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The Accounting Review Vol. 88 No. 2 2013

Managerial Ability and Earnings Quality

Peter R. Demerjian1; Baruch Lev2; Melissa F. Lewis3; Sarah E. McVay4

1 Emory University · 2 New York University · 3 University of Utah · 4 University of Washington

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.

DOI
10.2308/accr-50318
Volume
88
Issue
2
Pages
463-498
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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