51 Pages Posted: 28 Jul 2010 Last revised: 12 Dec 2012
Date Written: March 1, 2013
We examine the relation between managerial ability and earnings quality. We find that earnings quality is positively associated with managerial ability. Specifically, more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the bad debt provision, and higher quality accrual estimations. The results are consistent with the premise that managers can and do impact the quality of the judgments and estimates used to form earnings.
Keywords: Managerial ability, managerial efficiency, earnings quality, accruals quality
JEL Classification: M41
Suggested Citation: Suggested Citation
Demerjian, Peter R. and Lewis-Western, Melissa Fay and Lev, Baruch and McVay, Sarah E., Managerial Ability and Earnings Quality (March 1, 2013). Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1650309 or http://dx.doi.org/10.2139/ssrn.1650309