Managerial Ability and Earnings Quality
February 24, 2014 Leave a comment
THE ACCOUNTING REVIEW American Accounting Association
Vol. 88, No. 2 DOI: 10.2308/accr-50318 2013 pp. 463–498
Managerial Ability and Earnings Quality
ABSTRACT: We examine the relation between managerial ability and earnings quality.
We find that earnings quality is positively associated with managerial ability. Specifically,
more able managers are associated with fewer subsequent restatements, higher
earnings and accruals persistence, lower errors in the bad debt provision, and higher
quality accrual estimations. The results are consistent with the premise that managers
can and do impact the quality of the judgments and estimates used to form earnings.