The Empirical Study Of Listed Commercial Banks’ Earnings Quality

Earnings quality is an indicator to show how reliable the earnings of the financial statements can reflect the information of the enterprise’s economic value. The earnings of an enterprise has two characteristics:the quantity and quality. As an important tool for financial analysis, earnings quality should be paid more attention than earnings quantity. Earnings quantity is very important not only for a listed company’s sustainable profitability, but also for the decisions of the company and the investors.Financial enterprises play an important role in the national economy, and as the main components of the financial industry, the position of the commercial bank is more prominent. The business scope of the commercial bank, which is almost the foundation of our country’s financial system, covers most of the economic field, and other financial institutions’ development are all based in its platform. In recent years the banking industry in China is growing with unprecedented speed and scale. With the four state-owned commercial banks listed, it is an inevitable choice for the commercial banks to list at home and abroad. Therefore, to analyze the earnings quality of the listed commercial banks appears to be particularly critical.This article analyzed the definition, characteristics and influencing factors of earnings quality and aimed at establishing a market-oriented assessment system of the earnings quality on basis of the combination of qualitative and quantitative analysis. From a qualitative point of view, the analysis of the earnings quality of listed commercial bank should carry out from five aspects, which contains the social environment, financial sector conditions, the choice of accounting policies, internal governance structure and the audit opinions. From the quantitative point of view, this article uses factor analysis to establish the evaluation system of the earnings quality. Through this method, financial data for three years of16listed commercial banks in Shanghai Stock Exchange and Shenzhen Stock Exchange are selected, and the research is taken out on the following five aspects, those are growth, profitability, liquidity, safety and structural of the earnings. At the end of this article, conclusion is drawn and the policy recommendations are put forward.