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Prior literature has revealed three key earnings benchmarks: earnings level; earnings change; and analysts’ expectations. The purpose of this paper is twofold. First, the authors seek to establish which earnings benchmark induces the largest extent of earnings management. Second, the authors explore the implications of earnings management on firm future performance. Both of these purposes are investigated for Chinese listed companies during China’s IFRS/ISA reporting era.

The authors rely upon the unique regulations and incentives for Chinese listed companies in order to develop four testable hypotheses. Next, the authors employ both logistic and ordinary least squares regressions to test the hypotheses.

The results suggest that Chinese listed firms have the highest level of income increasing discretionary accruals around the earnings level benchmark, followed by the earnings change benchmark. The authors do not find any evidence of earnings management to beat analysts’ expectation. In addition, the authors find evidence that Chinese listed firms with relatively high level of earnings management and low earnings exhibit relatively weak future stock performance.

The findings are the first to document an earnings management benchmark hierarchy with respect to the extent of income increasing discretionary accruals, while simultaneously establishing a link between earnings management and firm future stock performance, for Chinese listed companies. The findings are valuable for regulators and investors by suggesting that management intervention in the reporting process during China’s IFRS/ISA reporting era may act to circumvent delisting regulations and cloud earnings signal for firms that beat certain earnings benchmarks.

The aim of this paper is to investigate stakeholder power changes and their impact on firms' disclosure decisions in the Chinese stock market. Using legitimacy theory and stakeholder theory, the paper identifies newly emerged stakeholder groups for listed Chinese firms during three distinguished periods of the development of the Chinese stock market.

Panel data analysis was undertaken over a period from 1995‐2006 with an aim to examine the influence of stakeholder power changes on voluntary disclosures made by 297 listed firms in their 12 years of annual reports. A voluntary disclosure checklist has been used for hand‐collecting data from annual reports.

The finding shows that different stakeholder groups exert different degrees of influence on firms' decision‐making in respect of information disclosure during different stages of the development of the Chinese stock market.

The impact of a stakeholder power changes on corporate disclosure has not been well addressed and how listed Chinese firms respond to these changes is still a significant gap in the Chinese corporate disclosure literature. In this study, the paper uses proxies to represent each stakeholder group, discuss power changes of each group and predict the impact of power changes on firms' voluntary disclosure.

The paper identifies the new content of the “social contract” between listed firms and Chinese society and identifies various stakeholder groups of listed Chinese firms in the context of a new “social contract”. The paper predicts that voluntary corporate disclosure is the result of stakeholder pressures and firms use voluntary disclosure as one of their strategies to manage the firm‐stakeholder relationship.

This paper provides evidence on the impact of regulatory environment on financial reporting quality of transitional economies. This study compares the financial reporting quality of Hong Kong firms which are cross-listed in mainland China with those of Hong Kong firms cross-listed in China using specific earnings management metrics (earnings smoothing, timely loss recognition, value relevance and managing towards earnings targets) under pre- and post-IFRS regimes.

The financial reporting quality of Chinese A-share companies and Hong Kong listed companies are examined using earnings management measures. Using 2007 as base year, the study used a cumulative of −5 and +5 years of convergence experience which provide a total of 3,000 firm-year observations. In addition to regression analyses, we used the difference-in-difference analysis to check for the impact of regulatory environments on earnings management.

Through the lens of contingency theory, our results indicate that the adoption of the new substantially IFRS-convergent accounting standards in China results in better financial reporting quality evidenced by less earning management. The empirical results further shows that accounting data are more value relevant for Hong Kong listed firms, and that firms listed in China are more likely to engage in accrual-based earnings management than in real earnings management activities. We established that different earnings management practices that are seemingly tolerable in one country may not be tolerable in another due to level of differences in the regulatory environments.

The findings show that Hong Kong listed companies’ exhibit higher level of financial reporting quality than Chinese listed companies, which implies that the financial reporting quality under IFRS can be significantly different in regions with different institutional, economic and regulatory environments. The results imply that contingent factors such as country’s institutional structures, its extent of regulation and the strength of its investor protection environments impact on financial reporting quality particularly in transitional and emerging economies. As such, these factors need to be given appropriate considerations by financial reporting regulators and policy-makers interested in controlling earnings management practices among their corporations.

This study is a high impact study considering that China plays a significant role in today’s globalised economy. This study is unique as it the first, that we are aware of, to compare real earnings activities against accrual-based earnings management in pre- and post-IFRS adoption periods within the Chinese and Hong Kong financial reporting environments, distinguishing between cross-listed and non-cross-listed firms.

As the capital market in China is still developing, several constraints on a Chinese-listed firm’s financing strategy have a direct impact on its financial flexibility. The purpose of this paper is to reconstruct traditional financial flexibility index (FFI) derived from the western context, provide empirical evidence within eastern context by modified FFI and examine how the managerial efficiency of Chinese-listed firms is demonstrated with modified FFI to escort corporate life cycle hypothesis.

