Convergence of Earnings Quality Measurement Models

Document Type : Research Paper

Authors

1 Ph.D. student of Islamic Azad University, Qazvin Branch

2 Faculty Member of Bu Ali Sina University, Hamedan

3 Ph.D. Student of Accounting, Islamic Azad University, Qazvin Branch

4 Graduated Master

Abstract

Given the increasing importance of the concept "earnings quality", various models and criteria for its evaluation have been presented. The literature review of the subject of research has shown that, firstly, various definitions have been proposed for the concept "earnings quality", and secondly, different earnings quality models have the different describing and explaining power. In other words, the question that has led to this research is whether there is a convergence among the various criteria of earnings quality. In fact, this study examines whether the lack of unity in the earnings quality definitions is also evident in its measurement models or not. In order to answer this question, the earnings quality based on the five models of Dechow and Dichev (2002) , the McNichols model (2002) , the Ball and Shivakumar model (2006) , the Kasznik model (1999) and the McNichols and Stubben model (2008) for 155 The company listed in Tehran Stock Exchange during the years 2009 to 2015 is estimated. Then, the convergence of these variables is analyzed using correlation test. The results of the research hypothesis test show that there is no perfect convergence among the different criteria of earnings quality

Keywords

Main Subjects


منابع
بولو، قاسم و طالبی، میثم. (1389). معیارها و مدل‌های اندازه‌گیری کیفیت سود. بورس، 92، 10-18.
ثقفی، علی، بولو، قاسم و مهدی‌دانا، محمد. (1394). رابطه کیفیت سود و عدم تقارن اطلاعاتی. پژوهش‌های تجربی حسابداری، 4 (16)، 1-16.
رحمانی، علی و بشیری‌منش، نازنین. (1392). بررسی قدرت کشف مدل‌های مدیریت سود. تحقیقات حسابداری و حسابرسی، 4 (19)، 54-73.
صفرزاده، محمد حسین. (1392). کیفیت سود و معیارهای اندازه گیری آن. پژوهش حسابداری، 3 (9)، 125-145.
عباس‌زاده، محمدرضا و عارفی‌اصل، سولماز. (1394). مروری بر مفهوم کیفیت سود و طبقه‌بندی معیارهای سنجش آن. پژوهش حسابداری، 4 (17)، 93-110.
کردستانی، غلامرضا و مدافعی، پویا. (1391). بررسی توانایی مدل مبتنی بر درآمد اختیاری در مقایسه با مدل مبتنی بر اقلام تعهدی برای ارزیابی مدیریت سود. همایش ملی حسابداری، سیستان و بلوچستان.
مهرانی، ساسان، کامیابی، یحیی و غیور، فرزاد. (1396). بررسی تاثیر شاخص‌های کیفیت سود بر قدرت مدل‌های پیش‌بینی درماندگی مالی. بررسی‌های حسابداری و حسابرسی، 24 (1)، 103-126.
نمازی، محمد و رضایی، حمیدرضا. (1391). تاثیر نرخ تورم بر کیفیت سود شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران. پژوهش‌های تجربی حسابداری، 2 (5)، 67-91.
نیکومرام، هاشم، بادآورنهندی، یونس و همتی، محمد. (1394). بررسی روند رابطه بین کیفیت سود و قابلیت اعتماد در دوره بعد از الزام استانداردهای حسابداری. پژوهش‌های تجربی حسابداری، 5 (18)، 73-88.
نیکومرام، هاشم، نوروش، ایرج و مهرآذین، علیرضا. (1388). ارزیابی مدل‌های مبتنی بر اقلام تعهدی برای کشف مدیریت سود. پژوهش‌های مدیریت، 82، 1-20.
Abbaszadeh, MR. , Arefiasl, S. (2015). A Review of the Concept of Earnings Quality and Classification Criteria for Measuring it. Journal of Accounting Research, 5 (1) , 93-110. (In Persian)
Ball, R. (2013). Accounting Informs Investors and Earnings Management is Rife: Two Questionable Beliefs. Accounting Horizons, 27 (4) , 847-853.
Ball, R. , Shivakumar, L. (2005). Earning quality in UK private firms: comparative loss recognition timeliness. Journal of Accounting and Economics, 39 (1) , 83-128.
Ball, R. Shivakumar, L. (2006). The role of accruals in asymmetrically timely gain and loss recognition. Journal of Accounting Research, 44 (2) , 207-242.
Barth, M. Wayne, L. & Lang, M. (2008). International Accounting Standards and Accounting Quality. Journal of Accounting Research, 46 (3) , 467-498.
Beneish, M. & Vargus, M. (2002). Insider trading, earnings quality, and accrual mispricing. The Accounting Review, 77 (4) , 755-791.
Bernard, V. L. & Stober, T. L. (1989). The nature and amount of information in cash flows and accruals. The Accounting Review, 64 (4) , 624-652.
Bolo, GH. Talebi, M. (2010). Criteria and models of earning measurements. Bourse Economic. 92, 2-10. (In Persian)
Bushman, R. M. and Smith, A. J. (2001). Financial accounting information and corporate governance. Journal of Accounting and Economics, 32, 237-333.
Chen, T. K, Liao, H. H. and Tsai, P. L. (2011). Internal liquidity risk in corporate bond yield spreads. Journal of Banking and Finance, 35, 978-987.
Collins, D. W. , Pungaliya, R. S. , Vijh, A. M. (2017). The Effects of Firm Growth and Model Specefication Choices on Tests of Earnings Management in Quarterly. The Accounting Review, 92 (2) , 69-100.
De Angelo, L, 1986, accounting numbers as market valuation substitutes: A study of management buyouts of public stockholders. The Accounting Review 61 (3) , 400-420.
Dechow, P. and Dichev, I. (2002). The Quality of Accruals and Earnings, the Role of Accruals in Estimation Errors. The Accounting Review, 77, 35-59.
