The Empirical Study Of The Extraordinary Items Problem Of Chinese Listed Corporations Effect On Profit

Stock market is a market asked for completed information, and only with real and completed information disclosure can it work efficiently. Accounting information is one of the most important kinks in the stock market and has great influence on the investing decisions in the listed company. According to the durative of earnings, net profit can be divided into two parts, namely ordinary profit and nonrecurring items. Investors should distinguish the two different items and estimate whether a enterprise has the durable profitability, which would definitely help them to make their own decisions more wisely. Most western countries require their listed corporations to differentiate their difference and disclose separately. In recent years, Chinese SEC and the general public pay more and more attention to the long-term profitability and demand the listed companies to disclose the nonrecurring items information in the income statement. The nonrecurring items possess a major part and become a vital mean to manipulate profit. When a company starts to decorate its income by the nonrecurring items, it is quite obviously to realize troubles have entered into the company. Although the nonrecurring items can change the appearance of statements, the quality of its accounting information is unreal and, of course the function of prediction falls by a large margin. The issues related to investing decision can be stated as following: a major relevant profit is manipulated by people, the profitability reflected by net index is lack of long-term stability and the validity is doubtful because the index can't be predicted properly. Consequently, investors should lay more emphasis on the nonrecurring items.The attention to profitability, income structure, the quality of income will contribute to proper investing decision.In this paper, the paper systematically expounds the meaning of nonrecurring items related to the definition, and sorts nonrecurring items on domestic and international research literature. Second, the paper analysis the disclosure standards of information of nonrecurring items and disclosing the situation, the specific projects and their impacts of nonrecurring items of listed companies. Then, according to the introduction to the theories and analysis on the current situation, this paper come up with empirical study and establish the MLR to check the influence on profitability, which provides some evidence about the serviceability to the nonrecurring items.