Does State-Owned Capital Manipulate Earnings Responses in China?

Abstract

AbstractThis paper analyzes the relation between state-owned capital factor and earnings quality through Earnings Response Coefficient (ERC) in Chinese stock markets. Our research finds that the ERC is significantly associated with the role state-owned capital plays in the equity structure of the companies in Chinese stock markets. Further analysis indicates that companies controlled by state-owned capital tend to have a better earnings quality.