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

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: November 6, 2009

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 (November 6, 2009). Corporate Ownership & Control, Vol. 7, No. 1, pp. 434-455, Fall 2009. Available at SSRN: https://ssrn.com/abstract=1578178

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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