By tailored FFI to fit the contemporary operations of Chinese-listed firms, this study investigates how managerial efficiency varies across different life stages to demonstrate the moderating power in the firm performance of financially flexible firm.

It is found that financially flexible firms in the Chinese stock market generally experience good firm performance, yet the managerial efficiency could gradually be diminishing at their mature stage even firms’ financial flexibility remains consistent with the agency theory. This paper sheds light on the necessity to reexamine the components in financial flexibility based on the eastern context, and provides avenue to further understand the managerial behavior of Chinese listed firms when considering firm life cycles.

Although it is difficult for this current study to offer the precise weights on each factor in calculating financial flexibility, the judgment matrix method is adopted to at least provide reliable estimates in accordance with Chinese business contexts with less than 10 percent errors in contrast to the actual weights.

This modified FFI is particularly suitable for Chinese-listed firms under certain unique financial reporting regulations by adjusting a number of weights and factors. This study may help practitioners understand the managerial conduct of publicly listed firms in China.

The paper constructs a modified FFI with Chinese stock market characteristics embedded, and provides insightful evidence to explain the new pecking order theory by considering the life cycle stage of Chinese-listed companies.

Drawing on a cost–benefit perspective, this paper aims to explore the relation between information asymmetry and the decision to delist from stock exchanges during periods of uncertainty. Specifically, it investigates the role of firms’ intangible investments and the availability of alternative sources of finance on the decision to delist from foreign stock markets.

The study takes advantage of a natural experiment in which cross-listed Chinese firms facing uncertainty in US markets because of widespread allegations of accounting fraud decide on whether to remain listed or voluntarily delist. The decision to delist is modelled as a function of the level of information asymmetry between firms and their stakeholders and the availability of alternative financing, while controlling for other drivers of firms’ delisting decision. The data used in the empirical analyses cover a hand-collected sample of 91 Chinese firms voluntarily delisting from US stock markets between 2010 and 2016. This sample is matched with an equal sample of Chinese firms, which remained listed in US stock markets during the same period. A probit regression model accounting for fixed effects is used.

There is a significant positive relationship between investments in intangible assets and firms’ decision to delist. Moreover, the positive intangibles−delisting nexus is accentuated by the availability of alternative sources of financing. Collectively, the results are consistent with the theoretical argument that the higher information asymmetry associated with intangible assets may increase the cost of staying listed on stock exchanges, particularly in periods of uncertainty (captured in this study by accounting fraud allegations targeting cross-listed firms). The results have important implications for corporate managers, capital market participants and policymakers.

Policymakers and standard setters must continue to work to improve the accounting regulations of intangible assets and to promote the adoption of global accounting standard across both emerging and advanced economies.

The study exploits a unique natural experimental setting to explore why cross-listed firms delist. The underlying theoretical framework to explain delisting is new. This framework captures the role of information asymmetry, uncertainty and alternative financing in explaining the cost and benefits of remaining listed on a foreign market.

The purpose of this paper is to investigate the impact of short selling and margin trading on the price discovery and price informativeness of cross-listed firms, using a sample of Chinese firms listed on the China and Hong Kong stock exchanges.

The sample consists of 67 Chinese cross-listed firms on A-share and H-share markets out of which 18 firms are allowed to be sold short/ traded on margin since March 2010. Using pre- and post-event period, the authors compare and contrast various market microstructure variables. The contributions of the home (A-share) and overseas (H-share) markets to the incorporation of new information into prices are calculated following the permanent-transitory approach of Gonzalo and Granger (1995) as well as the adverse selection component of Lin et al. (1995).

The findings indicate that for the group of Chinese cross-listed firms that are not allowed to be sold short or bought on margin, the home (A-share) market contributes more to the price discovery process over time. However, for the group of cross-listed firms that are eligible for short selling and margin trading, the authors observe no significant difference in the contribution of either A- or H-share markets to the price discovery. The contribution of home market for these firms is even lower around the announcement of major events. The authors further find that while the short sale activities appears to be informative, measured by the adverse selection (AS) component of spread, on the whole they have not led the A-share markets to be more informative.

The sample of cross-listed Chinese firms that are allowed to be sold short or bought on margin are rather limited. Hence, the results should be read with some caution.

The removal of short selling constraints appears to improve the contribution of the respective markets to the process price discovery, in the case for larger cross-listed firms.

The authors shed new lights on how the introduction of short selling and margin trading impacts on the price discovery of the Chinese cross-listed firms. A further contribution of the study is the use of high frequency data, while most of the previous studies on the Chinese markets use daily data.

