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This research paper is jointly authored by Dr Wen Qu, Dr Michelle Fong from Victoria University and Dr Judy Oliver from Swinburne University and it has been accepted for publication by the Corporate Ownership and Control.
The study examines whether the 2007 IFRS converged Chinese GAAP has improved the quality of accounting information for investors in the A-share market in China. Authors analyze investor’s reaction to financial information released pre and post IFRS convergence in the Chinese stock market. Multiple regression analysis was employed using data from 309 listed Chinese companies. The findings of this study show that earnings per share, relative to book value of equity, is a stronger explanatory factor of market return in both the pre- and post IFRS convergence periods, suggesting that investors rely heavily upon earnings released by listed companies when making security price decisions in the Chinese stock market. The results also suggest that investors’ reliance on the income statement information for investment decisions becomes greater in the post IFRS convergence period. Overall, the research findings show that IFRS convergence has improved the quality of financial information in the Chinese stock market.
The full article is now available.