Earnings Quality, Accruals and Subjective Goodwill Accounting

This paper analyses accounting accruals that may relate to earnings quality and its information content. The characteristics specifying earning quality are discussed according to research surveys of earnings quality. These are compared with the characteristics of accounting income specified by the c...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Author Yuko Katsuo
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2008
Subjects
Earnings
Goodwill
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Summary:This paper analyses accounting accruals that may relate to earnings quality and its information content. The characteristics specifying earning quality are discussed according to research surveys of earnings quality. These are compared with the characteristics of accounting income specified by the concept of 'released from risks' in ASBJ (2006). In this context, the conversion process of subjective goodwill, which is related to the allocation problem in accounting income and its relation to earnings quality, is focussed upon. The allocation problem is examined by clarifying the conversion process of subjective goodwill, and by highlighting the portion of the allocation error that reflects managerial discretion.