A Deep Analysis of the Impact of the Difference between IFRS and CAS Net Profits on International Investors

Jingtong Liu

doi:10.47297/wspdecWSP2515-797311.20250905

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A Deep Analysis of the Impact of the Difference between IFRS and CAS Net Profits on International Investors

Volume 9, Issue 5

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A Deep Analysis of the Impact of the Difference between IFRS and CAS Net Profits on International Investors
A Deep Analysis of the Impact of the Difference between IFRS and CAS Net Profits on International Investors
Nanchang Hangkong University , Nanchang, Jiangxi, 330100, China
Vol. 9, Issue 5, Pages: 56-62(2025)
Published：31 May 2025
DOI：10.47297/wspdecWSP2515-797311.20250905
Accepted：

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Liu Jingtong.A Deep Analysis of the Impact of the Difference between IFRS and CAS Net Profits on International Investors[J].Development Economics of China,2025,09(05):56-62.
DOI：

Liu Jingtong.A Deep Analysis of the Impact of the Difference between IFRS and CAS Net Profits on International Investors[J].Development Economics of China,2025,09(05):56-62. DOI： 10.47297/wspdecWSP2515-797311.20250905.

摘要

Abstract

In the context of increasing global financial integration

the consistency and transparency of accounting information have become crucial for cross-border investment decision-making. This study examines the impact of discrepancies in net profit reporting under International Financial Reporting Standards and Chinese Accounting Standards on international investors' perceptions of Chinese firms and their subsequent investment behaviors. Drawing on information asymmetry theory

the study constructs a theoretical framework linking differences in accounting standards to investor uncertainty and capital allocation efficiency. Using a sample of Chinese firms dually listed in domestic and international markets

the analysis incorporates net profit reconciliation data

stock prices

and foreign ownership ratios. Empirical results reveal three key findings: (1) significant differences exist between IFRS- and CAS-reported net profits; (2) these differences are systematically associated with specific accounting policy choices such as revenue recognition and impairment testing; and (3) larger discrepancies are negatively correlated with foreign shareholding ratios and exhibit lower value relevance in stock pricing models. The findings highlight the informational advantages of IFRS-based reporting in mitigating asymmetries and improving investor confidence. This study contributes to the literature on financial disclosure quality and offers practical implications for standard-setters and firms seeking to enhance transparency and attract international capital.

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references

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