Empirical Research On Chinese Listed Company's Earnings Quality

The quality of listed company's accounting information has always been highly valued by investors, creditors and government authorities. As the core part of accounting information, earning information seems more important. In recent years, many serious financial scandals of listed companies happened in the world, such as Enron, Worldcom and Dell in U.S.A and YinGuangXia, KeLong and CaoYuanXingFa in China etc. These scandals were all linked with earnings manipulation. So improving the quality of earnings has profound and lasting significance to the sound development of security market and protect of investors and creditors' interests. Based on this realistic background, this paper will dwell on the issues of "the concept and traits of earnings quality", "the influencing factors of earnings quality", "the present problems about the earnings quality of listed company" and "how to improve the earnings quality", so as to give a thorough and comprehensive understanding of earnings quality.Earnings quality is an evaluation of current earnings' facticity, profitability, stability and growth. And highclass earnings should contain three basic traits: firstly, it must be measured on practically accoured acctivities following accounting rules and systems; secondly, it must has a good ability of getting profibit; thirdly, it will be keeped on and go on developing in the long run. Earnings quality is influenced by many factors. The main influencing factors of earnings' facalty are accounting rules, security supervision and company's fathering structure. And company's fathering structure and its own ability of acquiring economic generator, are the main factors which influence earnings's profibility, stability and growth.Relying on the traits and influencing factors of earnings quality, this paper establishes a comprehensive evaluation system with 12 evaluating indicators, gives a comprehensive evaluation of listed company's earnings quality from 2003 to 2005 by the method of Factor Analysis. To verify the accuracy and rationality of the comprehensive evaluation system and its evaluation, this paper takes a further test on earnings quality' explanation to stock yield. The test verified that the comprehensive evaluation system is reasonable, and the evaluation can help stock investors in desition making.Aiming at the current problems of listed company's earning quality which were found in empirical research, then this paper put forward some relevant suggestions, which can be concluded on four respects: to perfect accounting criterion, to strengthen security supervision and to enhance company' ability of acquaring economic generator.