Title page for ETD etd-10112005-115737

Type of Document Dissertation
Author Martin, Kris Rowland
URN etd-10112005-115737
Title The Effect of Accounting Method Choice on Earnings Quality: A Study of Analysts' Forecasts of Earnings and Book Value
Degree PhD
Department Accounting and Information Systems
Advisory Committee
Advisor Name Title
Richardson, Frederick M. Committee Chair
Brown, Robert Committee Member
Easterwood, Cintia M. Committee Member
Easterwood, John C. Committee Member
Leininger, Wayne E. Committee Member
  • accounting method choice
  • book-to-market ratio
  • earnings quality
Date of Defense 2002-03-01
Availability unrestricted
Whether the quality of a firm's reported earnings affects investors' ability to predict

future earnings and stock returns is still a subject of much debate among accounting researchers.

Lev (1989) suggests that low quality earnings may be causing the relatively low correlation

between reported earnings and stock returns (or the market's evaluation of future earnings). This

dissertation used the valuation model described in Ohlson (1995) and Feltham and Ohlson

(1995) to explore the possible links between accounting method choices and the ability of

investors to use reported earnings to predict future earnings. The results demonstrate that prior

researchers' assumptions regarding which accounting methods are generally conservative or

liberal are reasonably accurate over large numbers of firms. The results also show that one

group of analysts (Value Line Investment Survey) is able to predict future earnings more

accurately over medium-term and long-term forecast horizons for firms using generally

conservative accounting methods than those firms employing generally liberal accounting


This research adds to the prior "quality of earnings" research by showing that analysts

can predict earnings more accurately for certain classes of firms (i.e., firms using conservative

accounting methods), thus increasing our knowledge of what constitutes high-quality earnings.

The research also explores the effects of growth on the quality of earnings question, the effects

of firm size, leverage, and industry membership on the relationship, and the robustness of the

Feltham and Ohlson Model to alternative definitions of key components of the model.

  Filename       Size       Approximate Download Time (Hours:Minutes:Seconds) 
 28.8 Modem   56K Modem   ISDN (64 Kb)   ISDN (128 Kb)   Higher-speed Access 
  Martin_Kris_R_200203_phd.pdf 493.90 Kb 00:02:17 00:01:10 00:01:01 00:00:30 00:00:02

Browse All Available ETDs by ( Author | Department )

dla home
etds imagebase journals news ereserve special collections
virgnia tech home contact dla university libraries

If you have questions or technical problems, please Contact DLA.