Research on the Information Content of Financial Variables Related to Firm Riskiness:Based on the Empirical Analysis of Panel Data from Chinese A Share Manufacturing Industry

Current enterprise financial reporting system emphasizes both perspective on accountability and perspective on decision-usefulness,but doesn't pay enough attention to the disclosure of the risk connotation regarding accounting information as well as the playing of risk-controlling function of accounting,then the relevance of financial reporting with decisionmaking is greatly weakened.The purpose of this paper is to find those financial-statementbased risk measures which could properly explain the situation of China and to obtain those fundamental financial variables which consist of enterprise risk reporting framework. This article selects the Shanghai A share listed companies in manufactu ring industry data as samples,based on the Parks panel model empirically analysis the information content of financial variables related to firm riskiness.The result shows that the un-levered beta is better than the one estimated by the standard market model;cash flow,current ratio, growth,enterprise size and other financial variables have significant information content of systematic risk;in contrast,neither interest coverage multiple nor dividend payout ratio could correctly reveal the nature and change of systematic risk;financial leverage also has significant information content of systematic risk;The variance in different direction for financial lever and the operating lever increases the systematic risk of listed companies, accordingly reducing their value and the wealth of shareholder.And then this paper put forward some related policy recommendations,among which include constructing fl firm-risk-reporting framework based on the above financial-statement-based risk measures. Based on panel data,this paper illustrates that the previously mentioned financial variables are significantly correlated with firm systematic risk,which means the financial variables have significant information content related to riskiness,thus enriching the study literature concerning the research of the correlation between accounting information and systematic risk.Its practical significance lies in,as for the investors who have difficulty in obtaining the market beta because of the failure of listing or listing in a relatively short time, they also can effectivelycapturethose required systematic risk information related to investment decision through the enterprise financial reporting;and for the investors of the enterprises which bear market beta,they can discover the main problems of the enterprise operation and the crux of those problems through the systematic analysis of the financial variables affecting market beta,so as to guide them to make more informed choices of investment. Investors need not only the accounting information of earnings,but also the information of risk related to decision-making.Systematic risk is the comprehensive index of the risk level,the analysis of risk factors could enhance the usefulness of accounting information for decision-making.In view of the current financial accounting reporting system's failure to effectively provide investors with accounting information classified by risk and return (especially risk),we propose a new risk reporting framework should be established based on the studies on the factors affecting systematic risk,in order to provide investors with more useful information of risk,and then further expand the function of accounting.