Study On Non-recurring Items' Earnings Quality And Information Noises

It is the government's regulation that plays an important role in the development of the emerging capital market. Today, in terms of the process of IPO, Secondary Equity offering, ST and delisting, governors have established a large number of measures to ensure that the policies can be implemented well. The core requirement is the compulsive regulation on the information of the accounting earnings. Because of the information asymmetry, the information providers will consequentially cater for the government's requirements to maximize their interests. Since non-recurring earning has the characteristics of one-off and chanciness; it mainly relays on the subjective judgments and ties up with the behavior of earnings management; therefore, the earnings management behavior of the managers can obtain an immense manipulating space.Due to the late implementation of the regulation regarding disclosing of non-recurring items, there is little research that can be found in the field. This study investigates the information noises of non-recurring items based on the data from 1168 A-share listed companies that had non-recurring items in 2003 in the Chinese stock market. The author believes that this research can help the investors distinguish earnings components with different earnings persistence, and improve the quality of accounting earnings. Firstly, the essay analyzes how the listed companies manage the non-recurring items and their motivation, then demonstrates the earnings quality and its relations with non-recurring items, in the end, empirical study has been taken on the information noises of non-recurring items from the angle of the relationship between the non-recurring items and return rate. The empirical study includes the descriptive analysis of independent variables, independent samples test, logistic regression analysis, lineal regression analysis. The results show that:The variation of recurring earnings scaled by equity and the raw returns have a significant direct ratio; when the non-recurring items increase, the raw returns will decrease, while the raw returns will increase as the non-recurring items increase, and at the same time the regression coefficient of the non-recurring scaled by equity is bigger than that of recurring earnings scaled by equity, which correlates negatively with their persistence degree and indicates that the decrease of non-recurring items is good news while the increase bad and that the investors underreact to the earnings with high degree...