Can Information Transparency Improve Earnings Quality Attributes? Evidence from an Enhanced Disclosure Regime in Taiwan |
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Authors: | Yaying Mary Chou Yeh Hui-Wen Chen Mei-Ching Wu |
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Institution: | 1. National Dong Hwa University, Hualien, Taiwan;2. Audit Department, Deloitte &3. Touche, New Taipei City, Taiwan;4. Tainan City Police Department, Madou Precinct, Tainan City, Taiwan |
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Abstract: | Investors demand timely and accurate corporate disclosures in order to comprehend the governance and performance of a firm; they also rely on quality earnings information to assess the intrinsic value of a company. This study links the two using a Taiwan sample because the government of Taiwan has just performed a market-wide corporate-transparency rating. We find significant improvement on four accounting-based earnings-quality attributes, including accrual quality, earnings persistence, predictability, and smoothness. Further, there is a statistically reliable association between the level of information transparency and each of these earnings attributes, implying that a disclosure mechanism design can enhance management accountability in financial reporting. |
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Keywords: | earnings attributes earnings quality information transparency |
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