This PhD paper investigates a) the impact of the financial crisis of 2008 on earnings quality, b) the joint effect of financial crisis of 2008 and investor protection on audit quality, c) the joint effect of audit quality and investor protection on earnings quality and d) the cost of capital and the changes of audit quality and earnings quality influencing on it due to financial crisis of 2008 in publicly listed firms in advanced countries as per level of investor protection. The sample is categorized into three clusters. Cluster 1 is referred as outsider economies with strong outsider protection and legal enforcement and clusters 2 and 3 are referred as insider economies with better and weaker legal enforcement systems respectively. Using linear regression analysis, 137.091 firm-years observations are analyzed, the earnings quality is examined by using 10 different measures (conservatism, value relevance, accruals quality, earnings persistence, earnings predictability, loss avoidance analysis and earnings smoothness), the audit quality is examined by using 6 different measures (audit fees, modified audit report opinion, auditor switch, status of audit firm, existence of audit committee and demand for auditing), the investor protection is examined by using 8 different metrics adopted from World Economic Forum (property rights, judicial independence, transparency of government policymaking, strength of auditing and reporting standards, efficacy of corporate boards, protection of minority shareholders' interests, strength of investor protection and legal rights index), and the cost of equity capital under constant growth model introduced by Palea (2007) and under PEG ratio method introduced by Easton (2004) is examined.The results are mixed among clusters and research periods. Specifically, first, the results show that during the financial crisis, earnings quality is decreased. However, this deterioration on earnings quality appears to be more severe in clusters 2 and 3
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