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| Author: | Dechow, P. Ge, W. Schrand, C. |
| Title: | Understanding earnings quality: A review of the proxies, their determinants and their consequences |
| Journal: | Journal of Accounting & Economics
2010 : DEC, VOL. 50:2-3 p. 344-401 |
| Index terms: | earnings management accounting quality valuation measurement capital costs |
| Freeterms: | quality of earnings accruals proxies |
| Language: | eng |
| Abstract: | Various measures have been used by researchers as indications of "earnings quality" including persistence, accruals, smoothness, timeliness, loss avoidance, investor responsiveness, and external indicators such as restatements and SEC enforcement releases. For each measure, causes of variation in the measure as well as consequences are discussed. In this paper, there is reached no single conclusion on what earnings quality is because "quality" is contingent on the decision context. It is also pointed out that the "quality" of earnings is a function of the firm's fundamental performance. The contribution of a firm's fundamental performance to its earnings quality is suggested as one area for future work. |
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