| China's securities market reforms of non-tradable shares in 20051aunched the 2006-2007 bull market. The "sudden wealth" case in stock market leaded a growing number of listed companies plunge into the securities speculation in the secondary market, but paid little attention to the main operators. Although the outbreak of the U.S. sub prime lending crisis in 2007has led to the global financial crisis, and then the Bull market turned into the Bear market, but the securities speculative of listed companies in China continue to be motivated.At the same time, the Ministry of Finance issued new accounting standards in 2006and implemented it in all the listed companies on January 1,2007. A major highlight of the new accounting standards is the full use of fair value measurement attribute. At the same time, there have been some short-term investments and income items of the listed companies, such as the trading financial assets and the financial assets available for sale and the gain/loss of the change of fair value, which entered in the balance sheet and income statement.Generally speaking, the listed companies are the investing object in the stock market, rather than investors. The listed companies are also different from other small retail investors and professional institutional investors, because they have essential differencesin the investing object,the former investsprimarily inthe real economy, the latter invests primarily in the virtual economy.Chinese listed company'ssecurities speculation behaviorfor the purpose ofgetting short-term spread income is to shiftthe burden and steal the show.The listed companies pay more attention to short-term securities speculation, rather than"main" business, whichwilladversely affect the main businessdevelopment strategies and the stability of securities markets.At the same time, in the context of the new accounting standards, the listed companies'fair value information of the financial assetswill convey to the existing and potential investors in the market through the financial statements.Therefore, as the important part of accounting earnings, the listed companies' securities speculation gain/loss will have a significant impact on the market valuation and market pricing decisions of the existing and potential investors.In view of this, the paper intends to address the following two main issues:(1) What are the deep-seated motivations inducing factors of Chinese listed companies securities speculation?From the perspective of Corporate Finance, thelisted companies engage insecurities investment in the secondary market, which may for the following purposes, that is some kind of strategic considerations, risk management, short-term fund management. However, the Chinese listed companies'behavioral characteristics of securities investment show that the securities investment is essentially a securities speculation. Listed companies are too keen on speculative short-term securities, which will result in the inadequate supply of funds in the main business development, bring about the significant business risk and financial risk of the main business sustainable development,ultimately would damage the company's overall value.In general, the management of listed companies and shareholders can reasonably see the adverse impacts,but why there will be more and more listed companies for short-term securitiesspeculation in china?As the investment object of the listed companies is different from other investors, therefore, the people's speculative nature cannot effectively explain the listed company's securities speculation behaviors. Chinese listed companies securities speculation should have a deeper level inducing factors, this study attempts to find the important motive factors.(2)What are the economic consequences of the Chinese securities speculation?The economic consequences of the Chinese securities speculation are to affect the market valuation and market pricing decisions of the existing and potential investors. The listed companies'securities speculation earnings (including gains and losses) enter into the income statement by the return on investment and the gain/loss of the change of fair value, and become the important part of the accounting profits of listed companies. Therefore, the information of the listed companies'securities speculation earnings will convey to the existing and potential investors, and then change their investment decisions. In view of the importance of securities speculation earnings in corporate profits, it is necessary to explore what are the economic consequences of the securities speculation from the view of investors'decision-making. By studying the earnings persistence and the value relevance of the securities speculation earnings, this paper attempts to discover whether there are mispricing about the listed companies' securities speculation earnings or not.Thinking through these questions, the following sections are arranged in order to achieve the purpose of this study.The first chapter is an introduction. This chapter is the beginning of the paper. Firstly this chapter gives the research background and research purposes, then presents the research ideas and the paper structure, and then explains the research methods, and finally addresses research significance and innovations.The second chapter is the literature review and theoretical basis. This chapter reviewed the literature and make briefly reviewed in three aspects, which are the determinants of the securities speculation behavior motivation, the listed company earnings persistence, the value relevance of non-recurring gains and losses. At the same time, this chapter gives the three theoretical bases of the securities speculation behavior motivation of the listed companies and the economic consequences