Document Type

Article

Publication Date

2009

Publication Title

Review of Quantitative Finance and Accounting

Volume

33

Issue

4

First Page

371

Last Page

391

Keywords

Information, Transparency, Finance, Investment, Earnings, Cross-national analysis, Business And Economics--Banking And Finance

Abstract

This study investigates the relationship between the value relevance of earnings and earnings quality across countries. We find that there is a stronger relationship between earnings quality and the value relevance of earnings in countries with high investor protection than in countries with weak investor protection. We also find that the association between the value relevance of earnings and earnings quality is higher when a country's information environment is less opaque. Overall, our study documents evidence on international differences in the ability of stock prices to capture useful accounting information, consistent with the notion that the returns-earnings association reflects not only the quality of accounting earnings but also the informativeness of stock prices.

Comments

The article availbale for download is a post print. The definitive version was published in Review of Quantitative Finance and Accounting and is available here. Copyright (2012) Springer.

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