New European Union＇s Requirements and IFRS Practice Statement ＂Management Commentary＂： Does MD＆A Disclosure Quality Affect Analysts＇ Forecasts？

The Management Discussion and Analysis （MD＆A） is a mandatory document under the European Union＇s （EU） law. In 2003, the EU issued Directive 2003/51/EC, which broadened the information that firms have to provide in their MD＆A, and in 2010 the International Accounting Standards Board （IASB） issued the International Financial Reporting Standards （IFRS） Practice Statement ＂Management Commentary＂, a non-binding guidance for the presentation of this document. The aim of this paper is to examine the relationship between MD＆A disclosure quality and properties of analysts＇ forecasts. In fact, although most studies found that financial analysts mainly refer to financial statement data in forecasting earnings, there are few researches highlighting the importance of MD＆A disclosures for financial analysts. On this basis, Ramnath, Rock, and Shane （2008） called for researches in order to better understand the relationship between the information really used by analysts and their forecasts. To assess the quality of MD＆A disclosures, we developed a multidimensional measure on the basis of the EU requirements and the IFRS Practice Statement, and then we regressed this variable on both forecast accuracy and dispersion. The findings show that our measure of MD＆A disclosure quality is significantly and positively related to forecast accuracy. We conducted other analyses in order to better understand the previous relationship and we found that, if we analyze the different information contained in the MD＆A statement, financial analysts consider useful accounting and financial data in forecasting earnings. These results enhance our understanding of the role of MD＆A disclosures in the wide set of information that firms provide to financial statement users.

Discussion on the Chinese Materia Medica Under EU Regulations for Traditional Herbal Medicines

Traditional Chinese medicine(TCM)is a valuable resource for the Chinese nation.With its rich theoretical foundation and long-term practical experience,it provides a solid foundation and rich source for various types of pharmaceutical innovation.The European Union(EU)established Committee on Herbal Medicinal Products(HMPC)and issued 2004/24/EC Directive and 2001/83/EC Directive,which provides legal protection for strengthening the management of traditional medicines and unifying the drug registration standards of member states.It also provides the possibility for Chinese herbal medicine,a precious medical resource,to enter the European market and benefit European citizens.However,in the application process by Chinese traditional medicine manufacturers,there are practical problems such as unclear mechanism of action and differences in drug quality requirements between China and EU.By selecting an appropriate application direction and strategy,the type of drug applied is inclined to the direction of simpler drugs with a simpler mechanism of action.Meanwhile,the policy advantages of local drug manufacturers should be fully taken to strengthen bilateral or multilateral cooperation and other ways to deal with it,providing the possibility to promote the traditional Chinese herbal medicine to go abroad,better serve the people of all countries,and promote the international development of TCM.