The Research On Usefulness Of Accounting Information For Decision-Making In Public Companies In The Agriculture Sector

With ever expanding scales of public companies and standardization of information disclosure criteria, improvement on usefulness of accounting information for decision-making in public companies in the agriculture sector, who have"special assets"and"special produce mode", has not been proven. With respect to this issue, this paper tested whether the uniqueness of public companies in the agriculture sector has effects on usefulness of their accounting information for decision-makings or accounting information released by public companies in the agriculture sector contains valuable contents.In chapter one in the paper, theoretical knowledge and experience proof are obtained through thorough research on relevant literatures.Chapter two describes basic characteristics of public companies in agriculture sector and their accounting information inclusive of definition of public company in the agriculture sector, its industry distribution, development status, and confirmation, calculation, and exposure of"special assets"and"special income mode". All the above provides background for the paper's theoretical analysis and empirical research.From chapter three this paper, from the perspective of information, tested information contents in accounting information from public companies in agriculture sector. At first, the empirical study on the relationship between unanticipated surplus information and stock market abnormal return found that the market showed proper responses to surplus information of public companies in the agriculture sector yet the responses have obviously dispersion. Second, the test focused on which kind of information in the surplus information from public companies in the agriculture sector would transfer more valuable signals. The test shows that the market responded positively to items such as unanticipated main operational profit, business profit, and investment yield etc. but the business profit has the opposite direction. The unanticipated variation of net profit and total profit has no information contents. In chapter four, the test on the unanticipated variation of cash flow indicates that information contents in cash flow of public companies in the agriculture sector are very limited and it barely has information contents. However, the joint test on both investment yield and main operational profit shows that cash flow information has effects on profit statement information. The result of the information contents test on profit statement and cash flow statement shows that the market on the statement release day does not respond significantly, but respond in two weeks after the information release, which shows the accounting information from the public company lag behind. This does not match information perspective. Finally, the paper focuses on how the market responds when the market absorbs the balance sheet information through setting up financial ratios based on the information from both the profit statement and the cash flow statement. The objective is to see from the quantities angle how the investors in public companies in agriculture sector responds to non-surplus information. The test shows that information contents in non-surplus information from public companies in agriculture sector are limited and that the market does not respond to variation of other indices except for return on asset, quick ratio, and asset and liability ratio etc. The result does not conform to the anticipated assumption.The tests used in chapter three, chapter four, and chapter five are all processed based on the information perspective while chapter six tested from the valuation model perspective effects of accounting information released by public companies in agriculture sector on stock price estimation. In another words, the research is conducted on how inappropriate corporate value estimates by the market is affected by recorded corporate value in accounting. We use net profit per share and net asset per share in our regression calculation and came up with pick-stock function. At the end of April when all financial reports are released to public, we used pick-stock function value to select stocks and formed an investment portfolio, and calculated the investment return after a half year, and decided if the return is appropriate. The test shows that the reported accounting information does not have positive effects on stock prices of public companies in agriculture sector and that the quality of accounting information from public companies in agriculture sector needs to be improved.The last chapter discussed the reasons of low informative contents in accounting information from public companies in agriculture sector. This paper concludes that lack of detailed accounting rules and regulations for agricultural sector in our current general accounting system in China has caused low informative contents in accounting information from public companies in agriculture sector. Based on the result of the empirical study this paper offers the following suggestions: 1. to promote detailed accounting rules and regulations for the agricultural sector. 2. to perfect security markets, especially to support and train rational institutional investors, and import short-sell mechanism.