This paper aims to explore the interlock-performance relationship among mainland Chinese firms listed in Hong Kong by taking advantage of a relationship-intensive context whereby such a link is likely to be especially important. Although strategic networks such as interlocking directorates have been found to affect a number of strategic behaviors, the link connecting board interlocks and corporate performance has remained ambiguous. Considerable light has been shed on the strategic networks of firms whose shares are listed abroad, which have been under-studied despite their rising importance in the global economy.

Data come from a particularly interesting historical period – the early 1990s prior to Hong Kong’s 1997 handover to China. Both quantitative and qualitative research have been used.

Empirically, it was found that good performance in an earlier period helps draw outside directors in a later period, and that network centrality and certain types of interlocks help improve performance, albeit with varying degrees. Overall, our results answer the question whether strategic networks such as interlocks matter for corporate performance with a qualified “yes”.

Taking advantage of a relationship-intensive context, this article explores the interlock-performance relationship among mainland Chinese firms listed in Hong Kong. Focus is specifically on the two years, 1993 and 1995, due to their specific historical importance because these two years represent the beginning of Chinese firms’ listing in Hong Kong.

This study investigates whether listed firms using equity incentive plans (EIPs) adopt more conservative accounting in China's unique corporate setting.

Based on a sample of 2,243 listed firms and 9,950 firm-year observations for the period of 2008–2017, this study employs piecewise cross-sectional regression models with year and industry fixed effects to examine the associations proposed in the research hypotheses.

This study finds a positive relationship between the adoption of EIPs and accounting conservatism in listed Chinese firms. Further analyses reveal that this positive relationship is more pronounced when listed Chinese firms use restricted stock units (RSUs), instead of stock options, in their EIPs.

Unlike many early studies, this paper empirically investigates the impacts of two different types of equity incentives – stock options and RSUs – and thus contributes to accounting and corporate governance literature by providing a better understanding of the impacts of different types of equity incentives on financial reporting quality. However, this study does not consider other alternative equity incentive measurements because of the limited data regarding Chinese firm's executive compensation.

This study offers investors and policymakers in China some insight into how accounting conservatism in listed firms might be shaped by equity incentives used in their managerial compensation schemes.

This study is one of the few that examines the effects of using equity incentives in a large emerging market. It offers support for the view that the recent introduction of policies on EIPs by the Chinese government has an overall positive impact on listed firm's financial reporting quality, as reflected by greater degrees of accounting conservatism.

The purpose of this paper is to investigate the association between ownership structure and the properties of analysts’ forecasts in China’s unique corporate setting.

Multiple regression models were used to examine the influence of ownership structure mechanisms on analysts’ forecast properties for listed Chinese firms during the period 2008-2012.

The paper finds that analysts’ forecast accuracy is higher for listed firms with high levels of foreign ownership and managerial ownership. However, the complex pyramidal ownership structure could make corporate information less transparent and then increase the complexity of forecasting; hence, it results in less precise analysts’ forecasts. Interestingly, the relationship between state ownership and analysts’ forecast properties appears to be non-linear (an inverted U-shape), and the inflection point at which the relationship becomes negative occurs at state ownership over 45 per cent.

To the best of the author’s knowledge, this paper is the first to investigate the influence of ownership structure mechanisms on the properties of analysts’ forecasts in an emerging market, and the findings provide some insight on how the properties of analysts’ forecast might be shaped by certain ownership and control features in the context of concentrated state ownership and complex pyramidal ownership structure.

This study aims to examine the determinants of the female representations on Chinese listed firm’s boards. This study also investigates the effect of gender diversity on corporate social responsibility activities.

The Tobit regression model is used because the data is censored and using ordinary least square regression can give spurious results. For robust check, the authors also used Heckman’s (1979) two-stage self-selection model to remove the sample self-selection bias.

The authors find that the female representations on the corporate board are positively associated with firm age, firm performance, corporate governance, family ownership, institutional ownership and managerial ownership while negatively related to firm size and state ownership. This study also incorporates predictors of the critical mass of women on the Chinese listed firm’s board. The study also tests the female-led hypothesis and concludes that the female representation increases in firms with female chief executive officer (CEO) or female chairpersons. The Chinese listed firms with gender-diverse board are socially responsible.

The importance of diversity in corporate boards has been demonstrated in light of the agency theory and the resource dependence framework. The results contribute to the previous literature by documenting the determinants of female representations on board, robust by alternative measures of gender diversity, firm size, corporate governance and estimation techniques.

The economic significance of gender diversity stirred the firms to increase female representation. The policymakers can understand the reasons for female underrepresentation in Chinese boards and can reform the regulation to enhance governance quality, non-state ownership and risk aversion among the listed firms.

This study contributes to the literature by providing empirical evidence on the key predictor of the world’s largest emerging economy, specifically the study focuses on the firm specific determinants, different governance attributes, ownership structure and firm risk measures. This study also seeks to answer if the presence of a female in the Chairperson or CEO position encourages the firms to hire more female directors or not?