The Research About Earnings Quality Comparison Between Cross-listed Companies And Non-Cross-listed Companies

Since Qingdao Beer listed in the Hong Kong capital market in1993, there were63companies listed both in the capital market of developed countries and districts and Chinese capital market at the end of2010. With the increasing of the number of the cross-listed companies, compared with the non-cross listed companies, they have their own features at the aspect of earnings quality, corporate governance, enterprise value, these features can also reflect the features of our capital market. The former literatures has studied the features of the cross-listed companies from different angle, and the research of comparing the earnings quality of cross-listed companies and non-cross-listed companies is a popular research topic, and the former researches of this topic have got the consistent conclusion, and the conclusion is the cross-listed companies have higher earnings quality compared with the non-cross-listed companies. However, all of these researches compared the earnings quality of cross-listed companies and the non-cross-listed companies from the static angle, and they did not compare the comparison results from the dynamic angle.The former research results have been proved by researching the earnings quality of Chinese cross-listed companies. However, there are some changes happening in our capital market, the supervision efficiency, the investor protection level of our capital market is not weaker than the.foreign capital market, so the former research results may be not right. Recently, with the development of Chinese capital market, the introduction of creation part and the planning of international part, Chinese capital market has got great development, the supervision level and investor protection level has also get great improvement, the gap with the capital markets of the other developed countries has become smaller and smaller. In addition, since the implement of "New accounting standards", the earnings quality of the cross-listed companies has made great improvement. Although the accounting standards are not the root of conducting earnings management, the strict standards can keep down the earnings management behavior effectively, and this effect can also promote improving the information disclosure level so as to improve the investor protection level.Although the former literatures about the earnings management have improved the conclusion:compared with the foreign capital market, the supervision efficiency of Chinese capital market is lower, the earnings quality of the companies, which listed in the Chinese capital market, is lower than the companies which listed in the foreign capital market. All of these researches were conducted from the landscape orientation, and the portrait comparison is missing.The dissertation will choose Chinese cross-listed companies as the research targets, and compared the earnings quality of cross-listed companies and non-cross-listed companies. The cross-listed companies will choose all of the non-financial companies, and the partner samples will be chose according to the standards of same year, same industry and similar total assets of the year end. In addition, all of the samples will be divided into two groups with the margin of2007, and the earnings quality comparison will be conducted at both these two group of companies so as to prove the development level of our capital market in the international market.This dissertation will inspect the relationship of cross-listing and earnings management from two aspects:at first, the total samples will be treated as the research samples, and the topic of weather the earnings quality difference exists between the cross-listed companies and non-cross-listed companies. secondly, the publish of new accounting standards will be introduced to the model as the dummy variable, and the topic of weather the earnings quality difference between cross-listed companies and non-cross listed companies is changing at the former of2007and the post of2007. And this research is also conducted to prove the development of our capital market so as to prove the effect of the publishing of new accounting standards on improving earnings quality. The dissertation will make use of empirical methods and statistic testing method to test the above two aspects, and the whole dissertation will arranged be concretely as follows:The first part:introduction. This part mainly elaborates research background, research meanings, research method, the main contribution, the main contents, literature review and research train of thought. At the literature review part, the dissertation will be reviewed from the four angles of the motivation of cross listing, the economic results of cross listing, the influence of cross listing on earnings management and research comment.The second part:institution background and theoretical analysis. This part analyzed the meanings of cross listing, the meanings of cross listing, the difference of financial reporting environment between Chinese domestic and foreign market, the influence of cross listing on earnings management. And the researches on the meanings of cross listing are mainly from the two aspects of the concept of cross listing and the motivation of cross listing. According to the research, the motivation of cross listing include the motivation of dealing with the market segmentation, the motivation of decreasing the information asymmetry, the motivation of increasing the liquidity of stock, the motivation of unleashing the discovery function of stock price. The meanings of earnings management will be researched from the four aspects:the concepts of earnings management, the theoretical basis of earnings management, the main methods of earnings management and computation methods of earnings management. There are four differences between the reporting environment of Chinese domestic market and the foreign market, including the difference of standards of entering and withdrawing the market, the difference of legal environment, the difference of accounting information disclosure and the difference of logos of investor investment. The influence of cross listing on earnings management will be researched from the aspects of investor protection, market agent and the fame of auditors.The third part:research design. The research hypothesis of this dissertation will be provided according to the literature support and theoretical analysis at this part. The data source and sample selection standards of this dissertation will be introduced according to the research hypothesis. The explained variables, the explaining variables and the control variables will also be defined at this part. And the model of this dissertation will also be constructed according to the hypothesis and the variable definition.The fourth part:the analysis of empirical results. At this part, the research hypothesis will be tested by describe statistic, typical value testing, relevant analysis and regression analysis, and the results will be explained from the theoretical angle and practical angle. The fifth part:research conclusions, limitation and policy suggestion. This part is the last part of the dissertation. According to the empirical testing results and the research hypothesis, the conclusion about the comparison of earnings quality of cross-listed companies and non-cross listed companies will be got, and the limitation of the research and the future research orientation will also be concluded.The following conclusions can be got by the empirical test:Firstly, from the research angle, the dissertation tests the changes of the earnings quality difference of cross-listed companies and non-cross-listed companies so as to prove the development of our capital market. In addition, the reliability of the dissertation results has been increased by taking different variables to conduct empirical test. This is not only good for knowing the earnings quality difference between cross-listed companies and non-cross-listed companies, but also testing the achievement of our capital market by the development of last several years.Secondly, from the research contents angle, the dissertation compares the earnings quality of cross-listed companies and non-cross-listed companies, many testing methods have been used to increase the reliability of testing results.The limitations of this research include the following aspects:Firstly, for the substitution variable of the earnings quality, this dissertation only chooses the discretional earnings and the other substitution variables.Secondly, the dissertation can not list all of the control variables which will influence the earnings management.Thirdly, the dissertation does not compare the earnings management of the cross-listed companies before cross-listing and after cross-listing.