Using an earnings management model in which managers can manipulate the earnings announcement when the firm’s internal control system fails, this paper proposes a measure of earnings quality, based on Ganuza and Penalva’s (2010) notion of integral precision that can be estimated using either the time series of earnings or the relation between earnings and prices. I show that large scale frauds ...

SYNOPSIS: Earnings management remains a popular topic of debate and discussion among investors, regulators, analysts, and the public. One mechanism that might mitigate earnings management is auditors’ industry expertise. Using a large sample of clients of Big 6 auditors, this research examines the association between auditor industry expertise, measured in terms of both auditor market share in ...

The purpose of this study is to evaluate the effect of the characteristics of board of directors (Chief Executive Officer Duality, CEO tenure duration, size and independence of the board of directors) on earnings management. In this study, data from 62 companies listed in the Tehran Stock Exchange during the years of 2011 to 2015 were used. The statistical method used in this research is panel ...

The main objective of this research is to look at the relationship between intellectual capital and earnings quality in Indonesian banks. Intellectual measured by using EVAIC+, where indicators consist Human Capital Efficiency (HCE), Structural (SCE), Relational (RCE), Employed (CEE). Earnings discretionary accruals persistence. Furthermore, study also looks whether there a difference effect on...

This paper provides empirical evidence on whether the earnings fixation hypothesis can explain the accrual anomaly originally documented in Sloan (1996). Our analytical model yields the prediction that if investors fixate on reported earnings, the effectiveness of the accrual strategy will increase in the responsiveness of the stock price to earnings and the differential persistence of cash flo...

Information asymmetry in stock market can increase the risk of investment which in turn increases the capital cost of firms. Bhattacharya (1979) proposed a hypothesis that states dividend can act as a powerful signal in order to solve information asymmetry problem. We measured information asymmetry by lack of earnings transparency. Therefore we examine the effect of earnings transparency on cap...

cost by considering earnings quality for accepted companies in Tehran StockExchange. This survey investigates a population of 76 companies during the timeperiod of 2009-2014. The results show that under high earnings quality, the marketrisk factor, the book risk to market factor, and the size risk factor have positiveeffects, and the profit risk factor has negative effects on shareholders equit...