Haiyan Zhou
Temple University
Heibatollah Sami
Temple University
Abstract: This paper is the first one to systematically address the difference in the value relevance between the accounting information prepared and audited under the Chinese GAAP for A-share investors and under the international accounting standards (IAS) for B-share investors in China. The study reports three primary findings. First, accounting information is relevant to the pricing process in both the A-share market and the B-share market. Second, the value relevance level of accounting information is different between the A-share market and the B-share market. The accounting information in the B-share market is more value relevant as expected. Finally, the value relevance level of accounting information in the A-share market was low in earlier years, peaked in 1996, and then decreased due to changes in disclosure environment. These findings have implications for policy makers on recent moves toward replacing local GAAP with the IAS.
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