Date of Award
Dr. Winnie Poon
Dr Helen Kwok
This study aims to examine the usefulness of China accounting information in reflecting the stock returns in China stock markets and to recognize the significant factors that are possibly related to the stock returns in A shares and B shares respectively.Peoples’ Republic of China accounting standard (PRC accounting standard) is used for A shares whereas International Accounting Standard (IAS) is used for B shares. By comparing the two accounting standards, we found that the definition of some items and concepts of the financial statements are different. Consequently, the values of the financial ratios are varied. In order to recognize the significant factors in A shares and B shares, the means of factor analysis was adopted to sort out important factors from a large number of financial ratios. For A shares, profitability, interest efficiency, liquidity, asset efficiency and earning power are found to be significant factors. While for B shares, the significant factors are profitability, asset efficiency, liquidity, operating efficiency and earning on interest expense. After running the regression with A shares daily returns and B shares daily returns to their respective significant factors, profitability, asset efficiency and earning power are found to be significant at 5% level in A shares and only profitability is found to be significant at 1% level for B shares.
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Lau, W. K. R., & Leung, W. M. G. (1999). An examination of stock market performance in China using accounting information (UG dissertation, Lingnan University, Hong Kong). Retrieved from http://commons.ln.edu.hk/fin_fyp/1/