The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities... more The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People’s Republic of China. Somewhat akin to the SEC in the US, the CSRC carries out investigations to identify and prosecute securities fraud. The aim of this study is to provide some empirical evidence on the impact of the CSRC’s enforcement actions. We find that enforcement actions have a negative impact on stock prices with most firms suffering wealth losses of around 1–2% in the 5 days surrounding the event. Moreover, we find that firms have a greater rate of auditor change, a much higher incidence of qualified audit opinions, increased CEO turnover, and wider bid-ask spreads. The negative stock returns and the costly economic consequences for firms suggest that the CSRC has credibility and its actions have teeth.
China's listed firms report substantial non-operating revenues and expenses. We a... more China's listed firms report substantial non-operating revenues and expenses. We argue that these non-core earnings should have different properties and different valuation implications than operating or core earnings. Furthermore, the different types of firm ownership may have differential impacts on the information content of earnings components. Based on data from 1996 to 2008, we find that core earnings are more
The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities... more The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People’s Republic of China. Somewhat akin to the SEC in the US, the CSRC carries out investigations to identify and prosecute securities fraud. The aim of this study is to provide some empirical evidence on the impact of the CSRC’s enforcement actions. We find that enforcement actions have a negative impact on stock prices with most firms suffering wealth losses of around 1–2% in the 5 days surrounding the event. Moreover, we find that firms have a greater rate of auditor change, a much higher incidence of qualified audit opinions, increased CEO turnover, and wider bid-ask spreads. The negative stock returns and the costly economic consequences for firms suggest that the CSRC has credibility and its actions have teeth.
China's listed firms report substantial non-operating revenues and expenses. We a... more China's listed firms report substantial non-operating revenues and expenses. We argue that these non-core earnings should have different properties and different valuation implications than operating or core earnings. Furthermore, the different types of firm ownership may have differential impacts on the information content of earnings components. Based on data from 1996 to 2008, we find that core earnings are more
The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities... more The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People’s Republic of China. Somewhat akin to the SEC in the US, the CSRC carries out investigations to identify and prosecute securities fraud. The aim of this study is to provide some empirical evidence on the impact of the CSRC’s enforcement actions. We find that enforcement actions have a negative impact on stock prices with most firms suffering wealth losses of around 1–2% in the 5 days surrounding the event. Moreover, we find that firms have a greater rate of auditor change, a much higher incidence of qualified audit opinions, increased CEO turnover, and wider bid-ask spreads. The negative stock returns and the costly economic consequences for firms suggest that the CSRC has credibility and its actions have teeth.
China's listed firms report substantial non-operating revenues and expenses. We a... more China's listed firms report substantial non-operating revenues and expenses. We argue that these non-core earnings should have different properties and different valuation implications than operating or core earnings. Furthermore, the different types of firm ownership may have differential impacts on the information content of earnings components. Based on data from 1996 to 2008, we find that core earnings are more
The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities... more The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People’s Republic of China. Somewhat akin to the SEC in the US, the CSRC carries out investigations to identify and prosecute securities fraud. The aim of this study is to provide some empirical evidence on the impact of the CSRC’s enforcement actions. We find that enforcement actions have a negative impact on stock prices with most firms suffering wealth losses of around 1–2% in the 5 days surrounding the event. Moreover, we find that firms have a greater rate of auditor change, a much higher incidence of qualified audit opinions, increased CEO turnover, and wider bid-ask spreads. The negative stock returns and the costly economic consequences for firms suggest that the CSRC has credibility and its actions have teeth.
China's listed firms report substantial non-operating revenues and expenses. We a... more China's listed firms report substantial non-operating revenues and expenses. We argue that these non-core earnings should have different properties and different valuation implications than operating or core earnings. Furthermore, the different types of firm ownership may have differential impacts on the information content of earnings components. Based on data from 1996 to 2008, we find that core earnings are more
The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities... more The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People’s Republic of China. Somewhat akin to the SEC in the US, the CSRC carries out investigations to identify and prosecute securities fraud. The aim of this study is to provide some empirical evidence on the impact of the CSRC’s enforcement actions. We find that enforcement actions have a negative impact on stock prices with most firms suffering wealth losses of around 1–2% in the 5 days surrounding the event. Moreover, we find that firms have a greater rate of auditor change, a much higher incidence of qualified audit opinions, increased CEO turnover, and wider bid-ask spreads. The negative stock returns and the costly economic consequences for firms suggest that the CSRC has credibility and its actions have teeth.
China's listed firms report substantial non-operating revenues and expenses. We a... more China's listed firms report substantial non-operating revenues and expenses. We argue that these non-core earnings should have different properties and different valuation implications than operating or core earnings. Furthermore, the different types of firm ownership may have differential impacts on the information content of earnings components. Based on data from 1996 to 2008, we find that core earnings are more
The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities... more The China Securities Regulatory Commission (CSRC) is the regulatory body that enforces securities laws and regulations in the People’s Republic of China. Somewhat akin to the SEC in the US, the CSRC carries out investigations to identify and prosecute securities fraud. The aim of this study is to provide some empirical evidence on the impact of the CSRC’s enforcement actions. We find that enforcement actions have a negative impact on stock prices with most firms suffering wealth losses of around 1–2% in the 5 days surrounding the event. Moreover, we find that firms have a greater rate of auditor change, a much higher incidence of qualified audit opinions, increased CEO turnover, and wider bid-ask spreads. The negative stock returns and the costly economic consequences for firms suggest that the CSRC has credibility and its actions have teeth.
China's listed firms report substantial non-operating revenues and expenses. We a... more China's listed firms report substantial non-operating revenues and expenses. We argue that these non-core earnings should have different properties and different valuation implications than operating or core earnings. Furthermore, the different types of firm ownership may have differential impacts on the information content of earnings components. Based on data from 1996 to 2008, we find that core earnings are more
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