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Assessment of Quality of Financial Statements, using Exploratory Factor Analysis

Author

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  • Valentin Burca

Abstract

Implications of high quality financial statements have been proven across the literature, highlighting improvements in investment policy and contractual use of financial information. However, previous research papers assessing the quality of financial information have some limits, as the concept could not have been unanimously defined. In this paper, we propose an approach to assess the quality of financial statements, using exploratory factor analysis. The aim is to build an aggregate score describing the evolution of quality in financial statements.

Suggested Citation

  • Valentin Burca, 2020. "Assessment of Quality of Financial Statements, using Exploratory Factor Analysis," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 23(78), pages 93-116, December,.
    • Handle: RePEc:rej:journl:v:23:y:2020:i:78:p:93-116
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    More about this item

    Keywords

    Accounting quality; SARS; accruals; exploratory factor analysis; IFRS;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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