Earnings Quality in U.K. Private Firms

Posted: 14 Apr 2004 Last revised: 26 Apr 2009

See all articles by Ray Ball

Ray Ball

University of Chicago - Booth School of Business

Lakshmanan Shivakumar

London Business School

Multiple version iconThere are 2 versions of this paper


UK private and public companies face substantially equivalent regulation on auditing, accounting standards and taxes. We hypothesize that private-company financial reporting nevertheless is lower quality due to different market demand, regulation notwithstanding. A large UK sample supports this hypothesis. Quality is operationalized using Basu's (1997) time-series measure of timely loss recognition and a new accruals-based method. The result is not affected by controls for size, leverage, industry membership and auditor size, or by allowing endogenous listing choice. The result enhances understanding of private companies, which are predominant in the economy. It also provides insight into the economics of accounting standards.

Keywords: Earnings quality, conservatism, loss recognition, private firms, economics of accounting standards, earnings time series, accruals

JEL Classification: M41, M44, M47, K22, N24

Suggested Citation

Ball, Ray and Shivakumar, Lakshmanan, Earnings Quality in U.K. Private Firms. Journal of Accounting & Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=530042

Ray Ball (Contact Author)

University of Chicago - Booth School of Business ( email )

Lakshmanan Shivakumar

London Business School ( email )

Regent's Park
London, NW1 4SA
United Kingdom
+44 20 7000 8115 (Phone)
+44 20 7000 8101 (Fax)

HOME PAGE: http://faculty.london.edu/lshivakumar/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics