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Conservative Accounting, IFRS Convergence and Cash Dividend Payments: Evidence from China

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  • William Bradford
  • Chao Chen
  • Song Zhu

Abstract

We investigate the governance role of conservative accounting in mitigating the creditor–stockholder conflict by affecting firms’ dividend policies, and how the convergence to International Financial Reporting Standards (IFRS) affects the governance role of conservative accounting as it relates to dividend policy. We analyze data on Chinese listed firms from 2000 through 2011. The use of conservative accounting reduced cash dividend payouts, thereby playing a governance role by mitigating the firm's creditor–stockholder agency conflict. However, China's convergence to IFRS reduced the governance role of conservative accounting on dividend policy by reducing the accounting conservatism of listed firms in China.

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  • William Bradford & Chao Chen & Song Zhu, 2017. "Conservative Accounting, IFRS Convergence and Cash Dividend Payments: Evidence from China," European Financial Management, European Financial Management Association, vol. 23(3), pages 376-414, June.
    • Handle: RePEc:bla:eufman:v:23:y:2017:i:3:p:376-414
    DOI: 10.1111/eufm.12114
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    Cited by:

    1. Hakim Lyngstad{aa}s & Johannes Mauritzen, 2023. "Adults in the room? The auditor and dividends in small firms: Evidence from a natural experiment," Papers 2301.11079, arXiv.org.
    2. Yuan‐Teng Hsu & Chia‐Wei Huang, 2020. "Why do stock repurchases change over time?," European Financial Management, European Financial Management Association, vol. 26(4), pages 938-957, September.
    3. Hakim Lyngstadås & Johannes Mauritzen, 2024. "Adults in the room? The auditor and dividends in small firms: evidence from a natural experiment," Empirical Economics, Springer, vol. 67(5), pages 2207-2240, November.
    4. Shkulipa Lyudmyla, 2021. "Analysis of Impact of Changes in IFRSs on Convergence of Accounting Systems in World," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 31(3), pages 75-103, September.

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