Dose IFRS convergence in 2007 GAAP continuously improve quality of accounting information? – Evidence from the Chinese Stock-A market

Abstract

This paper aims to examine whether the convergence of Chinese GAAP in 2007 and IFRS has continuous improvement of accounting information for A-share investors in China. The investor’s reaction to the disclosure of annual financial reports that A-share companies are legally required to prepare and release was analyzed based on the data collected during 2008-2017, to stand for the situation during 2007-2016. Multiple regression analysis of 733 Stock-A companies was employed. The results of this paper show that earnings per share is a strong explanatory factor of market return in 2007-2016. A-share investors try to make cautious price decisions, depending heavily on earnings showed by companies. Besides, the findings of this paper suggest that investors are more reliable on balance sheet such as leverage ratio to assure their decisions wise during recent years.