EARNINGS QUALITY BASED ON FAIR VALUE ACCOUNTING

Abstract

Fair value measurements are on the Transilvania Bank Group earnings from December 31, 2017 to December 31, 2018. We search on the correlation between fair value measurements and earnings quality. As the fair value is an independent variable, the earnings quality is a dependent variable. The data collected are from the Transilvania Bank Group annual reports between December 31, 2017 and December 31, 2018. The predictability, accruals quality, earnings smoothing and value relevance are the most important measures of earnings quality. Earnings quality and the quality of accounting information are in direct relation. The impact of fair value accounting on earnings quality is significant. With the adoption of fair values, earnings predictability at Transilvania Bank Group became quite high due to the variability of income. This thing alters the quality of the earnings and thus affects the choices that stakeholders can make.

Keywords

• earnings quality
• earnings predictability
• bank
• fair value accounting
• financial statements