rules, such as lower-of-cost-or-market, and impairment of long-term assets. More striking is the absence of timely loss incorporation in financial statements certified by international auditors as IAS-compliant. IAS resemble common-law standards and are widely believed to increase financial reporting quality. The timely incorporation of losses has become perhaps the single most important feature of income reporting under common law (Basu (1997), Ball, Kothari and Robin (2000)).

We attribute the result to the comparatively low incentive of managers and auditors to recognise economics losses in a timely fashion and, conversely, to comparatively high political and tax influences on financial reporting practices. Our results imply that financial reporting cannot be improved simply by governments mandating accounting standards that evolved endogenously in different economies. The most fruitful area for Chinese accounting reform lies not in simply adopting or imitating international accounting standards, but in reforming domestic institutions such as the legal system, corporate governance and auditor training and independence. © City University of Hong Kong.

JEL classification: D82, F02, G15, M41 and O53

Keywords: China; International Accounting Standards; information asymmetry; timeliness; conservatism; institutional development


Equal access to information: Do cross-listed firms' stock prices respond to earnings disclosed in overseas and local markets?

Carol Ann Frost a and Grace Pownall b
a Dartmouth College
b Emory University


We estimate stock price responses to earnings disclosed by 110 cross-listed companies as a function of the order of information release in the US and the UK to address selective disclosure and capital market integration. We find that firms did not disclose the same information simultaneously in both countries. We find little evidence of US or UK price response to disclosures released only in the other country, suggesting that direct and simultaneous disclosures in each market is necessary to ensure equal access to information about cross-listed firms. Securities market regulators' concerns about cross-country conformity of disclosure appear to be warranted. © City University of Hong Kong.

JEL classification: M41 and O57

Keywords: global capital markets; equal access to information; international accounting


Dividend payment and ownership structure in the Chinese stock market

Yinging Zhao
City University of Hong Kong


This study examines the relationship between dividend payment and ownership structure in the Chinese stock market. The findings show the following. First, government-controlled firms are not only more likely to pay dividends than corporate-controlled firms, but they also pay more dividends than corporate-controlled firms. Second, firms without multiple large shareholders pay more dividends than those firms with multiple large shareholders. Finally, dividend payout ratios are positively related to the ownership of the controlling shareholder. These findings are consistent with the ¡§substitute model¡¨, in which dividends are the substitute for legal protection of outsiders, and are paid to establish a reputation for the good treatment of outside shareholders. © City University of Hong Kong.

JEL classification: G32 and G35

Keywords: dividend payment; ownership structure; Chinese stock market