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Value Relevance of Earnings in an Emerging Capital Market: the Case of A‐shares in China
Author(s) -
Haw InMu,
Qi Daqing,
Wu Woody
Publication year - 1999
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.00083
Subject(s) - earnings , earnings response coefficient , earnings per share , china , capital market , economics , value (mathematics) , price–earnings ratio , emerging markets , book value , stock market , post earnings announcement drift , financial economics , accounting , business , monetary economics , finance , paleontology , horse , machine learning , political science , computer science , law , biology
This study investigates the value relevance of earnings in the emerging capital market of China by examining the information content of accounting earnings measured under the People’s Republic of China Accounting Standards (PRC‐GAAP). Based on the A‐shares of listed Chinese firms during 1994–97, a significant association is observed between annual market‐adjusted stock return and the change of earnings. Also documented is a significant price reaction to the annual earnings announcement in a three‐day window centered around the announcement date. Overall, the empirical results suggest that earnings reported in China are value‐relevant to A‐share investors.