Analysis On The Relevance Of Stock Price With Financial Information Of Chinese Listed Companies

The financial accounting information assist in making financial decisions is the basic function of financial accounting, which is the basic element of the development of capital market.analysis on the relationship between financial information of listed companies and stock price served for the development of both financial accounting theory and practices of our security market.Feltham-Ohlson model is one of the most popular and widely cited valuation models in developed countries. It joined the companies'balance sheet,income statement and cash flow statement to explain the relationship between the financial information and the value of the companies from a new perspective. Currently, more and more studies center on Feltham-Ohlson model in western countries because it provides a new direction for empirical studies of accounting .Based on the Feltham-Ohlson model, this paper combined with the practical experience of western countries and the characteristics of China's stock market to study the relevance of stock price and financial information. The empirical study was divided in two parts. Firstly, based on two key indicators: earnings per share and net assets per share , it studied the relationship and its inherent changes of stock price and financial information during the past ten years on samples of year 2000 to 2010. Secondly, on the basis of the first study, the paper combined the former two key indicators with the proportion of rate of return (ROE),profit margin to explain the limits of the research, examining the value of the relevant accounting data on the impact of correlation and thus a more comprehensive exploration of China's investment decision-useful financial information, as well as the applicability of Feltham-Ohlson model in Chinese stock market.The results of this study confirmed that the financial information in China's capital markets have considerable usefulness in financial decision-making,which reveals that although the capital market is still a new market, investors have accurate judgments on the direction of financial information indication. To some extent,the results of this study proved Feltham-Ohlson model's applicability in the domestic market. However, more analyses in depth are needed to enrich the studies.