Empirical Study Ofaccounting Information's Value Correlation In Loss Making Company

Since the financial crisis, there is a corresponding increase in the number of Loss making companies. The company's financial information is important data base for investor to make decisions and for regulatory agencies to draw up the delisting and bankruptcy mechanisms. Therefore, to explore investors'behavioral characteristics after the publication of loss-making company's annual report and stock price's the main factors is particularly important.There have been many results in the domestic Study of the Value Correlation of accounting information from loss making company. However, these studies focused primarily on the overall research of the loss-making company's. There is little research on grouped loss-making company. Is there no difference in the value relevance of accounting information in different loss-making listed companies? In order to answer this question, the essay classified the loss making companies and then tries to study the accounting's influence on stock price.The loss making companies have been grouped into three types: Reversing, Over-investing and Liquidating. First, Earnings capitalization model has been used to measure the earning influence on stock price under different type loss making companies. And the results show that there exists no obvious direct correlation between earnings and stock prices, which is true when it comes to every type of companies. Secondly, Ohlson model has been used to measure the correlation between equity book value and stock prices. The results demonstrate that the correlation is significant and the equity book value has incremental information content. Lastly, net cash flow from operating activities has been introduced into the model as a variable in order to measure its influence on stock prices. We have found that the influence is significant only in Over-investing companies.