This paper examines business cycle variation in the earnings-returns relation. Earnings are more persistent when growth rates are high (i.e., in an expansion) than when growth rates are low (i.e., in a recession). Earnings are more persistent when production is high (i.e., in a credit crunch period) than when production is low (i.e., in a reliquification period). Relatedly, earnings response co...

In this paper, I examine a new approach for measuring earnings quality, defined as the closeness of reported earnings to “permanent earnings,” based on firm decisions with regard to capital and labor investments. Specifically, I measure earnings quality as the contemporaneous association between changes in the levels of capital and labor investment and the change in reported earnings. This appr...

This study investigates the association between CSR and market pricing of accounting income numbers' persistence. More specifically, we examine whether evaluation earnings persistence relies on firm's activities. We find that overestimates earnings, leading to overprice for companies in Korean setting. also overprices components which are accruals cash flow from operations, companies. However, ...

the main purpose of current research is to determine the effect of financial crisis on earnings quality. in this study, earnings quality was measured by using three earnings persistence, earnings predictability and accruals quality. the measure of financial crisis in a company is to have at least one of three criteria: three consecutive years of losses (operating loss, net loss or retained), re...

While there are many alternative proxies for “earnings quality”, there is little evidence as to what auditors consider to be indicative of high earnings quality. To answer this, we examine the adjustments that auditors require companies to make to earnings during year-end audits. There are three findings. First, audit adjustments serve to increase earnings persistence, smoothness, and accrual q...