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Methodological Analysis of Accounting Quality – Empirical Approach to DeAngelo’s Model and the Modified Jones Model

Ervin Denich ()
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Ervin Denich: Lecturer, Budapest Business School,

Public Finance Quarterly, 2021, vol. 66, issue 2, 195 - 210

Abstract: This study fills the gap in domestic research of accounting quality. The aim of this study is twofold: the firs goal is to systemise and summarise the models designed to measure the quality of financial statements. The second goal is to investigate the financial statements prepared by manufacturing companies acting in Baranya Country, from quality perspective, applying the DeAngelo (1986) model and the modifield Jones model (1995). Earnings quality is measured by the change in total accruals divided by total assets, considering a 4-years period of time between 2016 and 2019. Calculating the T-statistic, the amount of total accruals is a negative figure in the covered period. Consequently, it might suggests that managers make some decisions, which have a decreasing impact on earnings level of a company. Although the results of this study show some evidence of earnings management, further investigation is required in order to provide a more confident conclusion.

Keywords: quality; earnings quality; accounting quality; quality measurement models; t-statistic (search for similar items in EconPapers)
JEL-codes: M40 M41 (search for similar items in EconPapers)
Date: 2021
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