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Disclosure Quality and Earnings Management

Posted: 13 Dec 2001  

Jian Zhou

University of Hawaii at Manoa

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

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Drawing upon the results of theoretical and empirical research on the relation between corporate disclosure and information asymmetry and on the relation between information asymmetry and earnings management, we hypothesize that the extent of earnings management is negatively related to corporate disclosure quality. We measure disclosure quality using the Association for Investment Management and Research's rankings of corporate disclosure and earnings management using discretionary accruals. Our empirical analysis, conducted on a sample of 803 firm-year observations, supports our hypothesis and provides evidence on management's use of the flexibility afforded under current minimum disclosure requirements to exercise discretion in reporting earnings.

Keywords: Disclosure quality; Earnings management

JEL Classification: D82, M41, M43, M45

Suggested Citation

Zhou, Jian and Lobo, Gerald J., Disclosure Quality and Earnings Management. Asia-Pacific Journal of Accounting and Economics, Vol. 8, No. 1, pp. 1-20, 2001. Available at SSRN:

Jian Zhou (Contact Author)

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

Gerald Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)


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