Regional Legal Protection and Earnings Management: Evidence from China

Yuyang Zhang, Konari Uchida, Hua Bu

Research output: Chapter in Book/Report/Conference proceedingChapter


This chapter investigates the impact of regional legal protection on the earnings management of Chinese companies. Chinese data provide a time-variant legal protection index, which is advantageous in controlling for time-invariant, non-legal characteristics. We find that regional legal protection reduces earnings management for the period before the implementation of Split-share Structure Reform. The result is consistent with the conventional wisdom that better legal environments are associated with better earnings quality. Further analyses suggest that a significant relation exists especially between the protection of intellectual property rights and earnings management. This result proposes that legal protection mitigates earnings management that aims to prevent technology spillovers. However, there is no evidence that regional legal protection affects earnings management during the Split-share Structure Reform and after the adoption of IFRS-convergent New Accounting Standards.

Original languageEnglish
Title of host publicationCSR, Sustainability, Ethics and Governance
PublisherSpringer Nature
Number of pages23
Publication statusPublished - 2014

Publication series

NameCSR, Sustainability, Ethics and Governance
ISSN (Print)2196-7075
ISSN (Electronic)2196-7083

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Organizational Behavior and Human Resource Management
  • Strategy and Management
  • Development
  • Social Sciences (miscellaneous)
  • Management, Monitoring, Policy and Law


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