The Two-dimensional Earnings Facticity, Audit Opinion And Investment Efficiency

Information plays the fundamental role in capital market. Investors not justrequire more information disclosure by companies, they also need higher quality ofinformation. As the core financial information, accounting earnings information isimportant for investors to make their decisions. However, fraud accountinginformation keeps increasing the noise of capital market. This is damage to investorsand efficiency of capital market. Just as the leader of our country mentioned that fraudaccounting information is a serious problem which has great negative impact oneconomic development and various measures should be taken.Therefore, the numberof the disclosed information is explicit while the facticity is implicit.Although there are plenty of researches on the quality of accounting information,there is no systematic evidence on the facticity of accounting information which is theessential of accounting earnings quality. Facticity is the primary characteristic ofaccounting earnings information quality, the research on accounting earnings quality,accounting information quality and financial reporting quality is useless withoutconsideration of facticity.Firstly, this paper use normative study method to take theory analysis onaccounting earnings facticity from the basic theory of earnings, the characteristics ofaccounting earnings facticity and the function of accounting earnings. Thetwo-dimensional facticity of accounting earnings is proposed, that is, proceduralearning facticity and outcome earning facticity, and their definitions. Then, therelativity, individuality, sociality and two-dimension of accounting earnings areanalyzed. The conclusion shows that the improvement of two-dimensional facticity ofaccounting earnings can lead to higher investment efficiency.Secondly, two measurement models are constructed based on procedural earningfacticity and outcome earning facticity.The efficiency coefficient method is used tomake the score of two-dimensional facticity of accounting earnings standardized.Based on the central enterprise comprehensive performance evaluation rules, thispaper take grade evaluation on two-dimensional facticity of accounting earnings. Inorder to increase the accuracy and reliability of measurement model of proceduralearning facticity,the system modification and statistical test are taken to the total accuracy model.Nextly, this paper use the data from china capital market to empirically analyzethe situation of accounting earnings facticity.The results show that thetwo-dimensional facticity of accounting earnings in china is above average,procedural earning facticity is better than outcome earning facticity. There aresignificant differences in procedural earning facticity for firms in different stockexchanges, year, industry, types of controller and unfacticity of earnings, but thedifference is insignificant in whether the firm is ST or not.There are significantdifferences in all these aspects for outcome earning facticity.Because of the verification function of auditor will affect the economicconsequence of accouting earnings.This paper takes empirical test on thetwo-demensional facticity of accounting earings and audit opinion before the study ofthe investment efficiency and the two-dimensional earnings facticity.The resuls showthat firms with untruthful procedural earnings have audit opinion shopping,and thelower of procedural earning facticity leads to higher probability to have audit opinionshopping. The lower of outcome earning facticity leads to higher probability ofqualified audit opinion. Auditors can recognize the unfacticity of outcomingaccounting earnings.What’s more,the resuts shows that the low procedural earingsfacticity effectively relieves the ineffiency of investment,and the relieve affection tounderinvest is more significant than to overinvestment.The upunfacticity ofprocedural earnings relieves overinvestment,and the under unfacticity of proceduralearnings relieves underinvestment.On the contrary, the low outcom earings facticityeffectively deteriorates the ineffiency of investment,and the deteriorate affection tounderinvest is more significant than to.The upunfacticity of outcome earningsdeteriorates overinvestment,and the under unfacticity of outcome earnings deterioratesunderinvestment.