Empirical Reseach On The Usefulness Of Md&A In Anuual Report Of Limited Companies In Retail

Management’s Discussion and Analysis, or MD&A, is a kind of the text information, which disclosed in the accounting report of listed companies. Trough the way of the text analysis relevant data in periodic financial statements, the purpose is that MD&A disclosed the risky and uncertainty of listed company for the investors and other stakeholders. The mainly content of MD&A is that a listed company’s management layer had analyzed and evaluated the operation of the listed company in the reporting period, and will predict and judge the information in the next year. Chinese disclosure regulations required MD&A as the independent part of the annual reports and the interim reports, which played a crucial role in the disclosure of information. Whether researched on the usefulness of MD&A or not, it directly reflected the value of the investors’decision in the disclosure of information. At present, our country still lacks the comprehensive research on the usefulness of MD&A, especially lacks of analysis and research on each industry. So, this paper has done it, which has the very vital significance. The selection research object of the paper is MD&A in the annual report of the listed companies in the wholesale and retail trade industry from2007to2009, and the selection variables of the paper researched on MD&A are cost control, expense disbursement, management scale, significant event, product price, product sales volume, intangible assets, market forecast, profit forecast and risk countermeasure, which used the way of Multiple Regression Analysis to differently discuss the relationship of MD&A and forecast future business income or net operating cash flow, and used the way of Event Study to discuss the reaction of MD&A and stock market. Through theoretical research and empirical research, the result of the paper founded that the disclosure of MD&A information of listed company in the wholesale and retail trade industry in China, on the whole, had the significant incremental explanatory power to forecast the future business income and net operating cash flow, then also had made the certain response of stock market and MD&A in a period of time. However, the results also indicated that the phenomenon of Selective Preference existed in the information of MD&A, which a listed company’s management layer in the wholesale and retail trade industry disclosure in our country. Finally, this article is provided with forward related suggestions as the investors and other stakeholders’ perspective information of listed company, and is provided with corresponding reference to develop the MD&A disclosure requirements for the securities regulatory departments in the wholesale and retail trade industry.