The Development of Earnings Quality in Germany and its Implication for Further Research
Corporate Ownership & Control, Vol. 7, No. 1, pp. 434-455, Fall 2009
Posted: 30 Mar 2010
Date Written: November 6, 2009
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: Suggested Citation