The impact of accounting methods on earnings quality of publicly listed banks in the Philippines

• Main Authors: Anol, Ma. Lourdes C., Rances, Michael Jerls S., San Sebastian, Ram Christine C., Sena, Arianne Joanne U.
• Format: text
• Language: English
• Published: Animo Repository 2014
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/10929
• Institution: De La Salle University

To have a competitive advantage in the midst of the increasing competitive business environment, there must also exist a means for the investors to measure and assess carefully the performance and condition of companies in which they attempt to invest in. Hence, the relationship between the quality of the firms reported earnings and the investors ability to predict the future earnings of a firm has been thoroughly studied in a number of research papers. Martin (2002) concluded that conservative firms yield high quality earnings and consequently could be a good predictor of future earnings. This research was conducted using Feltham & Ohlson valuation model, as used in numerous studies, to determine the link and impact of the variables BVMV Ratio, Total Assets, Earnings Growth and Debt Ratio, to the quality of a firms earnings and the BVMV Ratio to the Return on Equity of the publicly listed banks in the Philippines. The results of the research suggested that the BVMV Ratio, Total Assets, Earnings Growth and Debt Ratio were all significant to the quality of a firms earnings while there is no significant relationship that exists between BVMV Ratio and the Return on Equity of a firm. These results propose that investors could rely and use to their advantage the variables such as BVMV Ratio, Total Assets, Earnings Growth and Debt Ratio to predict a firms future earnings.