Managerial Ability and Earnings Quality
Demerjian, Peter R., Lev, Baruch, Lewis, Melissa F., McVay, Sarah E.
The Accounting Review · 2013 · Volume 88 · Issue 2
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. Data Availability:Data are publicly available from the sources identified in the text.
Keywords
managerial ability, managerial efficiency, earnings quality, accruals quality
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