Research On The Information Content Of Non-routine Profit/loss Of Listed Companies

Since 1999, the CSRC requires listed companies to disclose "non-recurring gains and losses, after deducting the net profit, " since the non-recurring gains and losses caused by the listed companies and investors sufficient attention. SFC starting point of the policy is controlled using non-recurring gains and losses to manipulate profits in order to achieve the allotment, issuance, and to avoid delisting and other purposes. But there are signs that adjustment in the financial report disclosed profit is likely to mislead investors. Meanwhile, the international accounting standards is to uphold the concept of comprehensive income reporting, restrictions on enterprises to gain items classified as "extraordinary items" or "non-recurring profit and loss" in the report. Therefore, whether China should insist on mandatory disclosure of non-recurring gains and losses, and scholars put forward different views.In this context, of non-recurring profit and loss information for decision-making usefulness of our investors to measure the non-recurring profit and loss information effect of mandatory disclosure system, has great practical significance. In this paper, the Shanghai Stock Exchange A share of 2005-2008 data, the Commission required listed companies to disclose in its annual report earnings per share and after deducting non-recurring income and earnings per share target price to test the correlation between two indicators of information content differences, especially after deducting non-recurring profit and loss per share compared with earnings per share targets are more useful indicators of decision-making with the information gain. This article also compares the vertical non-recurring gains and losses each year the information content of the trend, for the assessment of non-recurring gains and losses of China's decision to disclose the usefulness of the information provided empirical evidence.This article is divided into four parts, all parts of the main elements are as follows:The first part of the background. China's listed companies by widespread non-recurring items for earnings management, regulating the behavior of accounting profits. Low quality of accounting earnings information affecting the information users of Enterprise Performance assessment. Earnings management based on control, and enhance accounting information relevant considerations, China Securities Regulatory Commission developed a non-recurring profit and loss information on mandatory disclosure system. However, the implementation of the new Guidelines, the current system, the surplus of information disclosed in the intelligibility and reliability deficiencies gradually. Meanwhile, the international authoritative standard setting bodies and securities regulators insist on a comprehensive income concept, rules restrict companies have part of the proceeds will be defined as "extraordinary items" in the report. In this context, of non-recurring profit and loss information for decision-making usefulness of our investors have important practical significance.The second part related theories and assumptions. Information Content of Accounting Earnings began in the late 20th century 60. According to the theory, the surplus of information will cause investors published estimates of future dividend changes, which affect their decision-making, thereby affecting the stock price. Information content of earnings related research that the movement of capital markets can be expected, for the regulators, investors and the capital market are important. Earnings Information Content There are two main ways:the event study method and the associated research methods. Both have advantages and disadvantages, considering the actual situation of China's capital market and to learn from the experience of previous scholars, this event study around the study design.The third part literature review. Summary of foreign non-recurring gains and losses for the research, some scholars believe that the deduction of earnings after extraordinary items do have a higher value relevance, but there is also evidence that the market did not respond properly to the very project. Specification of the domestic securities market that our widespread use of non-recurrent gains and losses for earnings management behavior. Empirical study shows that after deducting non-recurring profit and loss accounting earnings targets may have information gain, but the evidence is not sufficient. Most scholars believe our investors do not correctly understand the different earnings components of the decision on the price effect, the disclosure of non-recurring profit and loss profit and loss of system effectiveness is questionable.Part IV is divided into study design and sample. In this paper, the following hypothesis can be tested:H1:Earnings per share annual reports with the stock price indicator related to information content; H2: deduction of the annual report, after non-recurring profit and loss per share and stock price indicator related to information content; H3: After deducting non-recurring profit and loss per share target information content than the higher earnings per share targets; H4:After deducting non-recurring profit and loss information content of earnings per share target of an increasing trend. This study samples from the Shanghai Stock Market A Shares during the period 2005-2008 to 100 randomly selected listed companies, and in accordance with certain conditions were screened. This case study of the time window identified as annual reports 15 days before and after the day and set up two models to test the relevant hypotheses.The fifth part is empirical. First, descriptive statistics for sample analysis, results showed that the annual reports of listed companies to disclose the non-recurring gains and losses Overall, non-recurrent income; annual report disclosure of earnings per share and net non-recurring profit and loss targets caused some market reaction. Event study regression analysis showed that:earnings per share (EPS), excluding non-recurring gains and losses after the earnings per share (DEPS) and earnings per share and after deducting non-recurring gain or loss the difference between earnings per share (EPS-EPS) in a certain period of time and price are related with the amount of information, assumptions, and assumptions of a second set; deducting non-recurring gains and losses after the earnings per share (DEPS), in some periods associated with the incremental information and prices, assuming three set up in some period; deducting non-recurring gains and losses after the earnings per share (DEPS) of the information content is not as time goes by, there is a significant increasing trend, assuming that 4 does not hold.Part VI Conclusions and policy recommendations for the evidence. The existing system and the concept of the new accounting standards contradictions, can not adapt to the new requirements of the guidelines, while the existence of functional defects in the current system, and more preferred regulatory policy level, insufficient attention to the small and medium investors. Non-recurring gains and losses for the particularity of disclosure issues, the paper that the financial reports of listed companies in the non-recurring gains and losses on Information Required disclosure system should be abolished, it is with international standards inevitable. The current system of audit functions can be retained. Regulators may ask for additional, separate report allotment of corporate earnings excluding special items of net profit, together with the special audit opinion the auditor. However, there is no need to mandate that all listed companies in the financial report, disclosure of the very project. Limited capacity, this paper, the research design, sample and concluded there is still so limited, the future research can expand the scope of the sample, the longer range capital gains and losses information visit the information content.