Financial Statement Analysis: Evidence from Chinese Firms


This paper conducts a fundamental analysis of Chinese firms based on accounting numbers in their financial statements. The sample consists of 2,164 Chinese firms listed on Shanghai and Shenzhen Stock Exchanges during the period 2001 to 2013. We use nine fundamental signals and specify a benchmark model and an augmented model. We regress future excess returns on the signals and find that they are associated with excess returns; five of the signals are negatively associated with excess returns, while the other four are positively associated with excess returns. Further analysis suggests that our finding is mainly driven by state-owned firms.


Business and Information Technology


The authors thank Cheng-few Lee (editor-in-chief) and anonymous reviewers for their constructive comments and suggestions. They also thank Wei-Guo Zhang at the International Accounting Standards Board and workshop participants at the 28th Asian-Pacific Conference on International Accounting Issues for their helpful comments. Professor Tian acknowledges financial support by the National Natural Science Foundation of China [Grant No. 71403126]; Fundamental Research Funds for the Central Universities of Nanjing Agricultural University [Grant No. SKCX2016001]; Project of Priority Academic Program Development of Jiangsu Higher Education Institutions (PAPD), and China Center for Food Security Studies, Nanjing Agricultural University in China.

Keywords and Phrases

Finance; Income; State owned enterprise; Stock market; China; Guangdong; Shanghai; Shenzhen; Balance sheet; China; Financial statement analysis; Future returns; Income statement; State-owned enterprise

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Document Type

Article - Journal

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Publication Date

01 Dec 2018