Impact of market segmentation on value-relevance of accounting information: evidence from China

This study examines how the market segmentation policy in China affected value-relevance of accounting information. We find that the price difference between A- and B-shares significantly decreased after the market segmentation policy was diminished in 2001. We also find that the association between A-share price and accounting information increased after 2002. Although the association between share price and accounting information became much weaker for B-shares during the transition period of 2000-2002, this association also increased after 2002. This study provides evidence on how market condition and information environment affect the association between share price and accounting information in China.