A study of earnings quality and earnings management of companies accused by the Securities and Exchange Commission: 2007-2016

摘要

This article relates earnings quality with earnings management to determine if good or poor earnings quality is an indicator for financial or accounting irregularities by considering the persistence of earnings, cash flows and accruals between companies with high or low earnings quality. A sample of 61 companies accused by the Securities and Exchange Commission of accounting irregularities and 61 control companies were used. The data analysis showed that accused companies have poorer quality than control ones; similarly, control companies presented less discretionary accruals and better return on assets than accused ones.