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Corporate Reporting


New research from ACCA shows international accounting standards in China bring greater transparency for investors and benefit economy

The report Does IFRS Convergence Affect Financial Reporting Quality in China has found that convergence to International Financial Reporting Standards (IFRS) has benefited the Chinese economy, by making accounting earnings more informative and therefore more useful to domestic and international investors.

The researchers examined all Chinese companies listed on the Shanghai and Shenzhen stock exchanges between 2003 and 2009 in order to understand whether IFRS convergence made their reported earnings more informative for investors.

The study looked for changes to the value-relevance of earnings – the degree to which changes in reported earnings affect share prices – and found that this increased following IFRS convergence in 2007, and was almost certainly the result of convergence itself.

The research also revealed that IFRS convergence led to companies improving the quality of disclosures only where there were other strong incentives for them to do so, such as:

  • A high level of dependence on the equity markets for funding
  • Being outside of direct Government control and lacking access to Government subsidies
  • Being based in a less-developed region
  • Having significant foreign ownership 
  • Being a manufacturer.


Published: 26 Feb 2013