Research On The Usefulness Of Causal Attributions And Performance Improvement Measures Disclosure In Loss-making Listed Company

Causal attributions of loss listed company in annual report is a review of company’soperations as well as an analysis and evaluation on the company’s past operating conditions.The performance improvement measures is the outlook for the future development by themanagement as well as the prospective judgment of future trends. The disclosure of causalattributions and performance improvement measures provide varying causes of businessperformance for investors to meet their demand for related information, and the disclosure ofstrategic plans for next year are also expected to be taken to meet the investor’s prospectivedemand. This thesis regards profitability in next year as the dependent variable, whethercausal attributions and performance improvement measures will help investors to makepredictions, which help us research the usefulness of causal attributions and performanceimprovement measures disclosure in loss-making listed company. On the basis of theoreticalresearch, it will provide new evidence and ideas for regulatory authorities to regulate thesystem of listed companies’ information disclosure. On the other hand, it can judge thequality of listed companies’ information disclosure to give regulators new ideas andperspectives, which reminds investors to make cautious decisions.This thesis firstly reviewed many researches of causal attributions and performanceimprovement measures, and then introduced the self-interest of causal attributions and theforward-looking characteristics of performance improvement measures so that coulddemonstrate the usefulness of them from the theoretical angle. On the basis of theoreticalresearch, taking logistic regression to test whether causal attributions and performanceimprovement measures will help investors to make predictions. Take409loss companiesfrom2011to2012as example, studying the disclosed causal attributions and performanceimprovement measures. Manually collate and summarize the operation and futuredevelopment prospects discussed in the annual report, taking the angle of disclosed causesand planned measures whether could predict the profitability to study the usefulness.Empirical results show: The more causal reasons are mentioned in the annual report, thesmaller likelihood of profitability occur next year; The more strategic improvements inperformance improvement measures are mentioned, the greater likelihood of profitability occur next year; If performance measures is correspond with causal reasons, it’s notincreasing in probability There is a phenomenon that"solving the problem quietly"inmanagements. When describing the attribution information,they hided some information togive a good sense of the business. But when describing the performance improvementmeasures, they disclosed more measures to show their diligent and responsibility.Suchbehavior make causal attributions not correspond with improvement business performancemeasures. These results indicate that causal attributions and performance improvementmeasures in annual report help investors to predict the company’s future profitability,showing that they play important role on investors as well.Finally, methods have beensuggested on the sound system and increasing supervision on the annual audit of the annualreport disclosure of information.