Earnings Quality Attributes and Performance of Malaysian Public Listed Firms

This study attempts to address the question whether earnings quality of Malaysian public listed firms is associated with performance. Five attributes of earnings quality namely predictive value, feedback value, timeliness, faithful representation and neutrality as well as two common financial performance measures namely returns on assets (ROA) and Tobin’s Q were examined. When ROA is used as firm performance measure, there is a positive but not significant association between the predictive value of earnings and firm performance. In relation to the feedback value of earnings and timeliness, the association between these earnings quality attributes and firm performance is found to be significantly positive. When Tobin’s Q is used as performance measure, predictive value of earnings and timeliness have positive but not significant association with firm performance. In contrast, feedback value of earnings has negative and significant association with firm performance. Hence, after controlling the effects of size, leverage and growth on firm performance, result of the study shows that earnings quality of Malaysian public listed firms has positive association with firm performance.