Does Ifrs Convergence Improve Quality of Accounting Information? - Evidence from the Chinese Stock Market

This paper aims to examine whether the 2007 IFRS converged Chinese GAAP has improved the quality of accounting information for investors in the A-share market in China. We analyse investor’s reaction to financial information released pre and post IFRS convergence in China. Multiple regression analysis was employed using data from 309 listed Chinese companies. The findings of this study show that earnings per share, relative to book value of equity, is a stronger explanatory factor of market return in both the preand post IFRS convergence periods, suggesting that investors rely heavily upon earnings released by listed companies when making security price decisions in the Chinese stock market. The results also suggest that investors’ reliance on the income statement information for investment decisions becomes greater in the post IFRS convergence period.