Repository logo
 
Publication

Impact of earnings quality on company's performance: a literature review

2020Book part Restricted access
Simple item page
dc.contributor.authorDuarte, Ana Filipa
dc.contributor.authorLisboa, Inês
dc.contributor.authorCarreira, Pedro
dc.date.accessioned2021-07-28T15:57:09Z
dc.date.available2021-07-28T15:57:09Z
dc.date.issued2020
dc.description.abstractPurpose: Stakeholders use financial information in their decision-making process. Although, if financial information lacks appropriate quality, stakeholders’ perceptions will be biased. Thus, understanding earnings quality is crucial. Earnings quality is linked with the thematic of earnings management, as managing earnings is likely to decrease their quality. More recently, the literature has turned its attention to the impact of earnings quality on company’s performance. This work aims to understand the characteristics of earnings quality and how can it be measured. Additionally, it plans to investigate the impact of earnings quality on company’s performance. Methodology: This work is a literature review about earnings quality and its impact on company’s performance. Seven characteristics of earnings quality are simultaneously considered: accruals quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism. Different measures of these characteristics are analyzed, by explaining the differences among them and identifying the specific cases when these characteristics can be used. Moreover, the impact of earnings quality on company’s performance is analyzed to investigate if low earnings quality has a negative impact on company’s performance. Different measures of performance/ratios are also addressed, both market-based and accounting-based. Findings: High earnings quality usually has a positive impact on performance since the investment and financing decisions are based on correct information, thus increasing company’s profits and value creation. The use of earnings management practices, or of other techniques that reduce earnings quality, increase the probability of financial distress, as decisions may not be accurate, and the company’s financial situation may be different from the one presented in the financial statements. Originality: This paper presents an in-depth study of earnings quality and its impact on company’s performance. Most studies focus on earnings management, or other specific characteristic of earnings quality, but in an isolated perspective. Few studies consider the seven characteristics of earnings quality simultaneously. This study addresses this caveat. Moreover, the impact of earnings quality on performance is also relevant, especially to stakeholders, for a better understanding of the company’s financial information and for better decision making that can increase the company’s value.pt_PT
dc.description.versioninfo:eu-repo/semantics/publishedVersionpt_PT
dc.identifier.citationDuarte, A., Lisboa, I., & Carreira, P. (2020). Impact of Earnings Quality on Company’s Performance: A literalure review. Proceeding of the Internacional Conference of Applied Business and Management. ISAG – European Business School, 296-306. ISBN: 978-989-54164-2-4pt_PT
dc.identifier.isbn978-989-54164-2-4
dc.identifier.issn2184-7428
dc.identifier.urihttp://hdl.handle.net/10400.8/5954
dc.language.isoengpt_PT
dc.peerreviewedyespt_PT
dc.publisherISAG – European Business Schoolpt_PT
dc.subjectEarnings qualitypt_PT
dc.subjectFinancial informationpt_PT
dc.subjectEarnings managementpt_PT
dc.subjectPerformancept_PT
dc.titleImpact of earnings quality on company's performance: a literature reviewpt_PT
dc.typebook part
dspace.entity.typePublication
oaire.citation.endPage301pt_PT
oaire.citation.startPage291pt_PT
oaire.citation.titleProceedings of the International Conference of Applied Business and Managementpt_PT
person.familyNameLisboa
person.familyNameCarreira
person.givenNameInês
person.givenNamePedro
person.identifier2201979
person.identifier.ciencia-id5510-48F2-54DF
person.identifier.ciencia-id0912-B574-FAB4
person.identifier.orcid0000-0003-2802-2589
person.identifier.orcid0000-0001-9416-8733
person.identifier.scopus-author-id55582040700
person.identifier.scopus-author-id56652730600
rcaap.rightsclosedAccesspt_PT
rcaap.typebookPartpt_PT
relation.isAuthorOfPublicationd738c31a-5c43-42ad-8643-e7349164d0e4
relation.isAuthorOfPublication513aff5c-500f-44fa-9bf7-93b8af9a6b87
relation.isAuthorOfPublication.latestForDiscovery513aff5c-500f-44fa-9bf7-93b8af9a6b87

Files

Original bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
2020_Duarte et al_cap.pdf
Size:
230.35 KB
Format:
Adobe Portable Document Format
Description:
Download

Collections

CARME - Capítulos de livros
ESTG - Capítulos de livros