Study On Information Content Of Accounting Earnings And Cash Flows

In October302009, Chinese GEM (Growth Enterprises Market) board was listed on Shenzhen Stock Exchange. In the board, the listed companies have smaller scales, higher speed in developing and greater investment risks. And China’s GEM board has its own special market characteristics, for example, high listing price, high PE and having raised large amount of money. These characteristics make them different from the companies in the main board on the aspects of investor groups and investment strategies. As an investor of the GEM board, it is necessary to accurately and objectively evaluate investment value of the listed companies according to their financial statements. So there is significance to study on the information content of accounting earnings and cash flows.This paper reviewed relative literatures, and then collected data from2009to2011to complete an empirical study. Finally, this paper got some conclusions, which may be helpful for investors to make decisions, to give some policy advices and then the GEM market will be built better.This concrete consists of six parts, and the main contents of each part are as follows:The first chapter introduces the background and significance of the correlation of accounting earnings, cash flows and stock prices, then puts forward ideas to this research and writing methods and finally the innovations of this study.The second chapter firstly describes the theoretical basis of the study, and then reviews the relevant literatures at home and abroad.The third part describes the characteristics of the GEM board and its security systems.The forth part describes the assumptions and variables, put forward the sample, data corresponding processing requirements, and model based on the relative relevance and incremental-based association study of the empirical test, and finally draw empirical conclusions on the analysis of the test results.The fifth chapter is the recommendations and prospects, proposing how to further strengthen the value relevance of accounting information on the GEM board.The sixth chapter is about the defects of this paper and to gradually improve future researches.The main conclusions of the study are as follows:1. In the GEM board, the indicator of accounting earnings has information content.2. In the GEM board, the indicator of the cash flows has information content.3. In the GEM board, taking both accounting earnings’indicator and cash flows’indicator into consideration can give incremental information to explain the changes of stock price, and then be more helpful for the investor to make decisions.4. In the GEM board, the information content of accounting earnings is more than that of cash flows.