IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v43y2022i1p262-271.html
   My bibliography  Save this article

Other comprehensive income, corporate governance, and firm performance in China

Author

Listed:
  • Yan Wang
  • Yuan George Shan
  • Zhuqian He
  • Changheng Zhao

Abstract

This research is based on a data set comprising 6260 firm‐year observations from listed companies on the Shanghai and Shenzhen Stock Exchanges during 2009–2015, and the results indicate that other comprehensive income (OCI) disclosure generally improves firm performance, whereas earnings management reduces firm performance. The study also finds that OCI disclosure and corporate governance are complementary in restraining earnings manipulation and promoting firm performance, and there is a causal relationship between OCI disclosure and earnings management to affect firm performance.

Suggested Citation

  • Yan Wang & Yuan George Shan & Zhuqian He & Changheng Zhao, 2022. "Other comprehensive income, corporate governance, and firm performance in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(1), pages 262-271, January.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:1:p:262-271
    DOI: 10.1002/mde.3382
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.3382
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.3382?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Liu, Jianan & Stambaugh, Robert F. & Yuan, Yu, 2019. "Size and value in China," Journal of Financial Economics, Elsevier, vol. 134(1), pages 48-69.
    2. April Klein & James Rosenfeld, 1991. "Pe Ratios, Earnings Expectations, And Abnormal Returns," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 14(1), pages 51-64, March.
    3. Steven Cahan & Michael E. Bradbury, 2016. "Discussion of ‘Other comprehensive income: a review and directions for future research’," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(1), pages 47-58, March.
    4. Kim, Jung Hoon, 2016. "Presentation formats of other comprehensive income after accounting standards update 2011-05," Research in Accounting Regulation, Elsevier, vol. 28(2), pages 118-122.
    5. Shi, Linna & Wang, Ping & Zhou, Nan, 2017. "Enhanced disclosure of other comprehensive income and increased usefulness of net income: The implications of Accounting Standards Update 2011–05," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 139-144.
    6. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance and Equity Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 107-156.
    7. Zhijun Lin & Ming Liu & Carlos Noronha, 2016. "The Impact of Corporate Governance on Informative Earnings Management in the Chinese Market," Abacus, Accounting Foundation, University of Sydney, vol. 52(3), pages 568-609, September.
    8. Shahwali Khan & Michael E. Bradbury & Steven Cahan, 2016. "The volatility of comprehensive income and its association with market risk," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(3), pages 727-748, September.
    9. Tami Dinh & Helen Kang & Wolfgang Schultze, 2016. "Capitalizing Research & Development: Signaling or Earnings Management?," European Accounting Review, Taylor & Francis Journals, vol. 25(2), pages 373-401, June.
    10. Waqas Bin Khidmat & Man Wang & Sadia Awan, 2018. "Corporate governance, earnings management and the value-relevance of accounting information: Evidence from Pakistan," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 1-31, September.
    11. Nicky J. Welton & Howard H. Z. Thom, 2015. "Value of Information," Medical Decision Making, , vol. 35(5), pages 564-566, July.
    12. Steven Cahan & Dirk E. Black & Steven Cahan, 2016. "Other comprehensive income: a review and directions for future research," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(1), pages 9-45, March.
    13. Ujkan Bajra & Simon Cadez, 2018. "The Impact of Corporate Governance Quality on Earnings Management: Evidence from European Companies Cross†listed in the US," Australian Accounting Review, CPA Australia, vol. 28(2), pages 152-166, June.
    14. Shan, Yuan George, 2015. "Value relevance, earnings management and corporate governance in China," Emerging Markets Review, Elsevier, vol. 23(C), pages 186-207.
    15. Brian Bratten & Monika Causholli & Urooj Khan, 2016. "Usefulness of fair values for predicting banks’ future earnings: evidence from other comprehensive income and its components," Review of Accounting Studies, Springer, vol. 21(1), pages 280-315, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yusuf Babatunde Adeneye & Setareh Fasihi & Ines Kammoun & Khaldoon Albitar, 2024. "Does earnings management constrain ESG performance? The role of corporate governance," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(1), pages 69-92, March.
