Social Security Fund And Value Relevance Of Accounting Information

With the constant improvement of China’s capital market, the institutional investors also encounter the spring of development. According to the theoretical optimal ownership structure, the institutional investors play an important role in the corporate governance structure. However, Social Security Fund, as the main part of the institutional investor, belongs to the state, guarantees by the government’s credibility, supervises by the public, shoulders huge social responsibility, has a special supporting background and perfect management chains. Since2003when Social Security Fund first invested in the stock market, its holding size and number increases every year. It has fixed funding source, strict supervision and prudent investment decisions, it can deeply interpret the national policy, closely follow the national trend, and accurately grasp the investment opportunity. Could it grasp the principles of value investment, practice the active shareholder doctrine, play a leading role in responsible investment, oversight the management behavior, exert governance effect on listed companies, improve the quality of accounting information and earning usefulness, have increasingly become the social concern.Because Social Security Fund invests in the stock market for a short time, there is few empirical literatures which test the governance effect that SSF exerts on listed company. This paper examines whether the SSF could increase the value relevance of accounting information from the perspective of the accounting information quality, answer the relationship between the SSF and corporate governance, also provides the reference and inspiration for the study of SSF investing in stocks.This paper contains the following six parts. The first part is the introduction, which explains the background and significance of the topic, describes SSF institutional background, brings up the research content and framework, also summarizes the research methods and innovations. The second part is the literature review, first introduces the theoretical basis of value relevance from efficient market hypothesis, information concept and value concept, then classifies and comments on relevant literature from three progressive perspective. The third part is the theoretical analysis and assumption proposition, discusses the role of institutional investors and pension fund on corporate governance according to the mechanism of corporate governance as a basis for the assumption. The fourth and fifth part is the empirical study of this paper, respectively is study design and empirical analysis, selects the A-share listed companies in Shanghai and Shenzhen stock market which SSF holds from2008to2012as the research sample, chooses the share price as the dependent variable, while accounting information as independent variable, adds variables of SSF holding proportion to the Ohlson model, the empirical correlation of the social security fund holdings accounting information value, tests the impact of SSF to the value relevance of accounting information by empirical research. The sixth part is the conclusions and recommendations, summarizes the results of empirical analysis and brings up policy recommendations.This paper obtains the following main conclusions:SSF holding stock information has incremental value relevance. The higher stock proportion SSF holds, the higher value relevance that earnings per share and net asset value per share show, which proves that SSF already has some extent involved in the corporate governance and exerted governance effect. The degree of impact on earnings per share is greater than net asset value per share, indicating that investors are more concerned and convinced on the surplus information.The innovation of this paper expresses in the following two parts. Firstly this paper learns from the existing research results about the value relevance, improves the Ohlson price model and introduces new variables, gets rid of the limitations of past research on value relevance which focused on the financial statements and income statement items, extends the research perspectives of value relevance. Secondly, this paper studies the accounting information content of the companies in which SSF invested, illustrates that the SSF investing behaviors able to pass new information to the stock market and improves the usefulness of accounting information, provides new ideas to the research on institutional investors and the social security fund.