THE VALUE OF EARNINGS QUALITY IN EMERGING MARKETS: WHAT CAN WE LEARN FROM DIFFERENT EARNINGS MANAGEMENT APPROACHES?

This study investigates whether, and to what extent, corporate transparency and earnings quality are valued in such an emerging market as China where institutional environment is relatively weak and investors are somewhat unsophisticated. Empirical evidence indicates that tunneling based earnings management has a negative impact on firm value, while aggressive accrual management results in a valuation premium. These findings can be well...