An Empirical Analysis On The Relevance Of Accounting Information And Stock Price In The Chinese Stock Market

In stock market, high quality accounting information is the bridge between stock price and its intrinsic value. By the price scheme, the resources are efficiently allocated. In this way, the stock market is fostered to develop. On the other side, if the accounting information did not reflect the real economic activities of the company, it can hazard the decision of the investors, even worse; it can impact the measures of the government concerning the marco-economic policies.The paper starts from the information perspective as for the function of the accounting information for the stock market, analyzing the relevance on accounting earnings and the stock prices. The A-listed companies' stock and accounting information from 1998 to 2006 are used as samples, the classic Return Model is used to test the samples. In the short window study, the event study method is used; in the long window study, we used cumulative monthly return as the analysis objective, meanwhile, listing age is also added as variable to test the relevance on accounting information and stock prices from multi-perspectives.Through empirical test, we found out generally speaking, there is positive relevance between accounting information and stock price. Nevertheless, the yearly sub-samples and the sub-samples per stock exchange show more dynamic details. At last, we analyze the problems and offer relevant solutions to improve the value relevance of accounting information in Chinese Market.