The Relation between Reliability and Earnings Quality after Committing Accounting Standards

Abstract

This paper investigates the qualitative feature of reliability as a measure of evaluating earning accruals persistence in firms listed in TSE. To do this, we have tested two hypotheses. In the first hypothesis, earning accruals with less reliability are less persistent and in the second one reliability of financial information of listed firms changes after committing accounting standards, for a period of 9 years. The results show that any decreases in reliability of accruals cause decreases in earnings quality. Furthermore, we found that there exist no significant changes in reliability of accounting information after committing accounting standards over 2000 – 2009.

Keywords

• reliability
• Accruals
• Accounting standards
• Earnings Persistent