A Study On Evaluation System For List Companies' Earnings Quality In China From Investors

The purpose of this research is to establish an effective evaluation system for a listed company earnings quality. Earnings quality issue is the main problem for China's enterprises, especially listed companies. At this stage investors do not recognize accounting earnings information with the same number but different quality which could not conduct investors and other relevant interest groups make the right decision and could not conduct the securities market make resources optimal allocation. Therefore how the investors judge the quality of high or low of listed companies in the end becoming a issue which is important, and the analysis of earnings quality will also help alleviate the problem of information asymmetry in securities market.We are conducted by foreign scholars researched on earnings quality, use the sustainability, growth, security, and cash to protect of earnings quality for the four dimensions, select 13 basic signal of financial as the second indicators to research. First, we test the relevance of fundamental financial signals, and then use the data characteristics of longitudinal changes under the principle of coefficient of variation method for the first time empowers earnings quality to get four summary index value of the earnings quality characteristics, namely, the sustainability of earnings, growth, security, and cash guaranteed summary indicators. Finally, according to the summary quality characteristics, we use component analysis and comprehensively evaluate listed companies to build comprehensive evaluation model for quality of earnings.At the same time through the listed companies'earnings quality score, we use earnings response coefficients model checking the validity of the evaluation model and verify that although the effectiveness of China's capital market is not enough compared with the higher volatility of stock price and higher participation, but with the earnings information disclosure, the company's stock value tends to reflect the company's true value and reflects the earnings quality of listed companies.