| Equity investors are owners with residual interests in the companies and are concerned about t he entities’ ability to pay dividends and the likelihood that the price of stocks will increase.Due to t he development of security market,a central focus of financial analysis is evaluating not the quantit y of the earnings but also the quality.In order to make an empirical study on the earnings quality of tourism companies listed in China security market,the structural equation model was adopted in the article after analyzing the features,effects,and influencing factors of earnings quality,with 13 financial indicators from the four aspects.The model is based on the hypothesis that exogenous latent variable is a higher factor of and positive correlation with four endogenous latent variables,including profitability,reliability,growth and sustainability.Author calculated financial indicators of 27 listed tourism companies based on financial reports from 2010 to 2015.After validations and revisions on the model,the hypothesis was verified.After that,the weight of each index of the observations was calculated using the value of the load factors.Thus,a sore of earnings quality for each company was calculated and sorted with a brief evaluation of the result.One listed company,China International Travel Service Ltd(CITS),was picked for a detailed analysis on the earnings quality,and suggestions were made at the end.Endogenous latent variable load factor on the exogenous latent variables from high to low was showed in the model as follow,profitability,sustainability,growth,and reliability.Another word,profitability has the largest influence over the earnings quality.Investors could have a better understanding of the financial position of the companies as well as expectations about future.Thus,analyze the earnings quality could assist the decision making and reduce the risk of a certain investment. |
