Social Norms, Investment Rating and the Quality of Accounting Information

DOI: 10.5176/2251-2039_IE17.32

Authors: Ren Chunyan, Hu Ying

Abstract: Using Chinese A-share listed companies’ financial data and institutional investment rating data between 2010 and 2014 and multiple regression models, this paper empirically analyzes the relationship between the quality of accounting information and analysts’ investment ratings. The results show that China’s listed companies improve the quality of their accounting information under the pressure of negative investment ratings. Analysts take the quality of accounting information into consideration when dealing with the enterprises. This dissertation provides the corresponding theoretical suggestions for how to play the role of the implicit supervision of investment ratings to improve the quality of accounting information. This paper contributes to the literature by providing evidence on analysts’ perception of accounting information quality. It also extends the research of corporate governance from the perspective of social norms. The results corroborate the important role of social norms in corporate governance.

Keywords: Social Norms; Investment Rating；Quality of Accounting Information; Earnings Management