Earnings Quality Analysis Under New Accounting Standards

People in China always focus on the earnings information, because firstly earnings information has great relation with the investors which would help them have right decisions; Secondly, earnings information can also measure the performance of the management and earnings information can also be used to evaluate and oversee the financial behavior (including IPO, delisting and so on) in the stock market.China issued the Accounting Standards for Business Enterprises including 1 Basic Accounting Standard and 38 Specific Accounting Standards in Feb.26th 2006.The new Accounting Standard of China has little difference from the IAS/IFRS. However, the new Accounting Standard brings great changes compared to the old one, and the changes will lead to the direct influence on the accounting performance, corporate value, accounting policy, content of the financial reports and the information disclosure of the listed companies.This paper mainly studies the changes between the new and old Accounting Standards. First, we analyze the influence of the new Accounting Standards on the earnings quality in Normal Accounting method; then, we test the viewpoints by empirical research. The main viewpoints of this paper are: on one side, the new Accounting Standards (such as use of the fair value measurements) have improved the earnings relativity; on the other side, the new Accounting Standards also have influence on the earnings liability by changing the space of earnings management and other methods. To validate the viewpoints, we have the empirical analysis. The empirical evidences show that :(1)Overall, the new Accounting Standards improve the relativity between the stock price and the earnings information; (2)Specially, the investors identify the earnings information with different persistence gradually, and they only pay some attention to the profitability index ignoring other earnings index. Meanwhile, the new Accounting Standards make no difference at the phenomena; (3) The new Accounting Standards can't improve the relativity between the earnings information and the stock returns;(4) The earnings management hasn't make significant difference between under the old and the new Accounting Standards, but there are some companies which use the changes of new Accounting Standards for earnings management, so this area needs further study.