Journal of
Accounting and Taxation

  • Abbreviation: J. Account. Taxation
  • Language: English
  • ISSN: 2141-6664
  • DOI: 10.5897/JAT
  • Start Year: 2009
  • Published Articles: 209

Full Length Research Paper

Signaling, auditing fees, and earnings surprise before and after split-share structure reform in China

Shaorou Hu
  • Shaorou Hu
  • School of Economics and Management, Shanghai Maritime University, China.
  • Google Scholar
Chenyu Liu
  • Chenyu Liu
  • Faculty of Business Administration, University of Macau, China.
  • Google Scholar
Ming Liu
  • Ming Liu
  • Faculty of Business Administration, University of Macau, China.
  • Google Scholar


  •  Received: 23 March 2023
  •  Accepted: 02 June 2023
  •  Published: 30 June 2023

Abstract

In China, the split-share structure reform (SSR) has many benefits in helping decrease agency costs and normalise the stock markets. This paper explores the specific effects of this policy on firms’ signalling behaviour, audit fee charges and the meeting or beating earnings expectation (MBE) strategy through empirical research into the relations of these three subjects, combined with a cross-sectional analysis of their deeper influences. The outcomes of this study demonstrate that after the SSR, firms have more incentive to convey inside information and signal earnings, the audit fee charged for firms is reduced and firms are more willing to meet earnings expectations.

 

Key words: Split-share structure reform; earnings signalling; audit fees; earnings surprise; management disclosure.