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Quality Accounting in Indian Pharmaceutical Companies: A Review

Author

Listed:
  • Sandeep Goel

    (Management Development Institute, Gurgaon, India)

Abstract

Quality earnings are free from discretionary choices by the management and most valued by shareholders. The present study highlights the 'quality' aspect of accounting (earnings) by analyzing the creative accounting practices of pharmaceutical companies in India, untouched so far. It has been analyzed on three key parameters: quality of earnings, quality of revenue and z score for stability. Further, the market performance of these companies has been regressed with respect to quality factor for finding out the market reaction. The results show that the quality factor of revenue and earnings is low in these companies. It is hoped that the study improves shareholders' perception about the financial results reported by the companies.

Suggested Citation

  • Sandeep Goel, 2016. "Quality Accounting in Indian Pharmaceutical Companies: A Review," Oblik i finansi, Institute of Accounting and Finance, issue 4, pages 16-24, December.
    • Handle: RePEc:iaf:journl:y:2016:i:4:p:16-24
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    References listed on IDEAS

    as
    1. Kenton K. Yee, 2006. "Earnings Quality and the Equity Risk Premium: A Benchmark Model," Contemporary Accounting Research, John Wiley & Sons, vol. 23(3), pages 833-877, September.
    2. Healy, Paul M., 1985. "The effect of bonus schemes on accounting decisions," Journal of Accounting and Economics, Elsevier, vol. 7(1-3), pages 85-107, April.
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