Do Accounting Earnings of Listed Companies in China Transmit Efficient Evaluation Information? —— Based on Value Relevance of Differentiating Conservatism Level

Based on signaling theory, this paper investigates whether conservatism of listed companies in China, in asymmetric information condition, transfers efficient evaluation information. The analysis on listed companies in Shenzhen and Shanghai A share in 2002-2011, it suggests that, although in full sample the enhancement effect of accounting conservatism on the relevance of accounting earnings, in controlled sample it is certain that when a listed company' s accounting conservatism is at the market average level of the year, it will remarkably enhance value relevance. Thus, the paper draws the conclusion that when conservative principle is used within measure, it will enhance the value relevance of the listed company, and the using of conservatism totally does not do harm to the value relevance of China list companies' accounting earnings. On the contrary, the recognition of earnings on conservative principle in China helps the listed companies transfer more efficient evaluation information to the investors in the stock market, and conservatism can protect investors as well.