Abstract Based on the listed companies which have completed the split-share reform from 2006 to 2007, this paper investigates the economic consequences of the 2007 accounting standards change using the empirical models of value relevance of financial accounting information and institutional environment. Results show that: (1) the new accounting standards change has significantly reduced the value relevance of accounting information; (2) institutional environment has some effects on the consequences of accounting standards change; that is, the “substitute hypothesis” has been verified in the value relevance research. This research contributes to the literatures about the empirical research on the accounting standards theories.
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Received: 14 October 2010
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