Study On The Market Relevance Of IPO Companies' Earnings Forecasts

It is in the beginning for domestic research on the earning forecasts of the IPO companies. The focus of research in this field is the reliability of the earning forecasts and its influencing factors, but there are a few of researches in the value-relevance of earning forecasts. What's more ,the conclusions of these studies are not unanimous. The accounting information (contained earning forecasts information) disclosed by companies must be useful for decision-making , if not, they will not disclose it .This can be explained by the quality request for accounting information and the principle of cost-effectiveness. So, in order to test the value-relevance and the usefulness of decision-making of the IPO companies' earning forecasts I use the method of positive study to study the market reactions on the information .In my study .I set up a price model .In this model the interpreted variable is the closing price per share after the financial report be disclosed ,the interpret variable is the earning forecasts per share .and the control variable is the net asset per share. Also, in this model I consider many other factors such as ,the accuracy of the forecasts, the policies ,the size of the companies , the liquidity of the stocks ,and so on. The results of my tests are listed as follow: First, on the whole, there is a strong correlation between the earning forecasts and the share price in the capital market; Second, the net assets per share also has strong reaction to the market, but the reaction is slightly lower than earning forecasts'. Third , Various factors comparative study of the samples showed that with the difference of these facts the value-relevance of earning forecasts are different.