Quality of financial reporting - influence of corporate governance regulations

Abstract

This paper aims at analysing the quality of reported earnings for A and B group companies listed in Bombay Stock Exchange of India. For this purpose, the theoretical model proposed by Dechow and Dichev has been used to assess the quality of reported earnings. The results of the study show that reported earning quality of A-group companies is superior to that of B-group companies. The results further show that there is a drastic improvement in the reported earnings quality of B-group companies after the imposition of Clause 49 (the corporate governance related to mandatory disclosures for all listed companies) in January 2006.