Line-Item Analysis of Earnings Quality

Nahum D. Melumad and Doron Nissim

Foundations and Trends(R) in Accounting, 2009, vol. 3, issue 2–3, 87-221

Abstract: In this paper, we discuss earnings quality and the related concept of earnings management, focusing on the primary financial accounts. For each key line-item from the financial statements, we summarize accounting and economic considerations applicable to that item, discuss implications for earnings quality, evaluate the susceptibility of the item to manipulation, and identify potential red flags. The red flags and specific issues discussed for the individual line-items provide a framework for fundamental and contextual analysis by academic researchers and practitioners.

Keywords: Earnings quality; Earnings management; Financial statement analysis (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:now:fntacc:1400000010

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