Listed Company Earnings Quality

Since the establishment of Shanghai and Shenzhen Stock Exchange in the early 1990's, China's securities market has achieved tremendous development in the past decade. It also plays an important part in the development of socialist market economy.However, ill earnings management and even fraudulent financial statements of listed companies are prevalent. The cases of fraudulent financial statements prove that financial statement fraud of listed companies has reduced the quality of accounting information heavily, and impaired investors' confidence, moreover prevented the securities market from playing the role of optimizing allocation of resources.Recently, the publics pay much attention to the problem of low quality of earnings in listed companies. Of those remarks, there seems to exist one dominant opinion that the cause of low quality of earnings lies in making out fraudulent financial statements by accountants, and offering false audit reports by CPAs. However, the opinion isn't comprehensive and scientific. It doesn't touch the underlying reasons of low quality of earnings. There are several elements that influence quality of earnings in listed companies, and the elements should be considered fully. Therefore, all kinds of investors can benefit from systematic research of listed companies' quality of earnings. They can avoid blind investments by understanding and analyzing the real circumstances of quality of earnings in those companies. And the research of quality of earnings can restrict listed companies from ill earnings management and even financial statement fraud as well.That's the reason why the author selects the quality of earnings in listed companies as the topic of Master thesis. The paper discusses the quality of earnings in listed companies through theoretical exploration and status analysis, and presenting some constructive suggestions.