This teaching guide is based on a comprehensive survey as well as in-depth interviews of Chief Financial Officers (CFOs). We ask the CFOs about the definition and drivers of earnings quality, with a special emphasis on the prevalence and detection of earnings misrepresentation. CFOs believe that...

In most European countries, U.S.-owned subsidiaries are required by law to file separate entity financial statements in local GAAP. We use this unique institutional setting to examine whether the Sarbanes-Oxley Act of 2002 (SOX) had a flow-through effect on the earnings quality of local GAAP...

This monograph provides a thorough review of earnings quality issues and analysis. Its primary objectives are to help gain a deep understanding of earnings quality and facilitate the development of comprehensive, granular, and contextual earnings quality indicators and analyses. While there are...

We ask nearly 400 CFOs about the definition and drivers of earnings quality, with a special emphasis on the prevalence and detection of earnings misrepresentation. CFOs believe that the hallmarks of earnings quality are sustainability, absence of one-time items, and backing by actual cash flows....

This paper examines the association between auditor's independence and financial analysts' forecast revisions in the specific case of goodwill impairment testing. Using a sample of 1,247 firm-year observations representing 177 firms listed on the CAC All-Tradable (the former SBF 250) over the...

This paper investigates whether the differences in audit quality between Big 4 and non-Big 4 auditors can be attributed to the client’s pre-audit financial reporting quality or to the differences in audit treatment via audit adjustments. Hand-collected pre-audit and audited financial statement...

Motivated by regulatory assertions that the purpose of SOX was to restore investor confidence in the securities markets, we examine changes in the stock market reaction to earnings restatements following the implementation of SOX in order to evaluate whether the Act's reforms have had a...

Recent studies have questioned the validity of the Basu asymmetric timeliness of earnings (AT) as the proxy for accounting conservatism. An important basis for the criticism is the negative association observed between AT and market-to-book ratio (MB), another proxy for conservatism. Drawing...

The paper investigates information content of net income, other comprehensive income items, and pseudo comprehensive income for Japanese firms. The relative information content test demonstrates net income is one of the most dominant income measures, and the incremental information content test...

Aim/purpose - This paper aims at investigating whether the International Financial Reporting Standard (IFRS) 15 Revenue from Contracts with Customers implementation in Poland has affected earnings management that uses discretion in revenue recognition to avoid losses and earnings decreases....