An Empirical Research On The Value Relevance Of Gains And Losses

Having a true and complete disclosure of information is the basis for the effective operation of capital markets, and the accounting information is among the most important, which has critical influence on investors' decision-making. In 2006, China issued the new accounting standards which reflected the change of making reports, from the Revenue-expense View to the Asset-liability View, and the new principle introduced the concept of "Gains and Losses" which used in the international standard, also, it proposed to add a separate sheet-Statement of Change in Stockholders' Equity Accounts. Against this background, the paper separates the comprehensive income into net profit after non-recurring gains and losses and the gains and losses to study the relationship between stock price and gains and losses.This paper points for the following several aspects:The first chapter is an introduction, which introduces the research background and significance, the main research contents and study methods adopted, the innovations and the ideas made, and the framework. The second chapter introduces the connotation and denotation of gains and losses and comes to a conclusion that the definition is similar to the International Accounting Standards and U.S. Financial Accounting Standards, but varied with the UK Accounting Standards. The third chapter is the literature review section, both domestic and foreign capital markets are reviewed, which concludes that the research ideas are from the value relevance of accounting information to the value relevance of earnings information, then converts to the value of non-recurring gains and losses, and ultimately leads to the value relevance of gains and losses. Chapter Four is the empirical research, the paper constructs regression model and makes descriptive statistics. The paper uses the STATA software to make the regression analysis, finally, adds control variables to do the last expansion of the test. At the end of the text, the paper concludes that:gains and losses have significant negative value relevance. Adding the control variables has little effect on the regression results. The fifth chapter is the conclusion and outlook, presents the existing shortcomings and the further research direction.