An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Peter Demerjian
University of Michigan

Baruch Lev
New York University

Sarah McVay
New York University

Abstract: We examine the relation between managerial ability and earnings quality. We identify manager-specific effects by creating a measure of managerial ability using frontier analysis and separating manager-specific from firm-specific effects by following managers across firms. We find that earnings quality, measured by the extent that accruals map into cash flows, and managerial ability are significantly associated.

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