The Research On The Influence Of Cross-listing On Earnings Quality Under The Moderating Effect Of Accounting Standards Equivalence

As the world economic integration and the rapid development of capital marketinternationalization, capital flows, economic exchanges and corporate mergers andacquisitions have become more frequent between countries or regions. To establish aglobally recognized and high quality accounting standards is particularly urgent. Theinternational convergence and the equivalence of accounting standards is anirresistible trend. Conforming to this trend, the China accou nting standardscommittee and the Hong Kong institute of certified public accountants have signed ajoint statement about the equivalence between the mainland accounting standards forbusiness enterprises and Hong Kong fina ncial reporting standards on December6,2007.Based on the above background, this paper firstly analyzes the situation aboutresearch on cross-listing and the equivalence of accounting standards between Chinamainland and Hong Kong. Then, on the basis of relevant theories, this paperpositively analyses the effect of cross-listing on earnings quality and studies themoderating effect of accounting standards equivalence on the relationship betweenthe two, and further investigates the effect of law rules about investor protection andlaw enforcement on earnings quality, by using data of A-share listed companies andAH-shares listed companies from2002to2011. The results are as follows: earningsquality of AH-shares listed companies are higher than earnings quality of A-shareslisted companies, which suggests companies can improve earnings quality throughcross-listing, and accounting standards equivalence decreases the improvementeffect of cross-listing on earnings quality, that is to say, the difference of earningsquality between AH-share listed companies and A-share listed companies isnarrowed after the equivalence of accounting standards between China mainland andHong Kong, but at the same time, we find that the difference of earnings qualitybetween AH-share listed companies and A-share listed companies still exists.Furthermore, we find that the reason is that there are significant difference of thelaw rules about investor protection and the law enforcement between Hong Kong andChina mainland.According to the above research conclusions, we put forward some policysuggestions from three aspects, such as further advancing the internationalconvergence and equivalence of accounting standards, further perfecting the degreeof the law system about investor protection, and improving the efficiency of the law enforcement, in order to promote the listed companies to provide high quality ofearnings information.