Chinese Accounting Guidelines For International Coordination And Convergence Study The Impact Of The Quality Of Accounting Information

The companies, both listed in A-share and B-share market in China, must disclosure two different kinds of financial reports; one is according to the Chinese Accounting Standards (CAS) in A-share market, and the other is according to the International Accounting Standards (IAS) in B-share market. This paper can examine whether there are differences between two kinds of accounting standards using a sample of firms that provide financial reports under both CAS and IAS in China from 2001 to 2004. In order to compare the information contents and value relevance of different accounting standards, this research adopts operating cash flow model and stock return model to discuss the relative information contents of these two accounting standards.First, the empirical results show that using current accrual items to predict future cash flow from operation, there is no difference in the explanatory power of IAS and CAS accruals for future cash flows. Second, in the respect of stock return, IAS and CAS earnings have a similar association with annual stock returns. Therefore, there are no differences in accounting information quality between CAS and IAS in our country's economic situation. And the investors can not distinguish which accounting standards is more value relevance. The result is meaningful for government to formulate or advise the Chinese Accounting Standards in the future.