of the securities speculation, which are the investment myopia theory, the free cash flow theory, and the residual income valuation model-RIVM theory. This will provide research base for the words that follow.The third chapter is the analysis of the listed companies'securities speculation behaviors. Firstly this chapter defined the concept of the listed companies'securities speculation behaviors and analyzed the speculative nature of Chinese listed companies'securities investments. Then, this chapter analyzes the overall speculation atmosphere in Chinese stock market, at the same time, the combination of listed companies securities speculation expenditure data and securities speculation gains/losses data in China stock market 2007-2008,analyzes the overview of the listed companies' securities speculation and discusses the impacts. Finally, the chapter further explores the motives determinants of the listed companies'securities speculation and the adverse effects by the cases of two listed companies'securities speculation.Chapter four is the study design. This chapter describes the theory analysis and research assumptions, data sources and sample selection, empirical model and variable settings. And tends to test the behavior motivation and the economic consequences of the Chinese listed companies'securities speculation from the three aspects, which are the securities speculation motives inducing factors, the earnings persistence of the Chinese listed companies'securities speculation gains/losses, the value relevance of the Chinese listed companies'securities speculation gains/losses.Chapter Five is Empirical Tests. This chapter tested the behavior motivation and the economic consequences of the Chinese listed companies'securities speculation from the three aspects, which are the securities speculation motives inducing factors, the earnings persistence of the Chinese listed companies' securities speculation gains/losses, the impacts on the existing and potential investors the market valuation and market pricing decisions of the Chinese listed companies'securities speculation gains/losses. Empirical test results are divided into descriptive statistics and analysis, statistical regression results and analysis.Chapter VI is Conclusions, Implications and Prospects. This chapter is the end of the paper. Firstly this chapter summarized the above conclusions, and then presented the theory inspiration and policy recommendations, finally gave the lack of research in this paper and made thinking about the future direction for further research.This paper studies the content of the above arrangement, reached the following conclusions:(1)The nature of Chinese listed companies'securities investment is the securities speculation, which represents the investment myopia philosophy of the listed company management.(2) China's listed companies interested in short-term securities speculation, which mainly due to the poor growth of listed companies and the opportunistic earnings management of the listed company management.(3)The Chinese listed companies'securities speculation gains/losses is the low-quality temporary earnings, the investors misprice the securities speculation gains/losses, the investors depend on the aggregate accounting profits information to make the valuation and pricing decisions on the listed companies.The main innovations of this paper are: (1) The first time, this paper gave a more comprehensive discussion of the Chinese listed companies'securities speculation possible inducing factors. Study found, in addition to "human instinct" and "salary distortions," and "take-over", new evidence to explain short-term securities speculation, which are the listed company's main business growth factors and the opportunistic earnings management factors of the listed companies'management. Also found that the listed company's financial leverage has played a very good "debt control effect" for the short-term securities speculation. This enriched and developed the investment myopia theory and the free cash flow theory, helped the listed companies promote the strategic change of main business development and achieved the effective internal control of the listed companies'short-term securities speculation, but also helped regulators accomplish effective supervision.(2)This study is the first systematic examination of the temporary surplus features of the Chinese listed companies'securities speculation gains/losses, and discusses the forecast ability of the adjusted income excluding securities speculation gains/losses,verified that the Chinese listed companies'securities speculation gains/losses is the low-quality temporary earnings, which provided evidence for CSRC classifying the Chinese listed companies' securities speculation gains/losses as non-recurring gains and losses. It also helps the existing and potential investors distinguish and understand the different economic implications between the sustainable main business benefits and the temporary securities speculation gains/losses.(3)This study is the first systematic examination of the impacts on the investors'market valuation and market pricing of the Chinese listed companies' securities speculation gains/losses, and then found the evidence of the investors' mispricing of the listed companies'temporary securities speculation gains/losses. This will provide important inspiration for the regulation of the Chinese listed companies'securities speculation behavior, the regulation of the fair value measurement of the listed companies' securities speculation gains/losses, the regulation'of the information disclosure regulations of the listed companies' securities speculation gains/losses, the investor education in stock market.
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