Dynamic Measurement Of Earnings Quality Of Listed Companies Of Automotive Industry

Researching company's earnings quality can help stakeholders evaluate the company's earnings. There are many factors affect income quality. A lot of financial index in financial report can reflect earnings quality. Much of these financial indicators are relevant. Automobile profession's characteristic and our country's national condition cause Automobile profession's earnings quality to be characteristic. After analyzing automobile profession industry characteristic and earnings quality's characteristic the author carry on factor analysis to extract index better. This paper extract 13 indicators reflect income reliability, cash flow, earnings growth and financial structure. There are five index can reflect equity structure and Profit-controlling.In recent decades, the development of structural equation modeling techniques is widely used in various fields. It is more reasonable to study the complex variables'causal relationship, for this reason, the techniques are paid attention by many researchers. This paper use a branch of structural equation model--SMART PLS model to measure the earnings quality, the model uses the principle of complex data tables, provides a new method to measure earnings quality and more improves the research of earnings quality.And it automatically inspect that each indicator explain significantly the latent variables,and automatically reach the interior hidden variables'scores.At the end the author establishes a latent-variables growth model with five year grading system on quality of earnings from 2005 to 2009. The model fitting effect is remarkable. Parameter estimation is consistent with the line chart. Finally, using the measured earnings quality's scores and utilizing the single-sample t test infer overall average. Meanwhile, hypothetically testing the overall average reach the scope of the earnings quality's changes in 2010 and 2011,under the 95% confidence interval, and implement the theoretical forecast of automobile industry's earnings quality.