The Research On The Persistence Of Earnings Based On The Reliability Of Accounting Information

The earnings, as one kind of important accounting information the enterprise disclosure, the investors and creditors and other stakeholders are all in focus on it, and it is also one of the important target of financial accounting research. The main objective of financial report is to provide useful information for users of accounting information ,and the usefulness of accounting information is mainly depends on the relevance and reliability quality of the two main features.A large number of accounting documents are against of relevant questions,but the reliability of the research is relatively small. This may create a problem, relevence to the neglect of reliability of measurement. This thesis aims to research the economic consequences of accounting reliability in Chinese A-share firms to the persistence of earnings, also proposes some theoretical and empirical supports on firms’choosing accounting policies and governments’establishing regulations as well as improving supervision.This paper analyzes the sample of Chinese A-share firms during the 2001-2009 periods ,investigates the persistence of earnings and its components based on the reliability of accounting information. We use the adjusted square of the return on net assets and the return on cash to measure the reliability of accounting information.This paper find that the accrual are less persistence than the cash flow ,the accrual under the line are less persistence than the accrual below the line,and both are less persistence than the cash flow. On this basis, we measure directly the reliability of accounting information, and on the base of the reliability of accounting information R3 , building a combination in order to have regression test.We investigates the persistence of earnings and its components based on the reliability of accounting information .The research found that the reliability of accounting information is in the high (low), the persistent of earnings and its components is higher (lower). On the base of the reliability of accounting information R3 , building a combination in order to have regression test.