Purpose - Critical role of accounting and financial reporting is providing useful information for different and entitled users to help them in making economical decisions. While repeatedly it is stressed that the quality of financial information is a function of both the quality of accounting...

In recent years, there has been increasingly debate about ¬the impact of quality of accounting information on cost of capital or expected return of stock. The focus of these discussions is the quality of accruals. In particular, two recent papers by Francis et al (2004, 2005) were impressive...