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Measuring Earnings Quality Over Time

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  • Yohan An

    (Department of Finance & Accounting, Tongmyong University, Republic of Korea)

Abstract

The purpose of this paper is to analyze earnings quality over the twelve years. We measure earnings quality as two types of dimensions: (1) Decision usefulness and (2) stewardship (or accountability) based on the conceptual framework of the International Financial Reporting Standards. This paper investigates earnings quality of listed firms on the Korean stock exchange using a sample of 9584 firm-year observations over the period 1995-2006. Earnings quality as decision usefulness is measured as persistence and value-relevance, while earnings quality as stewardship (or accountability is measured as conservatism and accruals quality. This study finds earnings quality of Korean firms is relatively lower than that of developed countries across three earnings quality dimensions except for conservatism. Thus, it is likely that Korean firms engage in earnings management in the presence of economic incentives, thereby reducing earnings quality

Suggested Citation

  • Yohan An, 2017. "Measuring Earnings Quality Over Time," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 82-87.
    • Handle: RePEc:eco:journ1:2017-03-12
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    References listed on IDEAS

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    Cited by:

    1. Elena Loredana DINU, 2022. "Assessing methods for the quality of financial and accounting information," Romanian Journal of Economics, Institute of National Economy, vol. 55(2(64)), pages 70-83, December.
    2. Shikhil Munjal & Gurcharan Singh & Palvi Jearth, 2021. "Assessing the Consistency among Accounting Measures of Earnings Quality: A Study of Stocks Listed on National Stock Exchange 500," International Journal of Economics and Financial Issues, Econjournals, vol. 11(4), pages 19-26.
    3. Kimouche Bilal, 2021. "Persistence and Predictive Ability of Earnings: Evidence from France and the UK," Economics and Business, Sciendo, vol. 35(1), pages 190-200, January.
    4. Kimouche Bilal, 2021. "Measuring Accounting Conservatism in Financial Reports: A Comparison Between France and the United Kingdom," Journal of Social and Economic Statistics, Sciendo, vol. 10(1-2), pages 56-75, December.

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    More about this item

    Keywords

    Earnings Quality; Decision Usefulness; Stewardship;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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