An Empirical Study On The Information Content Of Retained Earnings And Cash Flow Of Private Listed Companies

The quality of information content of financial information has always been focused on by people,among which retained earnings is regarded by the market as the most informational core information in the financial reporting.However,with the development of theory regarding 'cash is king',information about cash flow also attracts people's eyes gradually.In our country,private listed companies being a special group have developed very quickly,with the consequence that investors,creditors and other stakeholders pay attention to their financial information.Study on the information content of retained earnings and cash flow in the financial reporting of private listed companies becomes more important,and are they of information content? Whether information content of retained earnings and cash flow of different type of private listed company is different? Will taking account of information content both of retained earnings and cash flow from operation activities deliveries more incremental information to investors?This paper study the questions mentioned above,selecting private listed companies which are listed in Shanghai and Shenzhen security market between 2005 and 2007 as sample,and the following conclusions are reached by Linear regression test:1.retained earnings and cash flow information of private listed companies are of information content;2.The information content of retained earning and cash flow of family founded companies is different from non-family founded companies;3.The information content of retained earning and cash flow is different in different observation time;4.In the private listed companies,the cash flow doesn't have incremental information before the announcement of financial reporting,but do have after the announcement of financial reporting.