Information Disclosure,Valuation Model And Capital Market Efficiency

Earnings management is a common means for companies to manipulate profit.For listed companies,this is a low-cost means for companies to help achieve their business goals.However,it will largely obscure the authenticity of accounting information and influence investors to make effective decisions.“Take a big bath” is one of the means for enterprises to manage their earnings.It means that the company can achieve the purpose of cleaning up the previously falsified assets or creating conditions for making profit in future by accumulating huge losses.However,after the disclosure of the company's huge losses,there is no quantitative comparison standard to measure the degree of capital market reaction.Therefore,this paper hopes to find a comparison method to judge the reaction of capital market after information disclosure through the valuation model.In October 2014,Zhangzidao Company announced in the third-quarter report that the shrimps were not harvested due to natural disasters,and the estimated loss for this year was nearly 800 million RMB.After the announcement,its share price fell by 20.18% within three days.However,is this fluctuation reasonable? This article will conduct research on the case of the huge loss event of Zhangzidao Company.First of all,this paper analyzes the profitability,solvency,inventory,cold water mass and frequent changes of executives of Zhangzidao to further determine whether the huge amount of asset impairment loss may be a“Big bath" behavior.Then,it classifies the situations of the reverse of the huge asset impairments based on the purpose of taking a big bath.It classified as permanent situation and temporary situation,with a breakdown of the temporary situation.After that,this article will use the analyst's forecast data as a starting point and estimate the stock price of each possible situation based on the free cash flow model.I hope that the estimated stock price in each possible situation can be used as a benchmark to compare it with the stock price after the information disclosure and the current stock price,to judge whether the market reaction is reasonable after the information disclosure.Finally,make recommendations for investor investment based on the result of stock price comparison analysis.