Key points are not available for this paper at this time.
Although earnings quality has been an important part of literature in accounting and financial economics for some time, there are relatively few examples of empirical work designed to isolate the effects of variation in earnings quality on the returns to equity ownership in the marketplace. Building on the previous literature, we conduct a robust analysis of these effects by employing earnings restatements as a proxy for quality of earnings in a multi-factor return model. Our results indicate that material misstatements of earnings are priced risk factors that have persistent (long-run) impacts on equity returns. Applications to business practice are discussed in the light of these results.
Dempster et al. (Tue,) studied this question.