Research On The Relationships Between Regional Economy And Corporate Performance And The Expansion Of Price Model

In the field of accounting research, price model based on accounting information,making good use of the corporate balance sheet and income statement information, isthe hot-spot of the accounting empirical research. According to the regional economictheory, there is some causal connections between the regional economic developmentand corporate performance and the mutual influence has some continuity. Due to thechanges in accounting information will be reflected in the stock price, there is someneed to research the influence of regional information on stock price.According to that thought, firstly, the paper reviews the theory about therelationships between regional economics and enterprise organization and get theconclusion that there is some causal connections between the regional economicdevelopment and corporate performance. Then the paper makes use of the Grangercausality test of time series, combined with China’s listed companies data from1990to2011, to empirically research the causal connection. Based on the foundation of thecausal relationship, then the paper uses panel data method to further empiricallyillustrate that the more economically developed, the greater the impact on corporateperformance. It shows that although China’s system for IPO and listing on stockmarket has the impact of national administrative power, the capital market isconsistent with the no government intervention capital market and the IPO systemcould achieve the purpose of optimizing resource allocation.Based on the above empirical results, we know that regional economicdevelopment will affect corporate performance and the more economically developed,the greater the impact on corporate performance. Combining with thedecision-making usefulness of accounting information, we can see that the changes inthe accounting information will affect investors’ judgment on the value of thecompany. Then, there is a significance for further research on the widespreadaccounting information-based price model. The paper through adding an independentregional economic development variable to the accounting information-based price model to analyze whether the explanatory power of the expanded model is raised andwhether the correlation of eastern economic development to share price is greaterthan the central and western economic development to share price. The conclusion isthat the expanded price model is suitable for eastern area, while the role of regionaleconomic development to stock pricing in central and western area has not yet fullyplayed. The explanatory power of eastern economic development to corporateperformance is greater than the central and the westernThe paper, based on the theory of the relationships between regional economicdevelopment and enterprise organization, have a consecutive series of empiricalstudies and get some convincing empirical conclusions. It also has some guidingmeaning for the formulation of policies about regional development and enterpriseIPO.