Managerial Ability and Earnings Quality

Managerial Ability and Earnings Quality

We examine the relation between managerial ability and earnings quality. We find that earnings quality is positively associated with managerial ability. Specifically, more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the b...

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Veröffentlicht in:The Accounting review 2013-03, Vol.88 (2), p.463-498
Hauptverfasser: Demerjian, Peter R., Lev, Baruch, Lewis, Melissa F., McVay, Sarah E.
Format: Artikel
Sprache:eng
Schlagworte:
Accounting
Accruals
Business management
Cash flow
Cash management
Creative accounting
Debt
Debt management
Earnings
Earnings management
Estimation
Financial accounting
Financial management
Financial restatements
Industrial management
Judgement
Management theory
Managerial skills
Managers
Net income
Quality management
Studies
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Beschreibung
Zusammenfassung:We examine the relation between managerial ability and earnings quality. We find that earnings quality is positively associated with managerial ability. Specifically, more able managers are associated with fewer subsequent restatements, higher earnings and accruals persistence, lower errors in the bad debt provision, and higher quality accrual estimations. The results are consistent with the premise that managers can and do impact the quality of the judgments and estimates used to form earnings.
ISSN:0001-4826
1558-7967
DOI:10.2308/accr-50318