An Empirical Research of Information Content of Financial Ratio Analysis

• Main Authors: Liu, Shih-Chi, 劉士棋
• Other Authors: Chung-Yueh Chang
• Format: Others
• Language: zh-TW
• Published: 1997
• Online Access: http://ndltd.ncl.edu.tw/handle/63411392259620259797

碩士 === 國立中興大學 === 會計學系 === 85 === Previous studies suggest that investors did utilize financial statement information to evaluate corporation historical performance, to understand current performance, to estimate future profitability and thus to make justifiable investment decisions. This paper intends to understand whether financial ratio information affects investors* behavior in order to testify whether financial ratio information possesses usefulness and information content. The methodology is first based on factor analysis to screen out financial variables. Furthermore, simple regression, multiple regression, partial F-test and ranked partial correlation analyses are utilized to analyze the relationships between unexpected earnings-based ratios and cumulative abnormal return in order to testify the information content of financial ratios. The results suggest: 1.Unexpected earnings-based ratios and cumulative abnormal returns are significantly related; thus, earnings-based ratios possesses information content. 2.In addition to earning-based ratios, nonearnings-based ratios individually are also significantly related to cumulative abnormal return. In addition, partial F-test also reflects the fact that overall nonearnings-based ratios also have information content. 3.Based on all analytical results, financial ratios information influences investors'' decision to a certain degree. Consequently, the conclusion is that financial ratio information possesses information content.