Work

New Chinese Accounting Standards and the Usefulness of Accounting Information in Debt Contracts

Year: 2013

Type: article

Abstract: This paper investigates whether the usefulness of accounting profitability in debt contracts changes after the adoption of the new Chinese accounting standards (“NCAS”) in 2007. We find that the sensitivity of new debts to accounting profitability declines after the adoption and that firms are heavily influenced by the adoption of the new accounting standards and experience a more significant decrease in sensitivity. Moreover, such a decrease in sensitivity is more pronounced for non-state-owned companies than for state-owned companies. Overall, our results indicate that the usefulness of accounting profitability decreases after the adoption of the new accounting standards.

Source: China Accounting and Finance Review

DOI: 10.7603/s40570-013-0003-x

Authors: Hongqi Yuan, Yubo Li, Fang Lou, Yao Zhang

Institutions: Fudan University, Shanghai University, Shanghai University of Finance and Economics, Tongji University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Funder: National Natural Science Foundation of China

Award: 上市公司关联交易监管研究