Earnings Quality and Firm Value: 30 Years of Portuguese Listed Firms
Earnings Quality and Firm Value: 30 Years of Portuguese Listed Firms
Earnings are crucial indicators for investors and decision-makers. This study examines howof seven key earnings attributes – Accrual Quality, Persistence, Predictability, Smoothness, Timeliness, Conservatism, and Value Relevance – affect market valuation, measured by Tobin’s Q, for Portuguese listed firms over three decades. Considering firm characteristics like size, capital structure, capital intensity, growth opportunities, insider ownership, and holding structures, along with industry and year fixed effects, we analyze the relationship between earnings quality and firm value. using data from 46 non-financial firms listed on the Lisbon Stock Exchange from 1987 to 2016, we find that accrual quality, predictability, and smoothness positively impact firm value, with accrual quality being the most significant. These findings are important for investors, financial managers, and stakeholders, highlighting the role of earnings quality in investment decisions and firm valuation.
JEL classification: G10; G14; G30
Earnings Quality, Earnings Management, Corporate Performance
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