A Study On The Usefulness Of Forward-Looking Information Disclosure In MD&A

The form of modern economic society competition is complicated and the intensity of competition is increasing, so companies in the fierce competition environment are required to constantly adjust their own competition state, adapting to this trend. In the past, perhaps traditional accounting statements with a balance sheet, income statement and cash flow statement, are enough for investors in daily investment information demand, but in the modern economic society with fierce competition, they have been unable to meet the needs of diversified investors. The non-financial information is getting its importance, because it can help investors to judge the company's future value. Therefore, its strategic value is becoming more and more important for investors.Under investors'strong demand of forward-looking information, the MD&A disclosure system which is introduced by China securities regulatory commission (CSRC) from the United States becomes the information communication bridge between company's internal management and external investors. Represented by "the outlook for the future development of the company", the MD&A forward-looking information provides investors with an understanding of the company's development strategy, business plans and goals, future capital needs and usage, next year's earnings forecast and so on. So it has a unique value for investors because it can meet investors'diversified information demand. In addition, the real estate industry belongs to the typical capital-intensive industry in which every project needs large amount of financial support, so investors would face huge risks. So investors will focus on the forward-looking information of listed real estate companies, including the feasibility of the project, the source, adequacy and usage of capital. Based on the above reasons, this paper sets the latest revision of the annual accounting standards as the starting point, studying the real estate companies' MD&A forward-looking information disclosure's usefulness during 2007 to 2013. Hope that this research can provide guidance for investors to use forward-looking information disclosure, and to protect the interests of the investors. At the same time, this paper hopes to help the real estate industry realizes its forward-looking information disclosure status and existing problems.This paper is divided into seven parts, the main research contents are as follows:The first part:introduction. This part focuses on the research background and research significance of this paper, and briefly summarizes the research methods, the research content and research ideas of this paper. The main task of this section is to introduce the research motive of this study and set this paper's framework for the whole research.The second part:the system research. This part expounds the MD&A forward-looking information disclosure system's evolution process.The third part:the literature review. This part presents a reasonable review of available literatures in the MD&A forward-looking information disclosure situation and the MD&A forward-looking information disclosure usefulness respectively. The MD&A forward-looking information disclosure usefulness literature review is subdivided into two parts:the role of forecasting earnings and its market reaction. The main purpose of this section is to help the understanding of present status of forward-looking information disclosure research.The fourth part is the theoretical analysis and hypothesis. This part analyzes the MD&A forward-looking information disclosure by using four classic theories and on this basis, this paper puts forward two research assumptions.The fifth part is the empirical design. This section aims at selecting samples, selecting variables and building models.The sixth part is the empirical test. This part carry on the procedures including descriptive statistics of selected samples, multiple regression analysis and robustness testing to provide evidence that the MD&A forward-looking information disclosure can help investors in earnings forecast and the MD&A forward-looking information disclosure have effects on market reaction.The seventh section is about the empirical conclusion and suggestions. This section gives a summary based on the above research and puts forward the policy suggestions, and puts forward my study's existing problems and shortcomings, and points out the direction for the later research.