ABSTRACT
The chapter describes measures of earnings quality in accounting theory and in empirical research in accounting and discusses the most commonly used quality attributes – such as earnings management, predictability, persistence, decision relevance, and income smoothing. Earnings management is the most frequently addressed topic in empirical research in accounting. The ambiguity of the concept of earnings management interacts with the problem in the positive or negative assessment of this phenomenon. Qualitative measures make it possible to predict and estimate future earnings by finding application in practice, particularly in business valuation models and investment decisions. This chapter discusses the most important accounting studies into the qualitative characteristics of earnings and presents the existing methodological approaches to measuring these phenomena.
