| February 15,2006, the Ministry of Finance issued the "Accounting Standards for Enterprises-Basic Standards"and 38 specific criteria, a total of 39 corporate accounting standards, in order to achieve China’s accounting standards substantive convergence with International Financial Reporting Standards, Even equivalent. 2007, great changes have taken place in the securities market, one with the completion of the share reform, the original sponsor of the non-tradable shares can flow; Second, big bull market in stock market. Some investment used fair value in accordance with the new standards, resulting in a substantial investment of listed companies’reported profits and net assets increased greatly, known as "cross-shareholdings under the irrational exuberance ". In 2008, the stock market fell sharply, listed companies’reported profits and net assets decline sharply which with large investments. China’s capital market’volatility is often in a series of trend, that is, according to the broader market up or down. This phenomenon coincided with foreign scholars’(Morck、Yueng'Yu (2000)) results, China’s phenomenon is very serious. If the enterprise’s surplus of information can be accurate and timely delivery each company’specific information, Investors can identify all earnings information. The volatility of different companies will show their own characteristics, rather than to follow up with the broader market up and down. Only in such circumstances, the securities market will fully reflect his pricing function and role in improving the efficiency of capital allocation.Accounting Standards as rules of the generation of accounting information system, it will not only play its role in regulatory supporting, but also affect the quality of accounting information, especially earnings quality. From the implementation of the new guidelines have been started more than three years, many researchers cared the implementation of new guidelines and carried on a series of studies about criteria. Existing documents about earnings quality information most based on the sample previous 2006,Those research lack of relative states. This paper intends to fill the vacancies on this research to provide some timeliness and value of the evidence. Since China adopted the new accounting standards, the quality of information, the degree of the quality merits,be able to achieve to the decision usefulness of information? How the extent of the performance the individual impacted by stocks capital market or by industry? Is the earnings quality associated with stock price synchronicity in a certain? These problems are this paper want to solve. In order to enrich literature about accounting earnings quality and Stock price synchronicity, to improve the operation of China’s capital market,promote the reform of accounting standards and strengthen supporting of the regulation experience in accounting information, and legislative and executive bodies considered the indicator of earnings in the stock issue issuance, placement, and suspension policies and so on. Based on this background and necessity, chose A-shares in Shanghai and Shenzhen stock markets as a research object, research relevance about earnings quality and stock price synchronicity.The basic principles defined the new target of financial accounting "corporate accounting should be faithfully reflect the financial position, operating results and cash flows and other aspects of useful information, to meet the information needs of all parties concerned to help users make economic decisions, And reflects the fulfillment of fiduciary duty in management ". Meanwhile, information disclosure, such as disclosed in the notes of specific guidelines are also strict requirements, specification of information in accounting standards and other system level has made some substantial progress. However, can these provisions enhance the quality of information to achieve the system’original objectives? Accounting earnings is the primary information, as opposed to cash flow, dividend policy and other indicators, the information user is more dependent on earnings data. If accounting earnings and stock prices have a certain link, the disclosure of accounting earnings information is useful for decision-making,this view has also been recognized by researchers. Therefore, the earnings quality is the most talked about and representative accounting information, it can be said that accounting earnings is one of the most important and most comprehensive, the indicators are most concerned by information users. The concept of earnings quality produced in the U.S. securities industry the 20th century first 30 years, O’Glove study persistence of earnings quality for the first time. Until now, the academic definition of earnings quality has not unified view, as their research purposes and standards to define its meaning. However, the definition of earnings quality is divided into two aspects by many documents:one is the surplus of information are related to decision-making by investors, one is a unusual items of surplus can show the level of future earnings. Classify the earnings quality in this paper such as earnings quality is persistence, predictability, stability, smoothing, timeliness earnings from the characteristics;Earnings quality include the manipulation of accruals and non-manipulation of accruals items; earnings quality is the market reaction to earnings information content from the capital market point. Based on the "utility of information theory", the research results of Beaver, this article divide earnings quality into permanent and temporary surplus earnings. Using fully diluted earnings per share and excluding non-recurring gains and losses per share as earnings quality’alternative variables, While operating cash flow per share earnings under control in order to better observe the relationship between earnings quality and stock price synchronicity.The company’s stock price generally able to reflect market, industry and company information at three levels.