Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers
We find that Chinese reverse merger (RM) firms exhibit lower financial reporting quality than U.S. RM firms, which in turn have poorer financial reporting quality than U.S. regular firms. These results indicate that the use of RM process is associated with poor financial reporting quality and the we...
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sg-smu-ink.soa_research-20252013-05-14T05:30:08Z Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers CHENG, Qiang CHEN, Kun-chih Lin, Ying Chou Xiao, Xing Lin, Yu Chen We find that Chinese reverse merger (RM) firms exhibit lower financial reporting quality than U.S. RM firms, which in turn have poorer financial reporting quality than U.S. regular firms. These results indicate that the use of RM process is associated with poor financial reporting quality and the weak legal enforcement on Chinese RM firms exacerbates the problem. Moreover, the financial reporting quality of Chinese RM firms is inferior to that of other Chinese firms listed in the U.S. Compared with other Chinese firms listed in the U.S., Chinese RM firms exhibit lower bonding incentives and poorer corporate governance. Overall, the results indicate that the RM process provides foreign firms that exhibit low bonding incentives and poor governance with a “shortcut” to Wall Street, leading to poor financial reporting quality. 2013-01-01T08:00:00Z text https://ink.library.smu.edu.sg/soa_research/1026 Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Accounting |
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Accounting CHENG, Qiang CHEN, Kun-chih Lin, Ying Chou Xiao, Xing Lin, Yu Chen Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers |
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We find that Chinese reverse merger (RM) firms exhibit lower financial reporting quality than U.S. RM firms, which in turn have poorer financial reporting quality than U.S. regular firms. These results indicate that the use of RM process is associated with poor financial reporting quality and the weak legal enforcement on Chinese RM firms exacerbates the problem. Moreover, the financial reporting quality of Chinese RM firms is inferior to that of other Chinese firms listed in the U.S. Compared with other Chinese firms listed in the U.S., Chinese RM firms exhibit lower bonding incentives and poorer corporate governance. Overall, the results indicate that the RM process provides foreign firms that exhibit low bonding incentives and poor governance with a “shortcut” to Wall Street, leading to poor financial reporting quality. |
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text |
author |
CHENG, Qiang CHEN, Kun-chih Lin, Ying Chou Xiao, Xing Lin, Yu Chen |
author_facet |
CHENG, Qiang CHEN, Kun-chih Lin, Ying Chou Xiao, Xing Lin, Yu Chen |
author_sort |
CHENG, Qiang |
title |
Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers |
title_short |
Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers |
title_full |
Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers |
title_fullStr |
Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers |
title_full_unstemmed |
Does foreign firms' shortcut to Wall Street Cut short their financial reporting quality? Evidence from Chinese reverse mergers |
title_sort |
does foreign firms' shortcut to wall street cut short their financial reporting quality? evidence from chinese reverse mergers |
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Institutional Knowledge at Singapore Management University |
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2013 |
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https://ink.library.smu.edu.sg/soa_research/1026 |
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1770571523722051584 |