Audit qualification and timing of earnings announcements: evidence from China

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Date: Sept. 2003
Publisher: American Accounting Association
Document Type: Article
Length: 10,251 words

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Abstract :

This study extends the scope of timing research to China's emerging capital market by examining the effects of audit opinions and earnings surprises on the timeliness of annual earnings announcements, after controlling for firm size, the presence of losses, financial distress, auditor switches, and changes in the Chinese regulatory environment. Based on a sample of listed Chinese firms for 1995-1999, we observe that both audit opinions and earnings surprises have significant effects, as reported in Bamber et al. (1993). We also find a significant effect attributable to the magnitude of negative earnings surprises as shown by Begley and Fischer (1998). In addition, we document a significant interaction effect between audit opinions and earnings surprises. Positive earnings surprises with modified audit opinions are announced significantly later than unqualified negative earnings surprises. Keywords: timeliness of earnings announcements; modified audit opinions; earnings news; emerging market. Data Availability: Data are publicly available from sources identified in the paper.

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Gale Document Number: GALE|A112539668