IFRS Convergence and Stock Market Impact: Evidence from the 2007 China Reform

Authors

  • C.S. Agnes Cheng The Hong Kong Polytechnic University
  • Ping Lin California State University, Long Beach
  • Jing Zhang University of Colorado, Denver
  • Sanjian (Bill) Zhang California State University, Long Beach

DOI:

https://doi.org/10.33423/jaf.v19i19.2694

Keywords:

Accounting, Finance, Accounting Convergence, Emerging Market, IFRS, Stock Market, China

Abstract

This study examines whether China’s adoption of new accounting standards in 2007 benefits shareholders by reducing information asymmetry in China’s stock market. Information asymmetry is measured by bid-ask spread, stock return volatility, and analyst forecast spread. Contrary to common perception and standard setter’s expectation, we find that information asymmetry has actually increased after the switch to the new CAS in 2007. Our results suggest that China’s recent convergence towards IFRS did not benefit shareholders, and that it was perceived negatively by market participants, which is consistent with earnings quality evidence from He et al. (2012).

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Published

2019-12-30

How to Cite

Cheng, C. A., Lin, P., Zhang, J., & Zhang, S. (Bill). (2019). IFRS Convergence and Stock Market Impact: Evidence from the 2007 China Reform. Journal of Accounting and Finance, 19(9). https://doi.org/10.33423/jaf.v19i19.2694

Issue

Vol. 19 No. 9 (2019)

Section

Articles

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