(Piotroski、Roulstone, 2004):The information of the market and industry will affect the entire capital market or a certain industry, fluctuated in stock in the same direction. Stock-price synchronicity, Refers to the relationship between the individual company’s market price changes and market average changes, the stock price of "the same up with the down".the stock price synchronicity raised by Roll (1988) in the financial Conference in United States first, flourished in Morck、Yeung'Yu (2000).It focused on the measure, the formation mechanism and the economic consequences from historical documents.The empirical researches about earnings quality, stock price volatility have three ways:Cumulative average excess returns, analysis of variance and the earnings response coefficient, the author chose the second one. Individual price will be independent of changes in the market or industry. Stock price synchronicity is lower, so the researchers will determine the number of company characteristic information as the stock price synchronicity standards. Its’ quantitative use asset pricing (R2) or frequency analysis, author chose the first one.The biggest difference between the two methods is that the former can better characterize the nature of stock price information, this feature more in line with the contents of this paper. So using the 2008 rate of return of individual stocks, market and industry, then converted into a weekly return, then established to get each company’s R2.Based on "Information and Efficiency theory", the size of R2 reflect the degree of proprietary information or character information in company, R is larger, the stock characteristics of the information contained in the company will be less, the stock price synchronicity is higher. LaPorta et al.(1997) propose national accounting policy, legal environment, the Government securities market conditions will affect the information of stock. MYY (2000) found that:Compared to global market,in the case of a relatively complete system, investors will gain the nature of the company information more dynamic, the stock price will be more characteristics information of the company, researching the relationship between earnings quality and Stock price synchronicity have practical significance in new guidelines.This paper is divided into six parts, the first chapter is an introduction, second and third chapters is a literature review about earnings quality、stock price synchronicity. The fourth chapter analyzes the core theory of this paper, the theoretical analysis of empirical assumptions, the fifth chapter is the empirical results of data analysis, the sixth chapter of conclusions and policy recommendations.This study applies the model and empirical, quantitative and qualitative methods, taking into account the issue and purpose of this study, chose main empirical method. Using 2008-2009 Shanghai and Shenzhen A shares of the sample, study the correlation between earnings quality and stock price synchronicity. First, using weekly return of the stock market and the industry, each company handover to get the goodness of fit, coefficient of determination(R) can be used as synchronization’alternative variables. Then, using fully diluted excluding non-recurring gains and losses EPS, Dividend plan as the explanatory variables, while controlling operating cash flow per share, institutional investors and other variables, multiple regression analysis they relationship.Combined pearson and spearman test results study the earnings quality, capital market efficiency and rationality of investor reaction to information. Finally, in order to avoid some motivation, business management manipulate the current short-term of earnings,author use the a quarter earnings per share delayed, study its effect on stock price synchronicity.The conclusions:(1)the regression results by 2008, comparing with previous researchers, China have declined in synchronization after implemented new guidelines, stocks appear better characteristics information on company level, but the difference of each company’s synchronicity is larger, that has need to be perfected.(2)After regression with fully diluted EPS and stock price synchronicity analysis:Earnings quality and stock price synchronicity is negatively related, earnings quality is better, investors are able to get information more fully and accurately from the companies’earnings. The volatility of individual stocks is lower as broader market trends, can reflect the characteristics information of the companies.(3)With EPS delayed a quarter,empirical results suggest that:earnings quality is better in 2008, empirical correlation results increased than before indicating that the adjusted information reflected reduced than before.(4)Dividends plan on the impact of stock price synchronicity, making stocks changed with the broader market "the same up and down", a positive correlation with the stock price synchronicity. (5) investors are able to distinguish the temporary surplus and permanent surplus in a certain extent. Finally, provide some suggestion about institutional, institutional investors, training investors, and the inadequacies of the article. |
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