Is Accounting Performance in China Mean Reverting?
中国A 股公司业绩变化是否均值回归?

Using Chinese stock market data,the article tests the "mean reverting" hypothesis about earning dynamics.Because "mean reverting" hypothesis is based on perfect market competition,but China has other specific institution background which affect earning dynamics significantly,whether this hypothesis be true in China is an empirical issue.The result refuses "mean reverting" hypothesis: the good firm performance is too persistent,and once good firms become bad firms,these firms' performance are also persistent.These results are consistent with other research findings about Chinese A'share firms,and are correlated with earning management.