An Empirical Study On Accounting Earnings,cash Flow And Stock Price Value Relevance

Accounting earnings had been always regarded as the most important index to make decisions for a long time.People think accounting earnings is strong relevant with stock price,and it is the standard of purchase stock. But accounting earnings which based on, it may be controlled by company. So People have to doubt whether accounting earnings is relevant with stock price.More and more researches found that cash flow is much more useful than accounting earnings.It is necessary to make a research about problem of accounting earnings,cash flow and stock price value relevance.Then we can Provide investors with valuable reference of efficiently using accounting information and will be helpful to Promote rational investment.Author takes 3342 listed companies from the year of 2005 to 2007 as the research sample,try to get the key of the problem. In the end,we get the conclusions:Accounting earnings is strong relevant with stock price.Earning company can get more information from it,but losses barely get it.Cash flows can Pass important information to investors, but compared with accounting earnings, the later have more information content.When we think of the information content of earnings, operation activities cash flows, investment activities cash flows and Financial activities cash flows represent more information content at the same time.