    2. Vasanthan Subramaniam & Mosharrof Hosen, 2023. "Corporate diversification and debt financing: Do family shareholders protect their control rights?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1305-1317, March.
    3. Boachie, Christopher & Mensah, Emmanuel, 2022. "The effect of earnings management on firm performance: The moderating role of corporate governance quality," International Review of Financial Analysis, Elsevier, vol. 83(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sticca, Ralph Melles & Nakao, Silvio Hiroshi, 2019. "Hedge accounting choice as exchange loss avoidance under financial crisis: Evidence from Brazil," Emerging Markets Review, Elsevier, vol. 41(C).
    2. Akhigbe, Aigbe & Makar, Stephen & Wang, Li & Whyte, Ann Marie, 2018. "Interest rate derivatives use in banking: Market pricing implications of cash flow hedges," Journal of Banking & Finance, Elsevier, vol. 86(C), pages 113-126.
    3. Murad Harasheh & Federica Doni & Maria Vittoria Franceschelli & Andrea Amaduzzi, 2021. "The value relevance of Other Comprehensive Income: Extensive evidence from Europe," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3835-3851, July.
    4. HeeJin Park, 2018. "Market Reaction to Other Comprehensive Income," Sustainability, MDPI, vol. 10(6), pages 1-14, June.
    5. Yiting Cao & Qi (Flora) Dong, 2020. "Does reporting position affect the pricing of the volatility of comprehensive income?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(9-10), pages 1113-1150, October.
    6. Grzybek, Olga, 2023. "Are accounting choices for intangible assets informative or opportunistic? Evidence from Poland," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).
    7. Ayres, Douglas & Huang, Xuerong (Sharon) & Myring, Mark, 2017. "Fair value accounting and analyst forecast accuracy," Advances in accounting, Elsevier, vol. 37(C), pages 58-70.
    8. Husam Aldamen & Keith Duncan & Simone Kelly & Ray McNamara, 2020. "Corporate governance and family firm performance during the Global Financial Crisis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(2), pages 1673-1701, June.
    9. Abderrahmane Djaballah & Anne Fortin, 2021. "Value Relevance of Comprehensive Income for the Canadian Market," Accounting Perspectives, John Wiley & Sons, vol. 20(1), pages 49-77, March.
    10. Zeting Zang & Humayun Kabir & Tom Scott, 2022. "Does OCI Presentation for Equity Financial Assets Matter?," Australian Accounting Review, CPA Australia, vol. 32(4), pages 427-439, December.
    11. Schweizer, Denis & Walker, Thomas & Zhang, Aoran, 2019. "Cross-border acquisitions by Chinese enterprises: The benefits and disadvantages of political connections," Journal of Corporate Finance, Elsevier, vol. 57(C), pages 63-85.
    12. Shahwali Khan & Michael E. Bradbury & Stephen Courtenay, 2018. "Value Relevance of Comprehensive Income," Australian Accounting Review, CPA Australia, vol. 28(2), pages 279-287, June.
    13. Neil Fargher & Baljit K. Sidhu & Ann Tarca & Warrick van Zyl, 2019. "Accounting for financial instruments with characteristics of debt and equity: finding a way forward," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(1), pages 7-58, March.
    14. Marhaendra Kusuma & Diana Zuhroh & Prihat Assih & Grahita Chandrarin, 2021. "The Effect of Net Income and Other Comprehensive Income on Future¡¯s Comprehensive Income With Attribution of Comprehensive Income as Moderating Variable," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 205-219, May.
    15. Johannes Thesing & Patrick Velte, 2021. "Do fair value measurements affect accounting-based earnings quality? A literature review with a focus on corporate governance as moderator," Journal of Business Economics, Springer, vol. 91(7), pages 965-1004, September.
    16. Ormazabal, Gaizka, 2018. "The Role of Stakeholders in Corporate Governance: A View from Accounting Research," CEPR Discussion Papers 12775, C.E.P.R. Discussion Papers.
    17. Haroon ur Rashid Khan & Waqas Bin Khidmat & Osama Al Hares & Naeem Muhammad & Kashif Saleem, 2020. "Corporate Governance Quality, Ownership Structure, Agency Costs and Firm Performance. Evidence from an Emerging Economy," JRFM, MDPI, vol. 13(7), pages 1-35, July.
    18. Hearn, Bruce & Li, Jing & Mykhayliv, Dariya & Waqas, Muhammad, 2021. "Asset pricing in the Middle East’s equity markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 72(C).
    19. Hairston, Stephanie A. & Brooks, Marcus R., 2019. "Derivative accounting and financial reporting quality: A review of the literature," Advances in accounting, Elsevier, vol. 44(C), pages 81-94.
    20. Ehalaiye, Dimu & Tippett, Mark & van Zijl, Tony, 2017. "The predictive value of bank fair values," Pacific-Basin Finance Journal, Elsevier, vol. 41(C), pages 111-127.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:43:y:2022:i:1:p:262-271. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.