Empirical Analysis On The Earnings Quality Of Publicly Listed Companies In China

At present, accounting theory circle and practice circle pay close attention to earnings quality together. The analysis of earnings quality is of great practical significance for guiding the investors to use the financial information reasonably to make decisions, guiding the reasonable capital flow and resource assignation and enhancing the investors'confidence on accounting vocation. At the same time, it is the urgent demand for the consummation of financial analysis system and further development of financial theory. At first, this paper discusses the definition, characteristic and influence factors of earnings quality by normative way. Then it draws lessons from foreign method of assessment of earnings quality, combines the characteristic of China's securities market, chooses information related to earnings quality from Chinese listed companies'financial statements as independent variable and examines whether earnings quality is related to the stock abnormal returns by empirical way. The regression result shows these five variables including provision for doubtful assets,inventory,sales and administrative expense,unusual earnings and audit opinion are positively related to stock abnormal returns. It shows that earnings quality can influence stock returns and the analysis of earnings quality is quietly effective in the security investment and decision. As the result of higher correlation coefficients between two variables and abnormal returns, unusual earnings and audit opinion can express earnings quality better. This paper also find the earnings quality of our listed companies is lower and our investors are lacking of sense to evaluate and analyze earnings quality at present. Therefore, the author makes some proposals in the end.