Disclosure Quality of U.S. Listed Chinese Companies: A Direct Comparison with U.S. Domestic Companies

Abstract

This paper tests whether there is a discrepancy between the disclosure quality of U.S. listed Chinese companies and that of U.S. based companies. In order to numerically measure disclosure quality, six indices are applied to 40 sample companies, including 20 U.S. listed Chinese companies and 20 U.S. domestic companies, and each index is followed by a paired sample t-test or a Chi-square test to quantify if there is a significant difference between the disclosure qualities of the two groups of companies. Based on our sample companies, there is no significant discrepancy between the two sets of companies financial reporting qualities. This work contributes to the literature of cross-listed Chinese companies by focusing on the fundamental question whether these companies reporting is truthful.