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The Impact of US-CN Audit Agreement on US-listed Chinese Companies and Its US Peers
- 1 Washington University in St. Louis
- 2 Xi'an Jiaotong-Liverpool University
- 3 University of Nottingham Ningbo
- 4 The Chinese University of Hong Kong
* Author to whom correspondence should be addressed.
Abstract
This paper examines the US-CN Audit Agreement’s influences on investors’ reactions towards US-listed Chinese companies and the potential spillover effect on US domestic listed companies with the same auditors that Chinese companies have. The sample consists of 282 Chinese US-listed companies and 3986 U.S. companies with the same auditors as those Chinese companies. We then compare the average stock return of U.S.-listed Chinese companies and the U.S. companies based on the sample period for the stock return data begins from July 27, 2022, to Aug 29, 2022. By using T-test separately, we found that U.S. companies have higher average stock returns in the previous 21-days period, and in the 3-day announcement window, the difference in stock returns between U.S.-listed Chinese companies and U.S. companies is not material. Therefore, we document that although investors become so alarmed by the publication of the US-China Audit Agreement that stock returns suffer. As a result, the success of US-China audit cooperation will increase investor confidence and help Chinese companies' stock returns and mitigate the negative effects.
Keywords
US-CN audit agreement, stock return, spillover effect, binding hypothesis
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Cite this article
Zhang,Y.;Chen,Y.;Wang,Z.;Gong,J. (2023). The Impact of US-CN Audit Agreement on US-listed Chinese Companies and Its US Peers. Advances in Economics, Management and Political Sciences,20,47-56.
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