An Empirical Analysis Of The Disclosure Of Contingencies And Its Impact On Stock Prices

In the increasingly complicated economic market,listed companies are facing a series of financial risks.With the vigorous development of China's stock market,the signal transmission of accounting information is becoming more and more important.As a kind of special economic event,contingencies have a greater impact on the daily operation,financial status,and future development of the listed companies.The recognition and disclosure of contingencies affects the decision-making of investors.“Corporate Accounting Standards No.Thirteen – Contingencies”,released in February 2006,standardized the specific requirements of the recognition,measurement and disclosure of contingencies,and improved the quality of accounting information,and timely and complete transmission of relevant information to investors.This paper compares the requirements of CAS13 and IAS37.In general,the requirements of these two accounting standards are relatively close.This paper also reviews theoretical researches and empirical researches in relation to the contingencies and its impact on stock prices done by domestic and foreign scholars.The paper uses event study to analyze 2015 A share listed companies' disclosures of contingencies and the impacts on stock prices.The empirical research methods used includes T test,descriptive statistical analysis and multi-variable regression analysis.The results show that(1)the recognition and disclosure of estimated liabilities has a negative impact on the stock prices,and level of the impact is significantly related to the size of estimated liabilities;(2)compare to the existing estimated liabilities,newly disclosed estimated liabilities have a greater negative impact on stock prices;(3)the disclosure of contingent liabilities enlarge the negative impact on stock prices.