Ownership, Board Structure and Informativeness of Earnings – Evidence from an Emerging Market

Michael Firth
Hong Kong Polytechnic University

Peter Fung
Hong Kong Polytechnic University

Oliver M. Rui
Hong Kong Polytechnic University

Abstract: This study extends previous studies by empirically examining how ownership and board structure affect the informativeness of earnings for companies listed in China. We proxy for informativeness of earnings by using the earning return relationship and discretionary accruals. The results show that different ownership (government, corporate and foreign) and board structures affect the informativeness of accounting earnings. We find that concentrated ownership is negatively related to earnings coefficients and positively related to the magnitude of accrual adjustments. This research has implications for Chinese regulators who are striving to improve corporate governance and transparency.

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