Empirical Examination of Value-Relevance on Effects of Accounting Regulations in Capital Markets

In order to examine the effect of accounting regulations in China capital markets, this paper takes empirical analysis on market reactions of accounting information disclosures from the angle of value-relevant research. The empirical results indicate that the combined explanatory power of earnings and book values per share for stock prices has an increasing trend since 1999; the combined explanatory power of earnings and book values for stock prices for 2001-2004, compared with that of 1998-2000, has increased distinctly. This indicates that stricter accounting regulations will substantially improve the quality of the accounting information and will thus enhance value-relevance of earnings and book values per share with stock prices.