Title :
The value relevance of net income vs. impairment items in Chinese listed agribusinesses
Author :
Yue, Shang-Zhi ; Li, Xiang-Hong
Author_Institution :
Coll. of Econ. & Manage., Northeast Forestry Univ., Harbin, China
Abstract :
This paper examines the value relevance of net income vs. impairment in Chinese listed agribusinesses. By linking valuation analysis with earnings time-series properties, we present additional evidence to support value relevance for listed agribusinesses: An earnings component is impounded in stock prices as long as it is persistent and no persistent impairment are value irrelevant. However, the time-series properties of earnings components are not fully priced by the market. The component items of net income, especially the impairments are found to be more effective in explaining the return and the stock price. The earnings response coefficients are larger for impairment than for net income, although impairment are less persistent and have lower predictive power. In discussing this pricing anomaly, we identify some unique institutional factors that may be responsible for the results.
Keywords :
agriculture; cost accounting; pricing; stock markets; China; agribusiness; earnings time-series properties; impairment items; net income; pricing anomaly; stock prices; valuation analysis; value relevance; Conference management; Cost accounting; Economic forecasting; Educational institutions; Engineering management; Forestry; Joining processes; Power generation economics; Pricing; Stock markets; Chinese listed agribusinesses; impairments items; net income; value relevance;
Conference_Titel :
Management Science and Engineering, 2009. ICMSE 2009. International Conference on
Conference_Location :
Moscow
Print_ISBN :
978-1-4244-3970-6
Electronic_ISBN :
978-1-4244-3971-3
DOI :
10.1109/ICMSE.2009.5318001