Study of Value-Relevance between Chinese Stock Market Investment and Accounting Information

In this paper, the value-relevance of the Chinese stock market investment and accounting information is studied from three aspects of the stock price, stock value and stock risk. It is found that, in terms of the value-relevance of the Chinese stock market and accounting information, the accounting information released by listed companies did pass information to the stock market in China, making the stock price and trading volume change obviously before and after the issue date. In terms of the value-relevance of the accounting information and the stock value, the value-relevance was not significant in China, showing the relative value model for judging the intrinsic value of stock, viz., price to earnings ratio (P/E) and price to book value ratio (P/B) is invalid to evaluate stock value, which means the value of stock be evaluated by absolute value model. As for the relevance between accounting information and market risk from stock investment, two risk evaluation methods of β value and lower partial moment LPM_q both show that the value-relevance is insignificant. In general, the relevance of the Chinese stock market investment and accounting information is relatively weak and extensive efforts need to be made to improve it.