Market Reaction Of Illiquid Asset Disposal Gains And Losses

With the sustainable development of China's capital market, the authenticity, accuracy and completeness of the accounting information of the listed companies have been put forward higher requirements. The accounting information content of the listed companies has aroused widespread concern in academic circles, practice circles and supervision department. As China's securities market started late, there is no comprehensive, in-depth, systematic study about the accounting information content in the academia area. As a component of accounting earnings, non-recurring gains and losses was with incidental, easy to manipulate and lower persistent, and may not have information content and decision-making information, and the more likely to become a means of listed companies to manage earnings.This article does the empirical research on the market reaction of illiquid asset disposal gains and losses, which is one kind of non-recurring gains and losses. The study tests whether the illiquid assets disposal gains and losses content decision-making information. Earnings response coefficients obtained in this paper proved that excess returns and unexpected earnings have a positive correlation, indicating that the accounting earnings effect on stock price movements. Earnings response coefficient of the illiquid asset disposal gains and losses is greater than the one of recurring gains and losses, indicating that gains and loss on disposal of non-liquid assets and recurring gains and losses affect the stock price movements, illiquid asset disposal gains and losses are priced highly than recurring gains and losses by investors. They fail to recognize the different persistence between the gains and losses on disposal of non-liquid assets and recurring profit and losses, the listed companies is likely to use illiquid asset disposal gains and losses to do earnings management.