Category: Money Tips Date: 2007-01-27
The new accounting standards not affect the long-term positive stock market return volatility of the stock valuation of
- 2006 analysis of China's new accounting standards
Editor's Note
Recently, the Ministry of Finance issued a new corporate accounting standards. The new criteria for triggering the market performance of listed companies of potential fluctuations in lively discussion. However, from the securities investment point of view, just to discuss the volatility of corporate accounting profit is not enough. Edition published in today's Shenyin Securities Research Institute, a research report from the stock valuation, management behavior decision-making camera adjustments and accounting policy changes and investment opportunities in hidden view, multi-dimensional analysis of the new guidelines to the impact of the stock market .
The new accounting standards relative to the original guidelines for the accounting treatment have significant differences. China's current enterprise accounting standards is 16, while the number of new guidelines to reach 39, in the integrity of the system has been a huge increase.
The new accounting standards starting from a basic financial framework of the concept of the role of the "basic norms" (in the Ministry of Finance issued decree), and 37 specific accounting standards, as well as a new criterion was first introduced with the original criteria of convergence to form a practice. We recommend investors to read the new accounting standards, the concern "Accounting Standards for Enterprises No. 38 for the first time implementation of the Enterprise Accounting Standards." At 37 specific accounting standards, certain criteria will have a great impact in certain sectors, we will be the impact of these guidelines as well as their finishing out of the major sectors (see table below).
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Stock price fluctuations do not significantly affect the performance of
Currently investors do not generally concerned about the opening of the new accounting standards, fluctuations in the performance of listed companies, the market expected in the first half of 2006 reflected in the second half of 2007. We will be the performance of listed companies, fluctuations in the next two stages: First, the implementation of criteria, the listed companies may carry out the accounting policy adjustments. Our main concern at this stage may be a listed company before the implementation of the new guidelines, the new guidelines for the accounting treatment of certain additional restrictions, advance accounts adjustment is probably the most typical in the new guidelines will be allowed back to early reversal of the impairment; second, when the implementation of the guidelines listed companies under the new guidelines of the assets, liabilities, equity book value adjustments as a result of a more reflect the economic substance of the accounting policy, resulting from fluctuations in the performance, such as the measured from a historical cost of assets to fair value measurement using triggered a chain reaction.
Change the criteria due to changes in accounting profit would rise to price changes?
In fact, this proposition at home and abroad lot about the efficient market theory and empirical analysis of the research reports have been expounded. If the market effective, guidelines change due to changes in accounting profit does not cause changes in stock! Because the share price by investors of the company's future expected cash flows as a result bear the investment risk and return requirements of the decision. Accounting policy changes only affect the accounting profits, but not change the company's cash flow and investor confidence in the short term, then the company's stock price should not be an impact. For the above reasons, we believe that public companies mentioned in the preceding opening of the new accounting standards of performance before and after the two-phase fluctuations do not significantly affect the company's stock price.
For the first phase, a listed company will be the provision for impairment of the back, but a restatement of previous performance or modified only. Likely in 2006, when substantial impairment reversal of companies will be those in the previous year through the provision for impairment of hidden profits, or need and can be transferred back to the impairment of the requirements to meet certain economic indicators公司. Because quarterly, mid-year report does not require an audit opinion issued by certified public accountants, so these companies can indeed relatively easy to quarterly in 2006, mid-year report of the related asset impairment adjustments. But this will only help investors to re-recognize those early over the quality of provision for the company's assets only.
For the second stage, after the accounting policy change may result in performance fluctuations due to a number of companies involved in all aspects of the problem, it is difficult to accurately measure. However, we tend to believe that "businesses currently measured in historical cost book value of the assets of their generally lower than its fair value", especially for those who continue to produce good economic benefits especially in long-term assets. Moreover, the new accounting standards, which for many accounting businesses will be measured at fair value, and a number of changes in fair value of assets will be reflected through the profit and loss. Therefore, we believe that the introduction of new accounting standards, the listed company's overall performance to a certain extent improved.
To improve the comparability of domestic and foreign stock valuation
In the stock valuation, although the discounted cash flow method of science is far higher than the comparative method, but due to contrast simple and practical, so it has been a securities investment community, most frequently used valuation methods, the most commonly used is undoubtedly the PE and PB and other indicators.
At present, the domestic analysts in the valuation of shares of listed companies, often with the A-share companies in Hong Kong, the United States or Western Europe and other markets, companies in the same industry performance and valuation comparison. Putting aside the A-share companies and offshore companies in which the growth nature of the different areas of business risk, just from an accounting point of view, this approach may be there is a big problem. In fact, the accounting policy differences, we directly compared A-share companies with foreign company's performance, as well as PE, PB and other indicators, is likely to get the wrong conclusions. Therefore, when we compare the performance and valuation levels when compared to different companies concerned about the differences between the accounting policies is very important, especially when we compare these to the A-share companies as an important basis for investment advice, the more so.
The reform of accounting standards, in essence, is a Chinese accounting standards with international accounting standards convergence. If we compare the new rules and international accounting standards, although there are still a number of small individual differences, but the relatively high degree of consensus. The international convergence of accounting standards is not only China, the EU, Hong Kong, Russia and other countries or regions of the accounting standards international accounting standards have been used or has been substantial convergence of U.S. accounting standards are also constantly moving with the direction of international accounting standards convergence revised. Therefore, after the introduction of new accounting standards, A-share companies listed overseas companies with the performance and valuation levels, more comparable.
This comparable increase in the impact of stock valuations are not limited to such a technical field, but will reduce China's overseas investors about listed companies and overseas investors to understand the cost of China's listed companies. Convergence of accounting standards, eliminating mutual understanding of accounting policies and accounting information barriers, will promote international trade and investment activities. The reform of accounting standards will QFII investors enter the Chinese A-share market, as well as overseas strategic investors, acquired the enthusiasm of Chinese enterprises improved, resulting in long-term effects. A total of 4 1 [2] [3] [4]
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