Earnings Quality: A Missing Link between Corporate Governance and Firm Value

Latif, Khalid; Bhatti, Arshad Ali; Raheman, Abdul

doi:10.22547/ber/9.2.11

Cited by 55 publications

(98 citation statements)

References 64 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…1 Greater risk helps firms to generate earnings. Firm size positively affects firm performance and is in line with the previous findings related to Pakistan [Latif, Bhatti, and Raheman (2017)]. The size factor is relevant with the view that larger firms do better than others in terms of survival while larger board size may ensure less exploitation of the resources due to monitoring of the independent members.…”

supporting

confidence: 86%

Corporate Financing and Firm Efficiency: A Data Envelopment Analysis Approach

Rahim¹,

Shah²

2019

PDR

View full text Add to dashboard Cite

This study investigates the endogenous determination of firm efficiency and leverage while testing the competing hypotheses of agency cost, efficiency-risk and franchise-value, in a sample of 136 non-financial firms listed on the Pakistan Stock Exchange (PSX), over the period 2002 to 2012. Data Envelopment Analysis (DEA) method is employed to measure firm efficiency as proxy for firm performance. The endogenous nature of firm efficiency and leverage allowed using two-stage least square (2SLS) technique. The findings of the efficiency equation suggest that leverage has a significant positive effect on firm efficiency. Additionally, firm risk, growth rate, size, board size and board composition positively affect firm efficiency. On the other hand, the results of the leverage equation suggest that firm efficiency has a significant negative effect on leverage. Firm size and CEO duality have positive effects on leverage while firm age, board composition, institutional ownership, managerial ownership and asset tangibility have negative effects on leverage. Generally, the results support agency cost and franchise-value hypotheses that higher leverage improves firm efficiency while higher firm efficiency results in reduced leverage. Keywords: Leverage, Firm Efficiency, Capital Structure, Firm Performance, Data Envelopment Analysis

show abstract

supporting

confidence: 86%

Corporate Financing and Firm Efficiency: A Data Envelopment Analysis Approach

Rahim¹,

Shah²

2019

PDR

View full text Add to dashboard Cite

show abstract

“…In aggrement with previous studies as i mentioned before, trend of research reccomended earnings quality as the most significant factors that effect to the financial effectiveness of companies (Gaio & Raposo, 2011). That research stated that a quality of earnings is supposed to allow companies to win public gain goodwill and confidence, so be able to achieve competitive advantage and superior subsequent performance (Latif et al, 2017).…”

Section: Related Workmentioning

confidence: 83%

The Effect of Earnings Quality on Financial Performance in Indonesia : is the State-Owned Bank better than Private Bank?

Utami

Nuzula

Damayanti

2019

APMBA

View full text Add to dashboard Cite

The primary objective of this study is to analyze the effect of earnings quality on financial performance of banks in Indonesia. The study also aims to compare in which type of banks the independent variable has more influence on the dependent variable, whether state-owned or private banking. Indicators for earnings quality are discretionary accruals and earnings persistence while measurements for financial performance are return on assets, return on equity, rate return on loans and total asset turn over. Eight conventional banks compared in this study are four government banks and four private banks. The authors apply Partial Least Square Multigroup Technique upon, research data from 2006 -2018 period. The results indicate that earnings quality has a positive significant influence on financial performance of the banks. Apparently, the effect of earnings quality on financial performance of private banks is greater than that of state-owned banks, showing that the types of bank moderates the influence of earnings quality on the financial performance. This study recommends the importance of improving earnings quality of state-owned banks. Furthermore, this study suggest that goverment companies should avoid earnings management in order to create good and high quality financial performance, especially in the banking sector in Indonesia.

show abstract

“…Adapting from Francis et al (2004); Gaio and Raposo (2014) and Latif et al (2017) this research evaluates earnings quality (EAQ) on seven attributes: (1) Accrual quality, (2) Persistence, (3) Predictability and (4) Smoothness as well as (5) Value relevance, (6) Timeliness and (7) Conservatism. Accrual quality is assessed on the view that earnings that map more closely into cash are more favorable.…”

Section: Methodsmentioning

confidence: 99%

“…Conservatism is evaluated as the ratio of the slope coefficients on negative returns to the slope coefficients on positive returns in a reverse regression of earnings on returns. The calculation of these seven attributes is based on indicators (items) and financial formulas as employed in previous studies (Francis et al, 2004;Gaio and Raposo, 2014;Latif et al, 2017). Based on Lee and Roh (2012) and Wang and Huynh (2014) this research measures corporate performance (COP) as accounting-based performance, which is evaluated on ROA (after-tax rate of return on total assets) and ROE (after-tax rate of return on shareholders" equity).…”

Section: Methodsmentioning

confidence: 99%

Earnings Quality with Reputation and Performance

Huynh

2018

Asian Economic and Financial Review

View full text Add to dashboard Cite

Article History JEL Classification:C51, G39, L25, M41.The quality of earnings is a potential driver of profit growth. However, it is regarded as a consequence of corporate reputation. Earnings quality is also suggested as a mediator intervening in the association between corporate reputation and corporate performance. This research employs the quantile regression to investigate the linkage between earnings quality and corporate performance. Then, it uses an indirect technique to analyze the mediating effect of earnings quality on the relationship between corporate reputation and corporate performance. The results provide statistical evidence on the comprehensive relationships among earnings quality, corporate reputation and corporate performance. The relationship between earnings quality and corporate performance is statistically supported in a more overall picture at different levels of corporate performance. Furthermore, this research offers statistical evidence on the mediating role of earnings quality in the impact of corporate reputation on corporate performance. The findings are expected to provide business managers with an insight into the complex links among earnings quality, corporate reputation and corporate performance, which will facilitate their decisions on the delivery level of good financial reports as well as on the maintenance of their corporate reputation to the extent that their company can obtain superior improved performance. Contribution/ Originality:This study contributes to the existing literature by providing statistical evidence on the mediating role of earnings quality in the effect of corporate reputation on corporate performance and it is the first to use the quantile regression to investigate the different effects of earnings quality on corporate performance. RESEARCH BACKGROUND AND PURPOSESeveral financial scandals, such as the major scandals of Enron and WorldCom, direct the attention of investors, researchers and also those concerned to the quality of financial information as well as the quality of reported earnings. Studies have begun to investigate the factors related to earnings quality released by publicly listed companies. Earnings quality is reported by previous researchers as being greatly essential to financial information users, practitioners and regulators as well as accounting researchers, because the earnings of companies are generally supposed to be an important information component offered in financial statements (Lev, 1989; Boonlert-U-Thai et al., 2006). If earnings quality is too low, users of financial statements can suffer negative effects, since poor earnings quality may enable investors to misallocate their money; therefore, they can obtain improper

show abstract

Earnings Quality: A Missing Link between Corporate Governance and Firm Value

Abstract: The existing literature concerning governance-value

Cited by 55 publications

References 64 publications

Corporate Financing and Firm Efficiency: A Data Envelopment Analysis Approach

Corporate Financing and Firm Efficiency: A Data Envelopment Analysis Approach

The Effect of Earnings Quality on Financial Performance in Indonesia : is the State-Owned Bank better than Private Bank?

Earnings Quality with Reputation and Performance

Contact Info

Product

Resources

About