Chinese Accounting Restatement and the Timeliness of Annual Report

Abstract

Chinese accounting restatements are mainly disclosed in companies’ annual reports due to unique Chinese institutional background and regulatory setting. Using manually collected data of 1050 accounting restatements from 2003 to 2011, we study the association between Chinese accounting restatement and the timeliness of annual report. The results from our difference-in-difference research design indicate that with an accounting restatement, a company takes longer to file its annual reports in the post-restatement period than in the pre-restatement period, suggesting a negative association between Chinese accounting restatements and timeliness of annual reports. When further examining the association between various restatement characteristics and timeliness of annual reports, we find an overall negative association between restatement severity and the timeliness of annual reports. We contribute to the existing accounting restatement literature from international perspective with evidence that restatements delay the timeliness of financial reporting.

Keywords: accounting restatement, timeliness of annual report, disclosure

JEL Classification: M4