Financial Statement Effects of Adopting New Accounting Standards Converging with International Practices
Utilizing comparison of accounting numbers prepared under two accounting standards for the same year,this paper examines the financial statement effects of adopting new accounting standards that converge with international practices in China.The value relevance of book value of equity and net income is smaller under new standards than under the old ones.New standards reduce persistence of net income.The incremental information analysis finds no evidence that new standard adjustments have incremental information contents.Including minority shareholders' interest into book value of equity and minority interest income into net income reduces value relevance of book value of equity and net income.The analysis does not find evidence that new accounting standards improve timeliness of accounting income,but finds that new standards improve conditional conservatism of operating income.