An Empirical Study On Influencing Factors Of Earnings Persistence Of Listed Companies In China

Accounting earnings is the most concerned indicator of businesses and investors.Earnings include two aspects: surplus number and surplus quality. Poor qualitysurplus can not provide useful information for decision, so surplus quality is the coreof earnings. Earnings quality is reflected in three aspects: earnings persistence,earnings predictability and earnings volatility. Earnings persistence will be theresearch starting point of this paper. Researching the influencing factors of earningspersistence will be the next step, and we think this work can help listed companies toimprove their earnings persistence.The data of this paper is derived from China’s manufacturing listed companies. Thepaper models to earnings persistence and its influencing factors. First, on the basis ofliterature research, we summarize the advantages and disadvantages of currentearnings persistence evaluation models and build a three-stage evaluation model forearnings persistence. Second, on the basis of the three-stage evaluation model, wecalculate earnings persistence scores of sample listed companies and do a briefanalysis. In order to test the validity of scores, we do the Gradient Test. Third, basedon the earnings persistence sores, we build6panel data models by Housman Test andF Test, then research the impact of ownership structure, features of the board, marketshare, fixed cost structure and invest size on earnings persistence, and we find that:ownership concentration and board size have an “U” linear relationship with earningspersistence; proportion of state-owned shares has an inverted “U” linear relationshipwith earnings persistence; ownership balance degree, proportion of institutionalownership, proportion of the independent director and firm size have significantpositive influence on the earnings persistence; duality and capital structure havesignificant negative influence on the earnings persistence; firms with lower marketshare can improve the earnings persistence by increasing their market share, but notfor firms with higher market share; firms with higher market share can improve theearnings persistence by increasing their fixed cost, but not for firms with lowermarket share; expanding investment can help all firms to improve their earnings persistence.