Research On Value Relevance Of Accounting Information Based On Residual Income Model

The current financial report can not truly reflect the ability of creating value of enterprises, to solve the problem, the residual income model offers the solution of classifying accounting information into financial information and operating information, which also offer new way to dig the topic of value relevance.This paper apply the thought to conduct empirical research,to dig on the real connection between financial information and firm value.At first, this paper reviews the historical literature concerning the study on the value relevance of accounting information according to different levels. Then, this paper makes a comment on the shortages those papers presented. Secondly, this paper narrows the definition of three main concepts which includes accounting information etc, and elaborates the theoretical basis of this paper. After that, this paper points out the defects of existing financial report and the necessity of classified presentation of financial information according to the profound analysis of entity’s activities, and on basis of classified presentation of financial information, this paper proposes hypothesises and conducts an empirical research of value relevance.Through the empirical research, the paper concluded that the financial report of classified representation has a higher degree of value relevance than the current financial report, the operating activities have a significant positive influence on the prices of stock, the financial activities have no significant influence on the prices of stock. Based on the conclusion, this paper put forward some relevant advices.