Study On The Usefulness Of Non-financial Information Of Listed Companies Annual Reports

Management's Discussion & Analysis(Hereinafter referred as MD&A)is business operating review of the report period and future development prospects by the management in period reports,which is importmant non-financial information. MD&A can make the investors understand the financial statements and future development prospects and business risks in the management perspective, and also offer future information about listed companies that traditional finiancial statements cannot offer. MD&A is a reprocessing of the relative numbers of the financial statements audited, and also a extension of the the financial statements audited. The main purpose of information disclosure is to reduce the information asymmetry of the capital market. As capital is a scare resoure, establishing a effective capital market and optimizing the capital configration are significant to promote a good and steady growth of economy. Nowadays, is the information disclosure of MD&A useful? It is not only a important theoretical problem, but also a important realistic problem. More and more investors pay more attention to the reading and using the information of MD&A .The thesis mainly focuses on the usefulness of MD&A by selecting the loss-making listed companies of Shenzhen Stock Exchange during 2007 and 2008 as sample and taking MD&A of these companies as research object. The information about business operating review and future development prospects are collating by hand. The thesis studies MD&As on the perspective of usefulness.Firstly, the thesis reviews the fomer achivements from domestic and foreign researchers. Secondly, the thesis introduces the institutional change and theoretical foundation of information disclosure of MD&A. The next, the thesis demonstrates the usefulness theoretically on the basis of feature such as perspectiveness, speciality, complementariness, intelligibility and decision relevance of MD&A. The next, the thesis does empirical research on whether MD&A offering incremental information to forecast the performance based on the sample of 118 loss-making listed companies of Shenzhen Stock Exchange during 2007 and 2008. The study results show that the external causes, internal causes and the measures to reduce the loss are strongly associated with the performance of loss-making listed companies the coming year so that the information disclusure of MD&A is significant to investers. At last, the thesis suggests that supervisory authority should consummate the auditing system of MD&A and strengthen the management of MD&A information disclosure.