Housing Prices and General Economic Conditions: An Analysis of Chinese New Dwelling Market

This paper presents an investigation of the interaction between housing prices and general eco- nomic conditions in China for the period of 1986-2002. The empirical results indicate that housing prices in China are predictable by market fundamentals, which could explain most of the variations in housing prices. The results of Granger causality tests confirm that unemployment rate, total population, changes in con- struction costs, changes in the consumer price index (CPI) are all Granger causalities of housing prices, with feedback effects observed to affect the vacancy rate of new dwellings, changes in CPI, and changes in per capita disposable income of urban households. Studies with impulse response functions further illustrate these relationships in terms of the degree of the impact on housing prices from the determinants and the feedbacks. The findings indicate that there is a long-term equilibrium relationship between housing prices and market fundamentals in China and it is the identified fundamentals that drive housing prices up, rather than a bubble.

Do goodwill impairments affect audit opinions?Evidence from China

There has been a steady growth of goodwill impairments in the Chinese stock market since the adoption of the impairment approach in accounting.The influence of goodwill impairments on a firm’s financial position and profitability give reason to doubt its current and future performance.We examine whether auditors,as a crucial external monitor,identify the information risks of goodwill impairments and express their concerns about financial reporting quality in their audit opinions.Using a sample of firms listed on China’s Ashare market from 2007 to 2017,we test the association between goodwill impairments and the type of audit opinion received in the same financial period.Our findings are as follows.First,the probability of receiving a modified opinion increases with the amount of goodwill impairments.Second,the positive association between goodwill impairments and modified audit opinions is driven primarily by earnings management risks.Third,this positive association is more salient when auditors are industry experts and there is no auditor–client mismatch.Fourth,auditors are more sensitive to the amount of goodwill impairments than to their mere existence.Overall,we document that auditors perceive goodwill impairments as a signal of information risks and communicate their concerns to investors to avoid litigation.