Earnings quality and firm valuation: international evidence

Detalhes bibliográficos
Autor(a) principal: Gaio, Cristina
Data de Publicação: 2011
Outros Autores: Raposo, Clara
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10400.5/24371
Resumo: This study uses a sample of over 7000 firms in 38 countries to investigate the relation between firm valuation and earnings quality. We find a positive and significant relation between firm valuation and an aggregate earnings quality measure based on seven earnings attributes (accruals quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism). This relation is particularly strong for firms with greater investment opportunities and more need for external finance, and for firms in low investor protection countries. Thus, firms are able to compensate for a weak legal environment by adopting higher earnings quality standards, particularly when they need to gain access to global capital markets. Overall, our findings suggest that firms with higher earnings quality are valued more highly in stock markets, supporting the idea that investors require a premium for the information risk associated with lower-quality earnings.
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spelling Earnings quality and firm valuation: international evidenceEarnings QualityFirm ValuationCapital MarketsInvestor ProtectionThis study uses a sample of over 7000 firms in 38 countries to investigate the relation between firm valuation and earnings quality. We find a positive and significant relation between firm valuation and an aggregate earnings quality measure based on seven earnings attributes (accruals quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism). This relation is particularly strong for firms with greater investment opportunities and more need for external finance, and for firms in low investor protection countries. Thus, firms are able to compensate for a weak legal environment by adopting higher earnings quality standards, particularly when they need to gain access to global capital markets. Overall, our findings suggest that firms with higher earnings quality are valued more highly in stock markets, supporting the idea that investors require a premium for the information risk associated with lower-quality earnings.ARN Wiley-Blackwell PublishersRepositório da Universidade de LisboaGaio, CristinaRaposo, Clara2022-05-25T10:52:35Z20112011-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/24371engGaio, Cristina and Clara Raposo. (2011) ."Earnings quality and firm valuation: international evidence." Accounting & Finance, Vol. 51 No. 2: pp. 467-499info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-03-06T14:54:01Zoai:www.repository.utl.pt:10400.5/24371Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T17:08:26.237496Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv Earnings quality and firm valuation: international evidence
title Earnings quality and firm valuation: international evidence
spellingShingle Earnings quality and firm valuation: international evidence
Gaio, Cristina
Earnings Quality
Firm Valuation
Capital Markets
Investor Protection
title_short Earnings quality and firm valuation: international evidence
title_full Earnings quality and firm valuation: international evidence
title_fullStr Earnings quality and firm valuation: international evidence
title_full_unstemmed Earnings quality and firm valuation: international evidence
title_sort Earnings quality and firm valuation: international evidence
author Gaio, Cristina
author_facet Gaio, Cristina
Raposo, Clara
author_role author
author2 Raposo, Clara
author2_role author
dc.contributor.none.fl_str_mv Repositório da Universidade de Lisboa
dc.contributor.author.fl_str_mv Gaio, Cristina
Raposo, Clara
dc.subject.por.fl_str_mv Earnings Quality
Firm Valuation
Capital Markets
Investor Protection
topic Earnings Quality
Firm Valuation
Capital Markets
Investor Protection
description This study uses a sample of over 7000 firms in 38 countries to investigate the relation between firm valuation and earnings quality. We find a positive and significant relation between firm valuation and an aggregate earnings quality measure based on seven earnings attributes (accruals quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism). This relation is particularly strong for firms with greater investment opportunities and more need for external finance, and for firms in low investor protection countries. Thus, firms are able to compensate for a weak legal environment by adopting higher earnings quality standards, particularly when they need to gain access to global capital markets. Overall, our findings suggest that firms with higher earnings quality are valued more highly in stock markets, supporting the idea that investors require a premium for the information risk associated with lower-quality earnings.
publishDate 2011
dc.date.none.fl_str_mv 2011
2011-01-01T00:00:00Z
2022-05-25T10:52:35Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.5/24371
url http://hdl.handle.net/10400.5/24371
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Gaio, Cristina and Clara Raposo. (2011) ."Earnings quality and firm valuation: international evidence." Accounting & Finance, Vol. 51 No. 2: pp. 467-499
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
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dc.publisher.none.fl_str_mv ARN Wiley-Blackwell Publishers
publisher.none.fl_str_mv ARN Wiley-Blackwell Publishers
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron:RCAAP
instname_str Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
instacron_str RCAAP
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reponame_str Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
collection Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
repository.name.fl_str_mv Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
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