Research On Financial Reports Of A-H Dual-listing Enterprises

With the accelerating process of economic globalization, more and more Mainland enterprises choose to list in Hong Kong's stock market, which are called A-H dual-listing companies. Due to the large differences between accounting standards, such enterprises not only need to prepare financial reports in accordance with the Mainland Accounting Standards, but also to provide financial reports in accordance with Hong Kong Financial Reporting Standards or International Accounting Standards in order to satisfy the information needs of investors in Hong Kong. Dual financial reports used to be rational; however there are also many problems. Therefore the international harmonization of accounting standards has become an inevitable task in our country and the world. On February 15,2006, the Ministry of Finance issued Accounting Standard for Business Enterprises, including the Basic Standard and 38 specific accounting standards, meaning the system accounting standards in China basically completed. And this is considered to achieve a substantive convergence with the International Accounting Standards.In this background, this paper studies the harmony of Chinese Accounting Standards and International Accounting Standards. Also we study the facto harmonization in connection with the differences of A-H dual-listing companies' financial reports. The study found that we have not only reached de jure harmonization with International Accounting Standards but also the de facto harmonization, because the gap between the net profits of two financial reports has been significantly reduced. Moreover, the study of the relationship of ROE of Hong Kong market discloses double the rate of return and report the correlation between the differences of the analysis, Hong Kong's capital market investors are more insensitive to the financial reporting disclosed in mainland market. Based on the discovery, this article concludes that it is time to reform China's financial reports of A-H dual-listing companies. The government of Mainland and Hong Kong should more actively cooperate. Under the premise of satisfying the information need of both markets investors, policies should be taken to simplify the procedures of disclosure of financial information. Financial Reports according to the local accounting standards can also be admitted in the counterpart market, which can help to promote the rapid development of A-H dual-listing companies.