Empirical Study On Earning's Quality About Cash-flow Information

Since Ball and Brown's(1968) groundbreaking use of empirical study method to deal with the problem of usefulness of earnings information in account field, accounting scholars from home and abroad have been doing lots of researches on this topic and enjoying fruitful accomplishments in the field of earnings quality. However,such researches are mainly focus on earnings persistency and earnings response coefficient;few of them have taken cash flow into account,especially in empirical point of view.Meanwhile,abroad studies of earnings quality based on cash flow are mainly standing on the ground of more sophisticated markets.China has a different market and different accounting standards,thus might has different information of earnings quality.On the basis of unscrambling current theories of earnings quality,this article tries to take the path of normative research to define the connotation of earnings quality.Then,it studies the theory basis of earnings quality and concludes its evaluation criterion,which is serving as a fund for the relationship between earnings quality and the information contained in cash flow amount.After that,we gather financial data,which are from the year 2004 to 2007,of companies listed in Shanghai Stock Exchange,start from DKW Model and adjust and expand the data in order to suit China's economic feature and our study purpose.This article uses empirical method to research synthetically on both cash-flow information and earnings quality.We then check the efficiency of the former mentioned research and reach conclusion.