Business, Management and Accounting
4 years ago

New study reveals how earnings quality impacts investor decisions and firm performance.

Journal of Accounting and Economics
Understanding earnings quality: A review of the proxies, their determinants and their consequences
Patricia M. Dechow, Weili Ge, Catherine M. Schrand

Paper Summary

The article reviews different ways to measure the quality of a company's earnings, like how consistent they are over time, how much is based on estimates, and how quickly they are reported. The quality of earnings can vary depending on the situation, and it is influenced by how well the company is actually performing. The researchers found that there is no one definition of earnings quality, and future research could focus on how a company's performance affects its earnings quality.

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