Title: Can investors rely on the quality of earnings figures published by listed and non-listed Russian firms?

Authors: Alexandra Bagaeva, Juha-Pekka Kallunki, Hanna Silvola

Addresses: Department of Accounting and Finance, University of Oulu, PO Box 4600, FIN-90014 Oulu, Finland. ' Department of Accounting and Finance, University of Oulu, PO Box 4600, FIN-90014 Oulu, Finland. ' Department of Accounting and Finance, University of Oulu, PO Box 4600, FIN-90014 Oulu, Finland

Abstract: This paper investigates earnings quality of both listed and non-listed Russian firms and explores whether foreign ownership affects the quality of earnings published by non-listed Russian firms. Russia, the largest European transitional economy, is an increasingly attractive market for foreign investors. Our empirical results show that Russian firms listed on a stock exchange report earnings of relatively good quality. We do not find support for the hypothesis that non-listed Russian firms co-owned by foreign investors report earnings of better quality than do exclusively Russian-owned non-listed firms. However, we find that non-listed Russian firms with foreign ownership report earnings with more timely recognition of economic gains than exclusively Russian-owned non-listed firms do. Our results are robust for different specifications of the earnings quality model.

Keywords: earnings quality; Russian firms; foreign ownership; reporting incentives; Russia; foreign investors; stock exchange; listed firms; non-listed firms.

DOI: 10.1504/IJAAPE.2008.020192

International Journal of Accounting, Auditing and Performance Evaluation, 2008 Vol.5 No.1, pp.30 - 49

Published online: 08 Sep 2008 *

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