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

Kriengkrai Boonlert - U - Thai
Chulalongkorn University (Thailand)

Gary Meek
Oklahoma State University

Sandeep Nabar
Oklahoma State University

Abstract: This study explores the effects of investor protection on earnings quality assessed on the basis of four accounting-based earnings attributes (accruals quality, earnings persistence, earnings predictability, and earnings smoothness). The study hypothesizes that the least favorable values of each earnings attribute generally occur in countries whose institutional characteristics provide weaker investor protection than in countries with stronger investor protection. The results are mixed and it would appear that conclusions about earnings quality depend on how it is defined. If the study defines earnings quality based on earnings smoothness, the results are consistent with the study’s hypothesis. Conversely, if earnings quality is defined based on accruals quality and earnings predictability, the results contradict the study’s hypothesis, indicating that high accruals quality and high predictive ability of earnings appear to be found in countries whose investor protection is weak.

Back to Session Listing

AAA Home Page