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A returns-based representation of earnings quality

Publication ,  Journal Article
Ecker, F; Francis, J; Kim, I; Olsson, PM; Schipper, K
Published in: Accounting Review
January 1, 2006

We examine the properties of a returns-based representation of earnings quality, estimated from firm-specific asset-pricing regressions augmented by an earnings quality mimicking factor. The coefficient on the earnings quality factor (the "e-loading") captures the sensitivity of the firm's returns to earnings quality in a given year or quarter, analogous to beta as a measure of the sensitivity of returns to market movements. Relative to other proxies for earnings quality, e-loadings can be calculated for larger samples of firms and can be estimated for shorter intervals at any point in time. Along all dimensions examined, we find that e-loadings perform well in capturing notions of earnings quality.

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Published In

Accounting Review

DOI

ISSN

0001-4826

Publication Date

January 1, 2006

Volume

81

Issue

4

Start / End Page

749 / 780

Related Subject Headings

  • Accounting
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1501 Accounting, Auditing and Accountability
 

Citation

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Ecker, F., Francis, J., Kim, I., Olsson, P. M., & Schipper, K. (2006). A returns-based representation of earnings quality. Accounting Review, 81(4), 749–780. https://doi.org/10.2308/accr.2006.81.4.749
Ecker, F., J. Francis, I. Kim, P. M. Olsson, and K. Schipper. “A returns-based representation of earnings quality.” Accounting Review 81, no. 4 (January 1, 2006): 749–80. https://doi.org/10.2308/accr.2006.81.4.749.
Ecker F, Francis J, Kim I, Olsson PM, Schipper K. A returns-based representation of earnings quality. Accounting Review. 2006 Jan 1;81(4):749–80.
Ecker, F., et al. “A returns-based representation of earnings quality.” Accounting Review, vol. 81, no. 4, Jan. 2006, pp. 749–80. Scopus, doi:10.2308/accr.2006.81.4.749.
Ecker F, Francis J, Kim I, Olsson PM, Schipper K. A returns-based representation of earnings quality. Accounting Review. 2006 Jan 1;81(4):749–780.

Published In

Accounting Review

DOI

ISSN

0001-4826

Publication Date

January 1, 2006

Volume

81

Issue

4

Start / End Page

749 / 780

Related Subject Headings

  • Accounting
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1501 Accounting, Auditing and Accountability