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In recent years, many enterprises have extended vigorously their business to different dimensions and regions. The investment in the stock market becomes common. In order to increase profits in operations, most enterprises often engage in merging, setting up a subsidiary or investing in other businesses. Therefore, many companies form a group corporation. Enterprises can focus on various development, have dimensional sources of income, share the risks in business influx. Therefore, Considering the connectivity among enterprises, when making decisions, the public, and investors need to evaluate not only the risk and return but also the operational and financial status of the mother company and its subsidiaries.
In the past researches, most of the papers addressed the issue of the combined financial statements of the listed enterprises in the stock markets. When investors make decisions, besides the cross relationship and influences on the performance and financial status among the parent company and subsidiaries, the statements can promote the information transparency and show the substantial and complete operational status to the investors.
Jin Guan Hui is the most authoritative institution that promote information transparency so that the investors can know the operational status of the substantial business entity. Therefore, it decides to roll out the combined statements in single track in the due process so that it will align with the international accounting principles. Therefore, on December 9, 2004, the accounting study development foundation first revised the memorandum No.7 on combined financial statements in the accounting guidelines which were issued on December 31, 1985. The new memorandum will be applied to the combined financial statements which were publicized on or after Jan 1st, 2005.
On December 16, 2004, Jin Guan Hui sent an official letter to all listed/public enterprises, regulating that from 2005, when issuing the semi-annual financial statements, the enterprises should also submit the corresponding combined financial statement for the first half of the year. In the year of 2005, Jin Guan Hui issued several written orders to enlarge the scope. In the order issued on July 9th, 2007 (Jin Guan Jen 6th No. 0960034217), all the listed/public enterprises, from 2008, are required to publicize the combined financial statement of first quarter and third quarter. In addition, the listed or public enterprises should publicize the financial statement of the parent company quarterly and combined financial statements as well. However, it is not required that the combined statement should be reviewed by accountants. This may cut down on the cost of hiring more accountants for the enterprises. Based on the consideration of cost and value, some enterprises may choose to file it internally or have it reviewed by accountants. Therefore, different enterprises may publicize different information in their combined financial statements. In the sample capital markets, there are various versions of combined statements. It is quite rare and worth discussing.
In this research, I selected the listed/ public enterprises from 2008 to 2010 as my samplers, excluding financial and insurance industries. I sum up the variables which may affect the quarterly financial statements, such as
business net income growth rate, business net profit rate, the debt ratio, the earnings per share, the company size, the nucleus reads a newspaper considers the state, the audit quality, and the extra accounting information. The total of the samples is 2,970. The research focuses on the verification of combined consolidation of the finance statements and the content of extra information reviewed by accountants. The result shows that if the merge earning growth rate, or business net profit rate is bigger than zero or equal to zero, the listed/public enterprises whose statements were reviewed by accountants had better and distinctive feedback from the investors, especially the stock price unusual reward.
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