Did New Accounting Standard Improve Accounting Earnings Quality?-The Evidence from the Listed Companies in Shanghai Security Exchange

This paper adds the variables that proxy for earnings quality and the revolution of accounting standard to the traditional return/earnings quantity model for the purpose of testing whether ERC of earnings quantity and quality had been improved due to the change of accounting standards. We use the accounting data of listed companies in Shanghai Security Exchange in year 2005 and 2007 as study sample. The result shows the new accounting standard does not improve the earnings quality substantially. We attribute it to the existence of temporary cost of accounting standard revolution and the imperfect of market condition for fair value accounting.