Article ID Journal Published Year Pages File Type
1006106 Journal of Accounting and Public Policy 2008 11 Pages PDF
Abstract

In Chinese stock market, firms reporting two consecutive annual losses are subject to special treatment (ST), with further losses causing the firms’ stocks to be suspended from trading or to be delisted. We argue that these earnings-based delisting requirements are misconstrued. Such policies drive financially healthy firms out of stock market, and induce listed firms to engage in rampant earnings manipulation in order to avoid delisting. The results carry important public policy implications for securities market regulation.

Keywords
Related Topics
Social Sciences and Humanities Business, Management and Accounting Accounting
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