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© 2020

Earnings Quality

Definitions, Measures, and Financial Reporting

Book

Table of contents

  1. Front Matter
    Pages i-xi
  2. Elisa Menicucci
    Pages 1-22
  3. Elisa Menicucci
    Pages 23-51
  4. Elisa Menicucci
    Pages 53-82
  5. Elisa Menicucci
    Pages 107-137
  6. Back Matter
    Pages 139-147

About this book

Introduction

This book provides an overview of earnings quality (EQ) in the context of financial reporting and offers suggestions for defining and measuring it. Although EQ has received increasing attention from investors, creditors, regulators, and researchers in different areas, there are various definitions of it and different approaches for its measurement.

 The book describes the relationship between EQ and earnings management (EM) since they can be considered related challenges, especially in the context of international financial reporting standards (IAS/IFRSs). EM occurs when managers make discretionary accounting choices that are regarded as either an efficient communication of private information to improve the informativeness of a firm’s current and future performance, or a distorting disclosure to mislead the firm’s true performance. The intentional manipulation of earnings by managers, within the limits allowed by the accounting standards, may alter the usefulness of financial reporting and lead to lower quality of earnings. The use of fair value in financial reporting has created a current debate about the impact it might have on EQ. At times, the high subjectivity in estimating fair value can allow opportunities for the exercise of management judgments and intentional bias, which can reduce the quality of financial reporting. Management discretion can result in high EM and hence in a reduction of EQ. Particularly during difficult financial periods, managers engage in EM to mask the negative effects of the turmoil, and in such circumstances accruals and earnings smoothing are attempts to reduce abnormal variations of earnings in such circumstances. This book is a valuable resource for those interested in wider perspectives on EQ and it adds to the research studies on this topic in the context of financial reporting.

Elisa Menicucci is an Assistant Professor of Business Administration at the Department of Business Studies, University of Roma Tre, Rome, Italy. Her research focuses on accounting, business valuation, and integrated reporting, and she is also involved in editorial and review activities for various international journals. Elisa is a chartered accountant and auditor, and also provides consultancy services, mainly in the areas of accounting, auditing, and business valuation for financial institutions and companies.

Keywords

Earnings Quality Financial Reporting Measures of Earnings Quality Earnings Management Income Smoothing Accounting Quality IFRS IFRSs Adoption Fair Value Accounting

Authors and affiliations

  1. 1.University of Roma TreRomeItaly

About the authors

Elisa Menicucci is an Assistant Professor of Business Administration at the Department of Business Studies, University of Roma Tre, Rome, Italy. Her research focuses on accounting, business valuation, and integrated reporting, and she is also involved in editorial and review activities for various international journals. Elisa is a chartered accountant and auditor, and also provides consultancy services, mainly in the areas of accounting, auditing, and business valuation for financial institutions and companies.

Bibliographic information

  • Book Title Earnings Quality
  • Book Subtitle Definitions, Measures, and Financial Reporting
  • Authors Elisa Menicucci
  • DOI https://doi.org/10.1007/978-3-030-36798-5
  • Copyright Information The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020
  • Publisher Name Palgrave Pivot, Cham
  • eBook Packages Economics and Finance Economics and Finance (R0)
  • Hardcover ISBN 978-3-030-36797-8
  • Softcover ISBN 978-3-030-36800-5
  • eBook ISBN 978-3-030-36798-5
  • Edition Number 1
  • Number of Pages XI, 147
  • Number of Illustrations 1 b/w illustrations, 1 illustrations in colour
  • Topics Financial Accounting
  • Buy this book on publisher's site