Construction and Application of Comprehensive Evaluation Model for Corporate Profit Quality: Data from Chinese Listed Companies
Author(s)
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Abstract
The high quality of enterprise profits is crucial for the high-quality development of the economy. This paper proposes a comprehensive evaluation model for corporate profit quality based on the Decision Making Trial and Evaluation Laboratory based Analytic Network Process (DANP) technique and variable weights theory. The model is applied to Chinese listed companies, analyzing their profit quality from 2018 to 2022. The results indicate that the growth rate of profit quality declined in 2019-2020, and profit quality has been consistently decreasing since 2020. Upon further analysis of specific dimensions, it is observed that the profit structure and stability of listed companies have shown a continuous decline after 2019, with other dimensions also displaying unfavorable trends accompanied by significant fluctuations. Furthermore, an industry-specific analysis reveals that although the overall profit quality of Chinese listed companies has been declining since 2020, the profit quality of the scientific research and technical services industry has remained relatively high. This can be attributed to the impact of the COVID-19 pandemic, which resulted in poor and unstable profits for the core businesses of listed companies, leading to a weakened profit structure and stability, and an overall decrease in profit quality. During the pandemic, there was an increased demand for scientific research and technology, which drove the development of the scientific research and technical services industry and contributed to its higher profit quality
Keywords
Profit quality, Comprehensive evaluation model, Variable weights theory, DANP
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