Empirical Study On The Earnings Explanatory Power And Value Relevance Of Classified Presentation Of Financial Statements

The classified presentation of financial statements (CPFS) improvement is alwaysthe problem that IASB and FASB are great concern to. With global financial crisissweeping the world in2008, IASB and FASB are accelerating the reform of many areasof financial accounting, in which the CPFS is a major highlight of the reform project. Asa landmark of CPFS, IASB and FASB Published the Discussion Paper——PreliminaryViews on Financial Statement Presentation on October16,2008, which mean theproject of CPFS improvement began.Based on the above background and referring to the relative fruits home andabroad, first, this paper makes an analysis and review for history and theory of origin ofCPFS, and then improves the hypotheses and research theory of the earningsexplanatory power and the value relevance of CPFS. Finally, through building empiricalmodel and collecting the data of listed companies of the Shanghai and Shenzhen StockExchange from year2007to2008, this paper makes empirical test for the earningsexplanatory power and the value relevance of CPFS.The dissertation is divided into three parts. Some of the conclusions andcontribution of this paper are listed as follows.①A brief description of the development process and origin of the reform for theCPFS. In our country, the research of CPFS is still at the stage of theoretical analysisand case studies and not sets foot in the field of empirical research by refining theliteratures, which lays the foundation of referencing theory and making hypothesis ofour research.②Make a theoretical analysis from the earnings explanatory power and the valuerelevance angles, rebuilt the new Du Pont Analysis System of which ROE is the coreand put forward the research assumption based on the Penman’ idea that the financialstatements should be made a distinction between business activities and financialactivities.③The CPFS increases earnings explanatory power of the financial information andalso has significantly relative value of relevance, beyond that, there is significantdifference of the earnings explanatory power between business activities and financial activities. All these conclusions above are obtained through empirical testing.