The Study On The Impact Of Earnings Quality On Accounting Information Value-relevance

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 much more important. Many scholars have test the value-relevance of earnings on China's stock market using the popular method in the international academia, and the conclusions are basically accordant, the results supported that the accounting information of the Listed Companies in China was correlative with the price of stock. However, in recent years, as the frequency of the financial scandal at home and abroad, and the prevalence of earnings management, People have questioned the quality of earnings which was disclosed by companies. Therefore re-examining the company's earnings value-relevance, evaluating the quality of the earnings of listed companies comprehensively, and checking the influence of earnings quality to earnings value-relevance are of great significant to the supervision of China's securities market, the disclosure of the listed companies and the investors' decision-making.This paper based on the concept of valuation point of view, analysis the relationship between the earnings information and the stock prices in theory. The paper uses the empirical research methods and the price model to test the earnings value-relevance of China's listed companies. The sample include 174 A shares of listed companies, which belongs to 6 industry, including: Apparel and textile industry; electrical machinery and equipment manufacturing industry; general machinery manufacturing; chemical materials and chemical products industry; transportation equipment manufacturing industry and real estate development and management industry. The paper uses Factor Analysis, evaluating the quality of the earnings of listed companies comprehensively, and takes the comprehensive assessment scores as the deputy variable of the earnings quality, then add the variables to the price model, and Positive test the impact of earnings quality to earnings value-relevance. The results show that:(1) The earnings quality of China's listed companies is relatively low. The earnings quality of the real estate development and management industry is the highest of all the 6 selected industries, the electrical machinery and equipment manufacturing industry is lower, followed by clothing and textile industry and chemical materials and chemical products industry. The earnings quality of transportation equipment manufacturing industry is the lowest of all. (2) Totally speaking, though earnings information of China's listed company has value relevance, but its relevance is not high. Some special years is not relevant even. This result shows us that the extent of the use of accounting statements is not enough.(3) Earnings quality has value relevance when the earnings information hasn't value relevance.(4) Earnings quality has incremental capacity to explain the value-relevance of earnings, the capacity of explanations is different in different years. This means that the investors concerned about the earnings quality in varying degrees in different years. Through research, the author found that this has great relation with the stock market situation of the annual report of the annual disclosure. If the stock market in a bear market, the investors will pay more attention to the earnings quality, its incremental information content is large; otherwise its incremental information content is small.