Study On The Relations Between Earnings, Cash Flows And Stock Prices In Small And Medium Enterprise Board

The relevance of accounting information associated with the stock price is one of the main content of the capital market researchs in Accounting, which not only openes up the field of accounting research, but promotes innovations in accounting research methods. Since 1968, when Ball & Brown published "An Empirical Evaluation of Accounting Income Numbers " to create the beginning of Positive Accounting Research, the study of the usefulness of accounting information has become the focus of empirical accounting research.Precently SME has occupied the main part of the national economy, with more financing channels and methods provided by the SME board. The SME board is a prelude to the GEM, providing wealthy experiences for it, with differences from the major board in the legal environment, targeted investors and the future development trend, so the SME board is bound to show vitality because of its historical mission in the future innovations. The research of value relevance of accounting information on the SME board has important theoretical and practical significance, firstly it will enrich empirical study of accounting theory; Secondly, as the value relevance of accounting information is one of the important factors measureing the effectiveness of the capital market,the study can provide an important basis for the effectiveness of the SME board meanwhile providing important basis for investors.However, as the board established at a short time, with little accounting researches on the board, the study of the correlations between accounting information and stock price is nearly blank, thus it is a major shortcoming not only for the accounting research but for investors in the SME boards,so it is urgent for accounting research in this board. This paper tries to explore the relevance of accounting information and stock prices in the SME board, wishing to make a useful exploration of future theoretical research.This paper bases on the Feltham-Ohlson model, selects 2007-2009 annual data of listed companies in SME board of Shenzhen Stock Exchange, using the method combining theoretical analysis and empirical analysis to explore the explanatory power of accounting earnings and cash flow for stock prices to find internal correlations and recently changes of them. This concrete consists of four parts, the main contents of each parts are as follows:The first chapter introduces the background and significance of the correlation of accounting earnings,cash flows and stock prices, reviews the relevant literatures at home and abroad, again to put forward ideas to this research and writing methods, and finally the lacks and innovations of this study. The second chapter firstly describes the characteristics of the SME board and its security systems, which is the background of this research,then proposes the theoretical premise of the correlation of accounting information associated with the stock price,then analyzes the mechanism of accounting information from the information view,pricing view and the contract view and the path in-depth.The third chapter describes the assumptions and variables, put forward the sample, data corresponding processing requirements, and model based on the relative relevance and incremental-based association study of the empirical test, and finally draw empirical conclusions on the analysis of the test results. The forth chapter is the recommendations and prospects, proposing how to further strengthen the value relevance of accounting information on the SME board and to gradually improve future researchs.Innovations and features are:Firstly, as the present study on the value relevance of accounting information is more than from the net assets, earnings, operating cash flow points, this paper use free cash flow and size as variables to expand the empirical study to jointly verify the value relevance of accounting information based on which considering the special nature of the SME board; Secondly, based on the SME board, this paper selects the F-O model, expands it to verify the value relevance of accounting information using the relevant and incremental research methods;Thirdly,selecting datas from the 2007-2009 annual financial reports of the listed companies, which just can depict the consolidated financial outlook in the SME board in China before the financial crisis, after the outbreak and the outbreak.So the empirical research based on these three years will must provide a favorable support for the value relevance of accounting information in SME board in the special economic environments.