Does Harmonization of Accounting Standards Lead to the Harmonization of Accounting Practices? A Study from China

Songlan Peng, York University
Rasoul Tondkar, Virginia Commonwealth University
Joyce Van Der Laan Smith, Virginia State University
David Harless, Virginia Commonwealth University

ABSTRACT. In this study we examine whether China’s efforts to converge domestic accounting standards with International Financial Reporting Standards (IFRS) have been successful in the harmonization of Chinese listed firms’ accounting practices with IFRS. We evaluate harmonization of firms’ accounting practices from three perspectives: (1) compliance with Chinese GAAP and IFRS, (2) comparability of accounting choices under Chinese GAAP and IFRS and, (3) identification of the earnings gap produced under Chinese GAAP and IFRS.

Using the 1999 and 2002 annual reports of 79 Chinese listed firms we find improvement in both compliance with IFRS and in the comparability of annual reports prepared under Chinese GAAP and IFRS. We also find a reduction in the difference between Chinese and IFRS-based net incomes from 1999 to 2002 as the result of the promulgation of 2001 Chinese GAAP. Overall our findings suggest that in China the harmonization of accounting standards has been a conduit to the harmoni

Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.

Back to Session Listing