The Relationship Between the Adjusting Earnings Per Share and the Market Quality Indexes of the Listed Company 1

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1 MANAGEMENT SCİENCE AND ENGİNEERİNG Vol. 4, No. 3,, ISSN [Print] ISSN 93-35X [Online] The Relationshi Between the Adusting Earnings Per Share and the Maret Qualy Indexes of the Listed Comany LI Xiang-li SUN Shao-rong 3 Abstract: The adusting earnings er share can be more directly reflect the list comanies the main business income s net rof. Selected the indeendent variables by the stewise method in the maret qualy indexes by the Shanghai Stoc Exchange listed comanies samles, and established the multile linear regression model among the relative effective sread, the liquidy index as the indeendent variables and the adusting earning er share as a deendent variable. The linear relationshi was significant and the residual random variable distribution was the normal distribution and the variance homogeney assumtion was established. Keywords: the adusting earnings er share; the relative effective sread; the liquidy index; the multile linear regression; the maret qualy indexes. INTRODUCTION The non-recurring gains and losses usually refers to relate directly to the income and exendure the main business, including the oerating income, the oerating exenses, the stoc disosal income, the subsidy income and other subects. The earnings er share including non-recurring gains and losses reflect the comany's overall rofabily. Per share after deducting non-recurring gains and losses is to better reflect the comany's main business rofabily. We should refer er share after deducting non-recurring gains and losses when evaluating the comany s investment value, and mae the right investment choices combing wh the other indicators. Net earnings er share (adusting earning er share) = net rof after non-recurring earnings er share 4. The china stoc maret is the earlier stages than the foreign stoc maret. The maret qualy is the core cometiveness comrehensive reflection and is the guidelines to romote the maret innovation and develoment to the maret organizers and is the imortant investment basis to the investors. 5 The roect is suorted by the fundation of the doctoral rogram of the Ministry of Education of the Peole s Reublic of China 教育部博士点基金项目 (75). School of Management, the universy of Shanghai for science and technology, Shanghai 93, China. 3 Shiiazhuang Universy of Economics, Shiiazhuang 53, China 4 Anonymous, the Adusted Earnings Per Share [EB / OL]. Htt://baie.baidu.com/view/38576.htm. 5 Shanghai Stoc Exchange Innovation Lab. Shanghai Stoc Exchange Maret Qualy Reort [R]. Shanghai: Shanghai Stoc Exchange, 8,3. *Received Aril 8 ; acceted 8 July 55

2 LI Xiang-li; SUN Shao-rong/Management Science and Engineering Vol.4 No.3, x, x ( ) in the The random variable Y often relates to wh a number of common variables ractical roblems. TheY has a distribution when the x, x are a grou determined value.if the Y mathematical exectation exists and is the x, x s function, then is denoted ux (, x,... x ). The ux (, x,... x ) are the regression function of the Y about the x, x.if ux (, x,... x ) is the linear function of the x, x, then is the multile linear regression model. The Y b bx b x b x N..., (, ) b, b,..., b, are the indeendent arameters and have no related to the x, x.(sheng et al., 8) What is the relationshi the maret qualy indexes wh the investment earnings?. MODEL Samle selection: The maret qualy indexes of the No.6 to the No.68 the listed comanies in the Shanghai Stoc Exchange in 8 were selected random as the samle. Samles Source: The Maret Qualy Reort in the Shanghai Stoc Exchange (9) (In fact is the data of the maret qualy in 8). The Panorama Networ ( htt:// ). Samle data rocessing: The adusting earning er share as the deendent variable and all the maret qualy indexes (the rice imact index, the liquidy index, the large transaction costs, the stalls total and the relative bid-as sread, the relative effective sread, the volatily, excess volatily, the return volatily, the rice efficiency coefficient and the ricing error coefficient) as the indeendent variables will do regression analysis using the Sss software. The stewise aroach selects the indeendent variable in order to avoid variables highly correlation. The stewise aroach standard is the F statistic theoretical robabily.if the indeendent variable artial F statistic robabily P value is less than.5, the indeendent variable has a significant linear effect on the deendent variable and should enter the regression equation, meanwhile reect the null hyothesis tests. If the indeendent variable artial F statistic robabily P value is greater than., the indeendent variable has not a significant linear effect on the deendent variable and should remove the regression equation. The relative effective sread was entered in the first ste. The liquidy index was entered in the second ste. The multile correlation coefficient R increased from.459 to.55.the square multile correlation coefficient increased from. to.76.the regression equation exlained the 7.6% variation of the deendent variable. The adusted correlation coefficients ranged from.3 to.6.these values resond the intensy correlation between the indeendent variables and the deendent variable.the greater are these values, the stronger is the correlation. The estimate standard error reduced from.5849 to after the three indeendent variables were entered, the F test statistic was 8.6 and the test robabily was. These two values indicated the deendent variable and indeendent variables had significant linear relationshi and a linear model can be founded. 56

