The Empirical Study Of The Impact Of Capital Structure In Listed Company On Earnings Quality

With the development and improvement of capital market and the expansions ofmany listed companies, some famous enterprises have made a few fraud scandals,which make people have to pay attention to the quality of corporate earnings. At thesame time the capital structure has been one of the most important problems infinancial and finance field, because it is related to many other aspects. Reasonablearrangement of enterprise’s debt structure can also help to improve other aspects, andthat is why people have frequently studied it. In the paper we have tried to associatethe capital structure with profit quality to find the correlation between them. Finallythrough the analysis of the research results, we hope to find out the solution to theoptimization of capital structure of the textile industry and the improvement ofearnings quality.In view of the problem we are studying, after having collected and reviewed therelated research situation of domestic and foreign capital structure and profit quality,we have proposed the research train of thought as follows: Firstly, we will define theindividual concept of the capital structure and the earnings quality, summarize therelated theories, and meanwhile also analyze the related literatures to discover thecurrent study situation. Secondly, on the basis of these studies we will describe thestatus of capital structure and profit quality of China’s textile industry for2008-2010years, analyze a large number of data, and then find out the inverted "U" typerelationship that may exist between them. Finally, we will employ the financial datafor2008-2010years of88listed companies in the textile industry and analyze theinfluence of capital structure on earnings quality by use of the SPSS11.5statisticalanalysis software based on the two curves and the multiple regression analysis.During the study, we will mainly adopt the literature analysis method of the standardanalysis method,factor analysis of empirical method, regression analysis andcomparative analysis method.The overall analysis results are as follows. There is a positive correlationbetween the ratio of liabilities to assets and earnings quality. There is a reverse "U" type relationship between capital structure and stress quality. There is a negativecorrelation between current debt ratio and earnings quality. There was a positivecorrelation between long-term debt ratio and earnings quality. There was positivecorrelation between net assets per share and earnings quality. There is a positivecorrelation between assets and earnings quality.According to the analysis results above some suggestions are given likingimproving the law and regulations system, changing the role of the banks, establishingenterprise bankruptcy system; strengthening enterprise information disclosure system;paying more attention to enterprise labor’s management quality; perfectingenterprise’s bond market; controlling the enterprise’s scale and choosing financingmeans reasonably.