Identifying Points of Tension for Financial Reporting: China
Being seen worldwide as a ?hot place? for capital investment, China has indeed offered many opportunities for capital investors internationally. Equity investment to Chinese companies via stock exchanges is one of them. This type of investment can be beneficial for Chinese companies when they are in need of capital for development. As companies in China collectively are new and thus in their early stage of growth, they may likely offer international investors higher investment returns, compared to their more matured counterparts from developed economies (Ramezani et al, 2002). This potential win-win situation, however, needs to be based on a condition: that is, international investors need to be able to understand Chinese companies. Then, it would be possible for them to make informed investment decisions. Otherwise, this type of investment may take place with high uncertainty and thus high risks (Dow and Werlang, 1992). This situation can be harmful for the international investors and, if pervasive, can become a significant barrier for international capital investment to Chinese companies.?
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Labour and Management in Development; Vol 12 (2011)