There are big ripple effects for investors since U.S. IPOs by Chinese firms will keep surging and such online criticism will continue to impact trading.
Blogger and other sites making the charges include SeekingAlpha and Citron Research.
"We know (these bloggers) don't do true, proper forensic investigation when they come out with these reports. There's a lot of stuff (about Chinese companies) that's false, misleading and creating a lot of negative feelings in the marketplace," said Mitchell Nussbaum, the chair of New York law firm Loeb & Loeb's emerging-markets practice, which represents Chinese companies in the U.S. "On the other hand, it appears that some â€” but far from all of these companies â€” have gamed auditors to a degree."
Bloggers are sticking by their guns. "No allegations made on (alfredlittle.com) have ever been disproven by the companies targeted," blogger Alfred Little said in an email interview. "Therefore, what alfredlittle.com provides to investors is a valuable service. And yes, those who have early access to the reports have made a killing shorting the phony stocks," said Little, whose posts appear on SeekingAlpha.
The controversy is stirring calls for more reliable Chinese corporate data. At the end of bilateral talks in Washington in May, U.S. and Chinese officials said they're seeking ways to stiffen oversight of accounting firms "that provide audit services for public companies in both countries."
Bloggers' other recent targets include Deer Consumer Products (NASDAQ:DEER - News) and fertilizer and feed maker Yongye International (NASDAQ:YONG - News).