Abstract
This paper investigates how state ownership affects financial reporting practices in China. Using several measures of state (government) ownership, we show that a one-standard-deviation increase in state ownership decreases financial statement comparability by 36.61%, and the impact is more pronounced when the central authority has majority control of the company. Moreover, lower earnings quality and lower levels of accounting conservatism among state-owned enterprises (SOEs) may explain the lower accounting comparability between SOEs and non-SOEs (NSOEs). Additionally, similar (different) managerial objectives converge (diverge) financial statement comparability between SOEs and NSOEs. Last, the geographical locations of firms also contribute to financial statement comparability. We employ a difference-in-differences design, changes regression and entropy balancing to mitigate potential endogeneity bias.
| Original language | English |
|---|---|
| Journal | Journal of Business Finance and Accounting |
| DOIs | |
| State | Accepted/In press - 2023 |
ASJC Scopus subject areas
- Accounting
- Business, Management and Accounting (miscellaneous)
- Finance
Keywords
- Chinese stock market crash
- accounting conservatism
- central and local government
- earnings quality
- financial statement comparability
- firm location
- foreign institutional ownership
- international accounting
- major state-owned enterprise
- managerial objectives
- state ownership