Dechow, P. M. , R. G. Sloan, A. P. Sweeney, (1995) , Detecting of earnings management. Journal of accounting review, 70 (2) , 193-225.
Deloitte & Touche. (2004). Quality of Earning. Integrity & Quality: Quality of Earnings.
Evert, R. and Wagenhofer, A. (2011). Earning Quality Metrics and What They Measure. Working paper, Graz University.
Francis, J. , LaFond, R. , Olsson, P. and Schipper, K. (2004). Cost of Equity and Earnings Attributes. The Accounting Review, 79 (4) , 967-1010.
Francis, J. , LaFond, R. , Olsson, P. M. and Schipper, K. (2005). The market pricing of accruals quality. Journal of Accounting and Economics, 39, 295–327.
Gaio, C. & Raposo, C. (2011). Earnings Quality and Firm Valuation: International Evidence. Accounting and Finance, 51, 467-499.
García-Teruel, P. J. , Martínez-Solano, P. , and Sánchez-Ballesta, J. P. (2014) , the role of accruals quality in the access to bank debt. Journal of Banking and Finance, 38 (1) , 186-193.
Gomariz, M. F. C. , Ballesta, J. P. C. (2013) , Financial Reporting Quality, Debt Maturity and Investment Efficiency. Journal of Banking and Finance, 40, 494-506
Healy, P. M. , (1985) , Evidence on the effect of bonus schemes on accounting procedure and accrual decisions. Journal of Accounting and Economics, 7, 85-107.
Jackson, A. B. , B. R. Rountree, and K. Sivaramakrishnan (2017) , Earnings Co-movement and Earnings Manipulation. Review of Accounting Studies, 22 (3) , 1340–65.
Jones, J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 29, 193–228.
Jones, K. , V. Krishnan & K. Melendrez. (2007). Do Models of discretionary accrual detect actual cases of fraudulent and restated earnings? An empirical evaluation. seminar participants at the Louisiana State University, Nanyang Technological University, University of Arizona, and Virginia Commonwealth University.
Kasznik, R. (1999). On the association between voluntary disclosure and earnings management. Journal of Accounting Research, 37, 57–81.
Kordestani, GH. R. , Modafeei, P. (2012). Investigating the ability of an optional model based on the model based on accrualsfor evaluation earning management. National Accounting Conference, Sistan University. (In Persian)
Kothari, S. P. , A. J. Leone, C. E. Wasley, (2005). Performance matched discretionary accruals measures. Journal of accounting and economics, 39, 163-197
Lobo,G. J. Song, M. & Stanford, M. (2012). Accruals quality and analysis coverage. Journal of Banking and Finance, 36, 497-508.
Lu, C. W, Chen, T. K. and Liao, H. H. (2010). Information uncertainty, information asymmetry and corporate bond yield spreads. Journal of Banking and Finance, 34, 2265-2279.
McNichols, M. (2002). Discussion of the Quality of Accruals and Earnings: the Role of Accrual Estimation Errors. The Accounting Review, 77, 61-69.
McNichols, M. and Stubben, S. (2008). Does earnings management affect firms’ investment decisions. The Accounting Review, 83, 1571–1603?
Mehrani, s. , Kamyabi, y. , Ghayour, F. (2017). Reviewing the Effectiveness of Earnings Quality Indices on the Power of Financial Distress Prediction Models. Quarterly Journal of the Iranian Accounting and Auditing Review. 24 (1) , 103-126. (In Persian)
Mikhail, M. B. , Walther, B. R. & Willis, R. H. (2003). Reactions to Dividend Changes Conditional on Earnings Quality. Journal of Accounting, Auditing & Finance, 18 (1) , 121-151.
Namazi, M. , Rezaei, H. R. (2012). The Effect of Inflation Rates on the Earnings Quality of the Companies Listed on Tehran Stock Exchange (TSE). Journal of Emprical Research in Accounting, 2 (5) , 67-91. (In Persian)
Nikoomaram, H. , Badavar Nahandi,Y. , Hemmati, M. (2016). The Relation between Reliability and Earnings Quality after Committing Accounting Standards. Journal of Emprical Research in Accounting, 5 (18) , 73-88. (In Persian)
Nikoomaram, H. , Noravesh, I. , Mehrazin, A. (2010). Assessment of accruals-based models to explore earnings management. Management Research, 82, 1-20. (In Persian)
Rahmani, A. , Bashirimanesh, N. (2013). Investigating of discovery power of earnings management models. Auditing & Accounting Research, Iranian Accounting Association, 4 (19) , 54-73. (In Persian)
Safarzadeh, MH. (2013). Earnings quality and its Measurments. Journal of Accounting Research, 3 (1) , 125-145. (In Persian)
Saghafi, A. , Bolo, GH. Mehdidana, M. (2015). The Relation between Earnings Quality and Information Asymmetry in the Firms. Journal of Emprical Research in Accounting, 4 (16) , 1-16. (In Persian)
Schipper, K. And Vincent, L. (2003). Earnings quality. Accounting Horizons, 17, 97-110.
Sloan, R. G. (1996). Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review, 71, 289-315.
Tomy R. E. (2012). Earnings Persistence over the Business Cycle. Working paper. Stanford University.
Velury, U. , Jenkins, D. S. (2006). Institutional ownership and the quality of earning. Journal of Business Research, 59 (9): 1043- 1051.
Visvanathan, G. (2006). An empirical investigation of closeness to cash as a determinant of earnings response coefficients. Accounting and Business Research, 36 (2) , 109-120.