Why Have Measures of Earnings Quality Changed Over Time
By Anup Srivastava. 2014
239 citations recorded by the source corpus.
The properties of earnings have changed dramatically over the past 40 years. Prior studies interpret this trend as a decline in earnings quality but disagree on whether it results from changes in the real economy or changes in accounting standards. I find that each new cohort of listed firms exhibits lower earnings quality than its predecessors, mainly because of higher intangible intensity. I conclude that the trend of decline in earnings quality is due more to changes in the sample of firms than to changes in generally accepted accounting principles (GAAP) or in the earnings quality of previously listed firms.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/6c96d202ca8e62d3a60b4db34bddd5202378fdb4
How researchers see this paper
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In Accounting
- Lorien Stice‐Lawrence
- Travis A. Dyer
- Mark H. Lang
- Christian Leuz
- Peter D. Wysocki
- Mostafa Monzur Hasan
- G. Iatridis
- L. Shivakumar
In Finance
- Travis A. Dyer
- Lorien Stice‐Lawrence
- Mark H. Lang
- Mostafa Monzur Hasan
- Christian Leuz
- Peter D. Wysocki
- L. Shivakumar
- G. Melloni
Citations in the corpus
- The Evolution of 10-K Textual Disclosure: Evidence from Latent Dirichlet Allocation (2017, background): “16 15 For example, Srivastava (2014) suggests that trends in value relevance of accounting data can be explained by changes in the sample composition of publicly-traded firms.”
- The deteriorating usefulness of financial report information and how to reverse it (2018, unknown): “Srivastava (2014) provides corroborating evidence: ‘I hypothesize that increases in intangible intensity reduce earnings quality …’ He then reports that the R2s of annual regressions of stock returns on the current levels and changes in earnings ‘… of the new-firm segment [intangibles-intensive…”