China Accounting And International Accounting In The Form Of Coordination And Physical Coordination Study

IASC(B) has made material progress in harmonizing accounting standards ( Formal Harmonization ) since 1970s, Whether harmonized accounting standards harmonizing accounting practice is a common concern of global accounting standard setters and accounting researchers . This research studies if harmonizing Chinese accounting standards with IASs(IFRS) since 1990s has harmonized Chinese accounting practices accounting information quality.Formal Harmonization aims to minimize the gap between different accounting standards expecting to increase comparability and accounting information quality (Material Harmonization) between information prepared following national GAAPs.Research method:This research firstly measures the gap between Chinese GAAP and IASs(IFRS) quantatively to draw conclusions on the comparability of standards, then focuses on the comparability of the information disclosed under Chinese GAAP and IASs(IFRS) by listed companies with both A and B share traded on shanghai and Shenzhen stock exchanges. Accounting quality of the information disclosed under two GAAPs is measured by the value relevance, the conservatism and predictability of the information.Conclusions:This paper finds that there are material gaps between Chinese accounting standard before 2006 and IASs(IFRS) because Chinese GAAP covered less business transactions and events than IASs(IFRS), but all these differences were eliminated by 2006 new standards.Harmonized standards increased the prudence of earning but reduced the prudence of equity under Chinese GAAP, the reconciliations between Chinese GAAP and IASs(IFRS) income and equity disclosed by companies with both A and B shares are: debt reconstruction, government grants, fixed assets recognition and depreciation, revenue recognition , goodwill, start-up costs, investment income, interest capitalization, business combination and consolidation, employee benefits, and intangible assets recognition and amortization.The relevance of earnings and book value under Chinese GAAP with AB share price is higher than earnings and book value reported under IASs(IFRS).The earnings under Chinese GAAP recognizes loss more timely than IASs (IFRS) earnings, although the prudence is lower than earnings reported under IASs in other common law countries. The accrual adjustment under both CASs and IASs does not enhance the ability of current operating cash flow to predict future operating cash flow, which means that the accrual does not meet the expectation of the standards setters to reduce the noises in cash flow to predict future cash flows and earnings.In a word, harmonizing accounting standards only could not bring about the harmonization of accounting information quality, which depends on the reporting environment including corporate governance and protection on investors 'interests.Innovations and contributionThis paper measures accounting quality from the market and non-market perspectives if the harmonized accounting standards have harmonized accounting information quality on Chinese stock market.The author finds the reconciliated items which lead to the differences between earnings and equity between Chinese GAAP and IASs(IFRS), both judgments and accounting standards are contributing factors to the differences between earnings and owner' s equity between Chinese gaap and IASs(IFRS), but the impact of accounting judgement has declined since 2001.Limitations and future researchMeasurement of Material Harmonization of accounting is a new area in international accounting, the author uses the accounting quality to proxy for accounting material harmonization, and the validity of this proxy needs to be further tested. The timeliness of accounting information is determined by the timely recognition of economic losses of earnings under Chinese GAAP and IASs(IFRS), we use negative weighted average return of AB share to proxy for economic losses which depends on the market efficiency of the stock market.The relationship between the indogneity of accounting quality and transplanting of IASs(IFRS) is an interesting field for future research which may bring more relevant results for standards setters. Future research should focus on the factors which affect accounting information quality.