A Study On The Effect Of Growth On Value Relevance Of Accounting Information And Stock Pricing

The article is expanded based on the depth discussion of business growth definition and connotation, further more, combined with the analysis to the growth definition, this articles one by one analyzed the enterprise growth theory, stock pricing theory, formation, evolution and revelation of accounting value relevance, and discussed the relationship of the above triple based on literature review and Initially outlined a theoretical context in which. The third part of the study is the part of theory building, through the use of contract economics of asymmetric information theory, respectively, from the perspective of managers and investors, deeply discuss the accounting information reflection to business growth, and relationship between accounting information and the stock pricing, and build a theoretical framework based on contract economics and accounting information measurement perspective, points out that the growth of corporate accounting information whether can be captured by the accounting system, and ultimately passed on to the stock price depending on joint action among corporate managers incentives and external accounting environment through accounting information.Based on the theory study above, the fourth part of this paper utilizes the data from2000to2011of Chinese Listed Companies, from the net book value of corporate assets and stock price information relationships and relationship between intangible assets investment information and stock prices, to empirical verify the impact of the growth of the information contained in the accounting information on stock pricing. The empirical results show that under China’s current accounting information environment, accounting systems for business enterprise is difficult to capture the growth of information and processing and effectively transmitted to the stock market.Based on the analysis of the status of China’s stock issuance and pricing, the fifth part of this article, through deep analysis of one actual case, attempts to reveal the relationship between China stock issuance and pricing and listed company’s accounting information.The last part of this thesis is conclusion and suggestion, from the main areas affected by the current Chinese accounting information system and the capital market, makes recommendations to improve these problems and to improve China’s economic growth.The main contribution of this study is focused on:Firstly, the research has build a theoretic model which is on the vision of the behavior of the manage and the reaction of investor, and can be used to analyze the valuation relevance of accounting data of the enterprise growth on the basis of the theories as below:1. the theory of enterprise growth,2. the theory of contract,3. The theory of asymmetric information,4. The theory of accounting. As we all know, the information on the growth of company is a kind of private information of company’s manager, which is difficult to transfer to investors because the sort of private information includes lots of the profession judgment of accouters and lack of testability. The willing of manager to disclose this kind of private information relying on the drive force made by enterprise stimulates system. If the payment of the manager depends on the company’s earning which is counted mainly by accounting data, the manager will be short of enough motivation to transfer their private information about the enterprise growth to investors. As to investors, it is difficult for them to use this kind of private information to value the company’s stocks because of their limitation of relative knowledge, cost of information and the noise of stocks transactions. So, in the real world, the relationship of accounting information, the growth of enterprise and the securities prices is not stable and obvious. However, the above relationship can be closer if the enterprise managers, the investors, the medial system and the government work together to make the surrounding of economy and finance better.Secondly, the article has innovate a kind of empirical test method which can be exam the valuation relevance of the accounting data of the enterprise growth on the basis of Feltham&Ohlson model.Thirdly, the thesis test the valuation relevance of the Chinese listed company accounting data and their growth, using Chinese capital market data to construct sample from2000-2011, in version of the relationship of the listed company’s stock price and their book value, and the relevance of the listed company’s stock price and their intangible assets value. The research finds that it is hard for the Chinese enterprise accounting system to capture the enterprise growth information and to transfer to investors. The pervious rarely did this.There is huge room for the following research to fill in aspects below:at first, the theory model built by the article can be modified; second, the empirical test method can be improved; third, the implements and suggestions made by the research should be more practicable.