Theoretical And Empirical Study On The Earnings Quality Evaluation Of Listed Companies In China

Profit is the core concept of measuring the performance of a company. However, thetraditional single indicator which is based on accounting income such as ROE (Rate of Return onEquity) and PE (Price to Earning Ratio) can not comprehensively reflect the quality of earningswhich are hidden behind the figures, neither can it provide effective information for makingdecisions. Therefore, for the investors and the healthy development of the entire capital market,how to identify the listed companies’ quality of earnings by using the restriction and articulationrelationship between accountants’ information through the perfect financial statements is an urgentproblem to be solved.In this study, normative analysis and positive analysis are both applied. Also, based on“accounting information availability”, and according to the characteristics of earnings, this paperaims to research the earnings quality evaluation of listed companies in China.This paper is divided into seven chapters:Chapter one is introduction, which mainly explains the background and significance of theresearch, the current situation at home and aboard, and the research contents and methods.Chapter two is the overview of relevant theory, which mainly explains the definition,characteristics, influence factors of earnings quality and statistical methods used in the study.Among them, the paper considers that earning quality should be the combination of the trueprofitability, cash collection ability and future profitability. And earning quality features shouldinclude authenticity, profitability, reliability, growth and sustainability.Chapter three is the construction of the earnings quality evaluation model of listed companiesin China. On the premise of income authenticity, the theory model is constructed by SEM(structure equation method). In this model, the second-order factor is the earnings quality. And thefeature potential variables including profitability, reliability, growth, sustainability are the primaryfactors. The observed variables are the indicators of evaluate system.Chapter four is the empirical test and correction of the theoretical model, which mainlydescribes pre-processing of the empirical data, the empirical test, twice corrections, the hypothesisof the research, and the confirmation of the weight coefficient of comprehensive evaluationindicators.Chapter five is the comparative analysis of listed companies’ earnings quality among differentindustries. This section contains the descriptive statistical analysis on earnings quality of theA-Stock listed companies in Shenzhen&Shanghai Stock Exchange in2010, the overalldescription about earnings quality of different industries, and the overall analysis of the earning characteristics of listed companies.Chapter six contains the conclusion and some relevant recommendations for the research. Itfocuses primarily on the main conclusions of the study. And based on the empirical results, it givessome recommendations from the aspects of macroscopic and microscopic views.Chapter seven is the conclusion part, which mainly describes the advantages, limitations andresearch prospects of the paper.