Accounting Earnings And Stock Price Behavior

It is the need of the condition of our country and development of China's accounting theory to study the relationship between accounting earnings and stock price behavior. China's accounting theory and practice and standards have experienced a great change since 1980's. The decision usefulness of accounting information, especial earnings data is one important symbol of success of our market orient accounting reform. It is well known that in our transition economy, there are some factors leading to the usefulness of accounting earnings, but others leading to no usefulness of accounting earnings. So it is very interesting to examine the decision usefulness, or value relevance of accounting earnings data through stock price behavior. The theme of this dissertation is studying the market price reaction of accounting earnings (and its disclosure) to answer the question that whether accounting earning is decision useful in China's security market. As by-product of this question, we can find the role of book value, preliminary dividend policy and audit opinion in stock price behavior, and the behavior abilities of investors in capital market and influences of some unique institutional factors on the function of accounting earnings.All is divided into 8 chapters.Chapter 1 is an introduction of some important institutional background of my study. The accounting reform beginning at the middle of 1980's is called the 3rd revolution in the Chinese accounting history. In this revolution, market economy, open-door policy and security market lead more and more important role of accounting earnings. On the other hand, some problems, for example, the multiple objects of accounting, the difference between Chinese GAAP and international practice, the manipulation of accounting data, the weak independence of CPAs, naive of investors, etc., cause people to doubt the usefulness of accounting earnings in stock market.Chapter 2 discusses several theoretical models of valuation function of accounting earnings. Firstly the role of accounting earnings was analyzed within the paradigm of information perspective, valuation perspective and contract perspective, respectively. Then a summary of various valuation models was developed, including dividend discount model, capital assets pricing model, earnings capitalization model, balance sheet model and accounting-based valuation model.