The Development of Earnings Quality in Germany and its Implication for Further Research: A Quantitative Empirical Analysis of German Listed Companies Between 1997 and 2006

42 Pages Posted: 11 Dec 2008 Last revised: 27 Mar 2010

See all articles by Paul Pronobis

Paul Pronobis

ESCP Europe - Department Financial Reporting and Audit (FRA)

Bernhard Schwetzler

HHL Leipzig Graduate School of Management - Department of Finance

Marco O. Sperling

University of Marburg - School of Business & Economics

Henning Zülch

HHL Leipzig Graduate School of Management

Date Written: September 9, 2008

Abstract

This paper investigates the development of earnings quality for a sample of 5,817 firm years during the period between 1997 and 2006 using seven different measures (accounting- and market-based). As a result, overall earnings quality of German firms improves over time. However, the measures of timeliness and value relevance indicate a decreasing earnings quality. These findings are tested by taking firm-specific accounting style into consideration using firm fixed effects.

Keywords: earnings quality, persistence, predictability, volatility, accruals quality, earnings management, timeliness, prudence, value relevance

JEL Classification: M41, M43, M47, G12

Suggested Citation

Pronobis, Paul and Schwetzler, Bernhard and Sperling, Marco O. and Zülch, Henning, The Development of Earnings Quality in Germany and its Implication for Further Research: A Quantitative Empirical Analysis of German Listed Companies Between 1997 and 2006 (September 9, 2008). Available at SSRN: https://ssrn.com/abstract=1266589 or http://dx.doi.org/10.2139/ssrn.1266589

Paul Pronobis (Contact Author)

ESCP Europe - Department Financial Reporting and Audit (FRA) ( email )

79, avenue de la République
Paris, 75011
France

Bernhard Schwetzler

HHL Leipzig Graduate School of Management - Department of Finance ( email )

Jahnallee 59
D-04109 Leipzig
Germany
+49-341-9851-685 (Phone)
+49-341-9851-689 (Fax)

Marco O. Sperling

University of Marburg - School of Business & Economics ( email )

Am Plan 2
Marburg, D-35037
Germany

Henning Zülch

HHL Leipzig Graduate School of Management ( email )

Jahnallee 59
Leipzig, Saxony D-04109
Germany
+49(341)9851701 (Phone)
+49(341)9851702 (Fax)

HOME PAGE: http://www.hhl.de/faculty-research/faculty/accounting-auditing/

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