3 Model LI Xiang-li; SUN Shao-rong/Management Science and Engineering Vol.4 No.3, Table : Model Non-standardized coefficient Standardized coefficient Beta value Standard error Beta value t value Significance level Constant Relative effective sread Constant Relative effective sread Liquidy Index The table showed the regression model constant, the non-standardized regression coefficient B values and their standard errors, the standardized regression coefficient B value, the t value and the significance level. Therefore the regression equation was: The adusting earnings er share = the relative effective sread The regression coefficient significance level were,.4 which were less than resectively.5.the linear relationshi was significant and a linear model can be founded. The effective sread in the regression model is a difference between the order real transaction rice and the sell-buy order mid-oint rice. The higher is the effective sread, the higher is the order actual imlementation cost. The P is the weighted average rice of the stoc i in the moment t. The P M is the average ose of the best urchase rice of the urchase rice and the selling rice of the stoc i in the moment t. Then t he effective sread of the stoc i in the moment t is: Absolute effective sread = P M Relative effective sread = P P M M % The weighted average effective sread of the stoc i in d Days is: Absolute effective sread = n t P M W n P M Relative effective sread = W % P t Among W is the roortion of the stoc i in t moment of accounted for the continuous time of the total transaction time a day. The mobily imact index is also nown as the rice cost index.it is the transaction rice when the some extent changing of the order rice.the bigger is the mobily imact index, the better is the maret liquidy. The A, A, A,... A are many selling rices of the stoc i in the moment 3 and A A A3... A. The S, S, S 3,... S are the corresonding number of A, A, A3,... A. The B, B, B3..., B are the buying rices of the stoc i in the moment and B B B 3... B. The D, D, D3,... D are the corresonding number of the B, B, B..., B. Then the mobily index in 3 the moment t which maes the rice increase is M 57

4 LI Xiang-li; SUN Shao-rong/Management Science and Engineering Vol.4 No.3, S A A among A m A min( m ) A The mobily index in the moment t which maes the rice decrease is S B B B m B among min( m) B The rice mobily index which is u or down % in the moment t is the average of the mobily index increasing and decreasing Figure : Residuals Histogram The residual normal is assumed to be normal distribution in the regression analysis.(tan & MEI, 7) The figure was based on samle data. The results showed that the residuals comared wh the normal histogram comarison. The residual was normal distribution Figure : Students Removing Residual - Standardized Predicted Scatter The figure is a redicted value lot of a student removing residual standardized. The vertical axis is the student removing residuals and the abscissa is the standard redictive value. The oints of the figure were u and down uniform distribution in the zero oint of the vertical axis corresonds the straight line. Therefore the variance homogeney assumtion was founded. 58

5 LI Xiang-li; SUN Shao-rong/Management Science and Engineering Vol.4 No.3, 3. CONCLUSIONS The Shanghai Stoc Exchange issued China's first the stoc maret reort in 6.The maret qualy attracts the domestic and international many asects. The low transaction costs, the high liquidy, a reasonable offering rice and the low stoc maret volatily are the stoc maret goal. The investment income is also an imortant reflection of the maret qualy. It is imortant to imrove the maret qualy and efficiency to organizers and is necessary to have a reference to the investors and the regulators to establish the relationshi of the investment income and the maret qualy. REFERENCES Shanghai Stoc Exchange Innovation Lab. Shanghai Stoc Exchange Maret Qualy Reort [R]. Shanghai: Shanghai Stoc Exchange, 7,3. SHENG Zou, XIE Shi-Qian, PAN Cheng-yi. (8). Probabily and Statistics [M]. Beiing: Higher Education Press: 33. TAN Rong-bo, MEI Xiao-ren.(7). Sss Statistical Analysis Practical Guide [M]. Science Press: 6. 59