Asia-Pacific Journal of Accounting & Economics
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Volume 8, Issue No. 1, June 2001

Table of Contents


Disclosure quality and earnings management

Gerald J. Lobo a and Jian Zhou b
a Syracuse University
b SUNY at Binghamton


Drawing upon the results of theoretical and empirical research on the relation between corporate disclosure and information asymmetry and on the relation between information asymmetry and earnings management, we hypothesize that the extent of earnings management is negatively related to corporate disclosure quality. We measure disclosure quality using the Association for Investment Management and Research's rankings of corporate disclosure and earnings management using discretionary accruals. Our empirical analysis, conducted on a sample of 803 firm-year observations, supports our hypothesis and provides evidence on management's use of the flexibility afforded under current minimum disclosure requirements to exercise discretion in reporting earnings. © City University of Hong Kong.

JEL classification: D82 and M41

Keywords: disclosure quality; earnings management


An investigation of goodwill accounting policy choice within a specific knowledge framework

Pearl H. N. Tan
Nanyang Technological University, Singapore


This study, using Singapore data, investigates the relationship between Chief Executive Officers' (¡§CEOs¡¨) specific knowledge and the accounting method choice on capitalisation of goodwill. International Accounting Standard 22 (1987), applicable in Singapore in 1996, the year of the study, permits a choice between capitalisation with subsequent amortisation and immediate write-off of goodwill to reserves. This study proposes a positive relationship between human capital specificity of CEOs and the recognition of purchased goodwill on the balance sheet. Specific knowledge is unique to firms and is acquired through experience. Given that specialised assets arise from firm-specific circumstances, firm-specific knowledge potentially explains the recognition policies pertaining to specialised assets. Overall, the evidence in this study supports a positive relationship between CEOs firm-specific knowledge and the capitalisation of goodwill. © City University of Hong Kong.

JEL classification: M41 and J41

Keywords: specific knowledge; human capital specificity; specialised assets; goodwill; International Accounting Standards


An analysis of the implications of the IASC comparability project for IAS adopters in the US

Paquita Y Davis-Friday a and Baruch College b
a Norlin G Rueschhoff
b University of Notre Dame


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