Influence Of Enterprise Management Ability On Earnings Quality

In this paper,we collect the annual disclosed data of Shanghai Stock exchanges and Shenzhen Stock exchanges from 2010-2016,for A-share listed non-financial companies,and examine the relationship between managerial ability and earnings quality.We pick accrual quality and earnings persistence as proxy to measure the variables of earnings quality.Then we apply Data Envelope Analysis methods to estimate the efficiency of the companies and eliminate the impact of firm-specific characteristics to obtain an estimation of managerial ability.We assume that managers with strong ability are able to accurately estimate accruals and transfer accruals into cash flow as well as acquire the greater earnings persistence.Our empirical results indicate that our measurement of earnings quality and managerial ability are effective and our hypotheses are tenable.We come to the conclusion that earnings quality is increasing with managerial ability.