Stock market liberalization and financial reporting quality
Hongpan Zhang, Jiayue Zhao
This study employs the Mainland-Hong Kong Stock Connect pilot program in China to investigate the influence of stock market liberalization on firm-level financial reporting quality (FRQ). First, through a staggered difference-in-difference specification strategy, we find that eligible firms experience a significant improvement in FRQ, as measured by a composite proxy of accrual earnings management, real activities manipulation, and financial report restatement. Second, cross-sectional analyses suggest that the effect is stronger when firms are headquartered in regions with weaker institutional environments, characterized by lower judicial efficiency and less developed financial markets. We also show that the impact is more pronounced when firms face less external pressure and possess more effective corporate governance before stock market liberalization. Third, further evidence highlights that augmented FRQ is associated with a reduction in regulatory compliance costs, an improvement in stock price efficiency, and a mitigation of financing constraints. Collectively, we shed new light on the role of stock market liberalization in shaping firms’ financial reporting behavior.
Year of publication: |
2023
|
---|---|
Authors: | Zhang, Hongpan ; Zhao, Jiayue |
Published in: |
China journal of accounting research : CJAR. - Guang dong sheng guang zhou shi : [Verlag nicht ermittelbar], ISSN 2214-1421, ZDB-ID 2548343-2. - Vol. 16.2023, 4, Art.-No. 100328, p. 1-27
|
Subject: | Stock market liberalization | Mainland-Hong Kong stock connect | Financial reporting quality | Aktienmarkt | Stock market | Finanzmarktregulierung | Financial market regulation | Hongkong | Hong Kong | Welt | World | Jahresabschluss | Financial statement |
Saved in:
freely available
Type of publication: | Article |
---|---|
Type of publication (narrower categories): | Aufsatz in Zeitschrift ; Article in journal |
Language: | English |
Other identifiers: | 10.1016/j.cjar.2023.100328 [DOI] |
Classification: | G15 - International Financial Markets ; G18 - Government Policy and Regulation ; M41 - Accounting |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014463542
Saved in favorites
Similar items by subject
-
Volatility Control Mechanisms : The International Experience and the Evidence from Hong Kong
Chan, Kalok, (2022)
-
Buckland, Roger, (2017)
-
Chen, Jing, (2009)
- More ...
Similar items by person