FINANCIAL DISCLOSURE DISPARITY: THE UNITED STATES VERSUS CHINA

Financial statement disclosures enable market participants to make informed economic decisions. This study examines the historical changes in the cultural, economic, and political arenas that led to China's modern financial accounting system and disclosures. Chinese accounting standards have ac...

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Bibliographic Details
Published in:International journal of accounting, economics, and finance perspectives economics, and finance perspectives, 2021-01, Vol.1 (1), p.72-86
Main Authors: Gershberg, Tatiana, Hossain, David, Monsour, Edward Lance
Format: Article
Language:English
Subjects:
Accounting
Accounting systems
Annual reports
Comparative analysis
Cultural Revolution
Economic reform
Financial disclosure
Financial statements
Hypotheses
International Financial Reporting Standards
Politics
Quality standards
Society
Standardization
Technique
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Summary:Financial statement disclosures enable market participants to make informed economic decisions. This study examines the historical changes in the cultural, economic, and political arenas that led to China's modern financial accounting system and disclosures. Chinese accounting standards have achieved substantial convergence with IFRS, while the United States' SEC established GAAP. The authors hypothesize whether there are no differences in the quantity and quality of disclosures between the United States (U.S.) and Chinese companies. To test this hypothesis, the authors examined annual reports and 10-Ks of a matched sample of 137 similarly sized U.S. and Chinese companies from various industries through quantity of disclosures, the prevalence, and the quality of proprietary disclosures. The results revealed that Chinese companies have a significantly higher quantity and quality of disclosures than U.S. companies. We conclude that Chinese companies provide higher quantity and quality of disclosures to remain competitive with the global market.
ISSN:2771-9162