Study On The Market Reaction To Earnings Quality Indexes Based On The Differences Of Complexity

Earnings information is the important basis for the investors to make investment decisions, and earnings quality is the premise to guarantee investors to make the correct decisions. There exists the phenomenon of “functional fixation” while ignoring the earnings quality in Chinese security market, but with the continuous perfection of the market system, improvement of the supervision level and gradual enhancement of the whole rationality of investors, the “functional fixation”phenomenon in Chinese security market are decreasing, and it could also gradually make the corresponding re actions to the indexes of the earnings quality. Due to the different complexity of the indexes of the earni ngs quality, some indexes are relatively simple and easy to understand, while some indexes are relatively complex and difficult to comprehend. So whether the Chinese markets in the early developing stage could comprehensively understand these quality index es of different complexity and make the correct reaction or not? In this article, based on the division of the complexity of the earnings quality indexes we will test that whether there exists the differentiation reaction in Chinese security market in order to improve the efficiency of the security market.In this article, start form the usefulness of the earnings information, and according to the basic theories of the efficient market hypothesis and the functional fixation hypothesis, meanwhile combine with the current status of Chinese security market to put forward the hypothesis that Chinese security market have differentiation reactions to the earnings quality indexes of different complexity. And select the listed companies from 2008 ~2013 as the samples to establish the multiple linear regression model, and the resear ch results show that: the market reaction to the earnings management levels is weaker than audit opinions, and the market reaction to net profitcashability indexes is weaker than the proportion of main operation profit. And the research also find that, Chinese security market pay more attentions to the relatively simple earnings quantity in dexes rather than the relatively complex earnings quality indexes.Generally speaking, although the efficiencies of Chinese security market are gradually improving, it still could not make the comprehensive and correct reactions to the earnings quality, and the markets are wholly tending to select the simple earnings quality indexes to observe, while ignore the complex earnings quality indexes.