A Positive Study On The Information Content Of Accounting Earnings And Cash Flows Of Chinese Listed Companies

The research on the information content of accounting earnings and cash flows is very important. First, from the history of the accounting theory, accounting earnings and cash flows are the most important concept in accounting systems, it is the foundation that investors carry on the investment decision. But the traditional financial theory believe that stock price equal to the discount of future dividend instead of future accounting earnings and future accounting earnings based on historical cost and principle of accrual-basis. This will make people doubt about the decision usefulness of accounting earnings, in order to prove it is useful in decision making, researches were being carried on in accounting fields. Secondly, from the view of the condition of our country, after the establish of new China, the accounting theory and practice experience a transition course that go through transition from planned economy to market economy. One important symbol of our market oriented accounting reform is whether accounting earnings have decision usefulness or not, and by examining the value relevance of accounting earnings, we can easily prove that. But in our country, the question of decision usefulness is still in dispute. On one hand, some factors might make the accounting earnings provided with the value relevance, such as: the accounting earnings is paid attention to by the department of higher level, the unity of accounting information and the independence of accounting firms are strengthened. On the other hand, the accounting reform of our country is a progressive course, some factors might make the accounting earnings provided with no value relevance, such as the pluralism and contradiction of the goal of accounting reform, the control of earnings and the distortion of accounting information.The theme of this dissertation is answer the question that whether account ing earning is decision useful in China's security market by the positive research of accounting earnings and cash flows of listed company of ShenZhen stock market in the period of 1999 to 2003. The dissertation is divided into four chapters altogether:Chapter one the introduction, divided into three parts altogether, the first part is to show the purpose and purport of this dissertation. The purpose of this dissertation isanswer the question that whether accounting earning is decision useful in Chin a's security market by the positive research of accounting earnings and cash flows. Second part is to do a descriptive describe of current research situation both at home and abroad. The third part is to state the research contents and frame structure of this dissertation.Chapter two a theoretical foundation, divided into two parts altogether: the first part is to introduce the three accountingParadigms of information perspective, valuation perspective and contract perspective. The second part is to introduce various valuation models and Efficient Market Hypothesis and Functional Fixation Hypothesis, The Models Including dividend discount model,capital assets pricing model, earnings capitalization model, balance sheet mod el and accounting-based valuation model.Chapter three the positive research, divided into two parts altogether. The first part is the research on value relevance of accounting earnings, the purpose of this part is to prove the value relevance of accounting earnings by the analysis of exchange sum and regression analysis of abnormal returns and unexpected earnings. The second part is the comparative analysis of accounting earnings(earnings per stock and returns on assets) and operating cash flow and free cash flow. The content of this part is do correlation analysis and regression analysis through O-F model on accounting earnings, operating cash flow and free cash flow.Chapter four the conclusion and policy suggestions, make a simple summary and put forward relevant policy suggestions on the research results of this dissertation.