The Structure of Corporate Ownership and Earnings Conservatism: Evidence from China

• Main Authors: Hsiao-Ling Wu, 吳筱苓
• Other Authors: Fan-Hua Kung
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/94712279559332076586

碩士 === 淡江大學 === 會計學系碩士班 === 98 === This thesis investigates the incremental effects of state ownership and non-tradable shares on earnings conservatism, examining data of Chinese listed companies. The split share structure represented a major hurdle to China’s financial market development. In 2005 the Chinese authorities have launched a structural reform program aiming at circulating state and non-tradable shares. The reform is expected to have important effects on the corporate governance and improve the earnings quality. The thesis employs the concept of earnings conservatism to define earnings quality and adopt empirical models developed by Basu (1997) and Ball and Shivakumar (2005) to measure the degree of earnings conservatism. The empirical results show that earnings conservatism increases since the reform. Consistent with prior studies, the earnings of companies with lower state-ownership and non-tradable shares remain sensitive to bad news, reflecting overall greater conservatism. This point demonstrates that the companies with state and concentrated ownership structures are more likely to depend on private communication to reduce information asymmetry and to resolve agency problems internally, thereby creating a low demand for earnings conservatism. This thesis provides an early evaluation of the reform and contribute to our understanding of how companies’ ownership structures affect the properties of earnings in emerging markets.