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    Foreign primary listings and earnings quality

    Access Status
    Fulltext not available
    Authors
    Cong, Lingmei
    Van der Zahn, J-L.
    Tower, Greg
    Date
    2011
    Type
    Conference Paper
    
    Metadata
    Show full item record
    Citation
    Cong, Ling Mei and Van der Zahn, Mitchell and Tower, Greg. 2011. Foreign primary listings and earnings quality, in Accounting and Finance Association of Australia and New Zealand Conference, Jul 3-5 2011. Darwin, NT: AFAANZ.
    Source Title
    Accounting and finance
    Source Conference
    2011 AFAANZ Conference
    Additional URLs
    http://www.afaanz.org/openconf/2011/modules/request.php?module=oc_proceedings&action=view.php&a=Accept+as+Paper&id=299
    ISSN
    1328-780X
    School
    School of Accounting
    URI
    http://hdl.handle.net/20.500.11937/19394
    Collection
    • Curtin Research Publications
    Abstract

    Establishing the firm's primary listing on a foreign rather than domestic capital market is a phenomenon virtually unique to firms from the People's Republic of China (PRC). This study determines whether earnings quality varies between PRC-domiciled firms with a foreign primary listing and counterparts with a domestic primary listing. It further investigates possible explanatory factors (i.e. place-of-listing and share type) influencing variations in earnings quality. The analysis of 501 PRC-domiciled firms provides support for bonding theory indicating the earnings quality of PRC foreign primary listed firms is statistically significantly higher than domestic primary listed firms. Moreover, earnings quality difference exists across PRC firms with different places-of-listing and share types. Higher earnings quality amongst PRC-domiclied foreign primary listed firms is due to the higher regulatory requirements in Hong Kong and Singapore.Findings suggest risk-averse international investors may find purchasing shares in PRC-domiciled foreign primary listed firms (i.e., H-Share, Red-Chip, and S-Share) to be a more prudent investment option. Overall, perceptions of poor quality of PRC-domiciled firms listing abroad may affect investor interest and confidence therein damaging future PRC growth prospects. The PRC authorities may need to improve the regulatory rigour to protect the nation's investment reputational capital.

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