| Popis: |
This study explores the relationship between strategy and earnings quality. We focus on firms classified as prospectors or defenders, and we analyze the effects of different strategic choices on various attributes of earnings quality: (accrual and real) earnings management, conditional conservatism, and earnings persistence. Our sample comprises 30 countries for the period 2005–2019 and includes 120,205 firm-year observations. It seems that business strategy is significant-ly linked to earnings quality metrics. Specifically, prospectors systematically exhibit higher val-ues of absolute discretionary accruals, lower abnormal operating cash flows, lower abnormal production costs, and higher discretionary expenses. Moreover, prospectors are more condition-ally conservative and have more sustainable earnings. |
