The Incremental Information Content Of Accounts Receivable Of Listed Companies In China

With the development of market economy, the credit transaction will play increasingly important role. The accounts receivable has been attached more and more attention to as a principal item in corporate finance management, since that item has the significant impact on the operation of company. In more details, its effects are mixed: on the one hand, the account receivable is helpful to increase the market share and enhance sales revenue; on the other hand, its negative effects involved retarding the company to gather the payment for goods, reducing the cash inflow, increasing the cost to manage accounts receivable, and enlarging the management risk. For recent years, the amount of accounts receivable of listed companies has gained striking increase in China, which make our study on it interesting and meaningful. To some extent, the large amount account of accounts receivable indicates operation uncertainty of listed companies in the future.Through reviewing related literatures and analyzing specific market background of our country, this thesis examines samples of manufacturing listed companies in China to investigate the incremental information cont of accounts receivable. Firstly, a descriptive analysis to accounts receivable in recent years has been demonstrated. Secondly, this thesis applies a na?ve model to calculate unpredicted accounts receivable, and then discusses the relationship between unpredicted accounts receivable and future performance (sales, earnings and profit margins) of listed companies, and thus the incremental information cont of accounts receivable in China has been exposed; at last, this thesis employs the measure of abnormal returns and the method of OLS to study the response of stock market to the information cont.This thesis concludes from the empirical research that: in recent years, the amount of accounts receivable has exhibited a clear upward trend in China, which even surpassed the increasing rate of income and profit from principal operations. Unpredicted accounts receivable that transmits the bad news of firm performance is negatively related to future sales and profit margins, which conform to the earnings quality explanation. The stock market's response to accounts receivable's information is not remarkable in our country, and thus its implied information to the investor has the very limited usefulness. Investors in our country hadn't realized or hadn't directly used this information to make their decision on the direction of investment. Research...