Title
The effect of earnings quality and country-level institutions on the value relevance of earnings
Document Type
Article
Publication Date
2009
Publication Title
Review of Quantitative Finance and Accounting
Volume
33
Issue
4
First Page
371
Keywords
Information, Transparency, Finance, Investment, Earnings, Cross-national analysis, Business And Economics--Banking And Finance
Last Page
391
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.
Recommended Citation
Cahan, Steven F.; Emanuel, David; and Sun, Jerry. (2009). The effect of earnings quality and country-level institutions on the value relevance of earnings. Review of Quantitative Finance and Accounting, 33 (4), 371-391.
https://scholar.uwindsor.ca/odettepub/30
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.