Research On The Usefulness Of Infrequent Earnings' Disclosure For Investors' Decision

Earnings'quality can be influenced by infrequent earnings because of its transitory characteristic. In 1999, China Securities Regulatory Commission announced the regulation of infrequent earnings'disclosure at first, and then revised fifthly in October 2008. Usefulness of Infrequent earnings'disclosure for Investors'Decision has been noticed as yet. This dissertation, adopting normative analysis and empirical research method, analyzed the situation of infrequent earnings'disclosure in China nowadays and tested whether investors in China can price each part with different persistence of earnings correctly. Based on these results, the conclusion of research on the usefulness of infrequent earnings' disclosure for investors'decision will be drawn.Firstly, this dissertation illustrated the conception about infrequent earnings and decision usefulness of earnings and systematically summarized the existing research about infrequent earnings, then established the process of this research. Secondly, the situation of infrequent earnings'disclosure in China for recently years was described through the analysis of the standing disclosure system of infrequent earnings in China, the analysis of the incidence and the effectiveness of infrequent earnings occurred by Chinese listed companies, and the analysis of infrequent earning components disclosure. The research hypotheses were proposed based upon previous analysis and the relative conception and tested with samples using Price Model, and then the results about value relevance were achieved to be the empirical research evidence for the research on the usefulness of infrequent earnings'disclosure for investors'decision.Therefore, the brief conclusion is as follows:The infrequent earnings disclosures of the listed companies are better regulated. China's compulsory disclosure regulation of the infrequent earnings improves the decision usefulness of earnings. But because the regulations have the limitations and investors lack for professional knowledge, the infrequent earnings still affect investors'pricing decision especially as the infrequent earnings frequently occurred. This indicates that usefulness of infrequent earnings'disclosure for investors'decision is still limited. At last, suggestions for defining infrequent earnings with principle oriented way and disclosing the infrequent earnings inside and outside income statement are put forward.