@article{Bhattacharya:127185,
      recid = {127185},
      author = {Bhattacharya, Utpal and Daouk, Hazem and Welker, Michael},
      title = {The World Price of Earnings Opacity},
      address = {2003-02},
      number = {642-2016-44003},
      series = {WP 2003-04},
      pages = {52},
      year = {2003},
      abstract = {We analyze the financial statements of 58,653 firm-years  from 34 countries for the period 1985-1998
to construct a  panel data set measuring three dimensions of reported  accounting earnings for each country –
earnings  aggressiveness, loss avoidance, and earnings smoothing. We  hypothesize that these three
dimensions are associated with  uninformative or opaque earnings, and so we combine these  three measures
to obtain an overall earnings opacity  time-series measure per country. We then explore whether  our three
measures of earnings opacity affects two  characteristics of an equity market in a country – the  return the
shareholders demand and how much they trade.  While not all results are consistent for our three  individual
earnings opacity measures, our panel data tests  document that, after controlling for other influences,  an
increase in overall earnings opacity in a country is  linked to an economically significant increase in the  cost
of equity and an economically significant decrease in  trading in the stock market of that country.},
      url = {http://ageconsearch.umn.edu/record/127185},
      doi = {https://doi.org/10.22004/ag.econ.127185},
}