The impact of corporate governance on earnings quality: evidence from Peru

Abstract

Purpose The purpose of this paper is to explore whether firms with good corporate governance practices in countries with high levels of political and economic uncertainty, such as Peru, present a higher quality of accounting information. Design/methodology/approach This study uses a multivariate regression analysis to investigate the impact of good corporate governance practices on the quality of accounting information for the firms listed in the Lima Stock Exchange (LSE). Findings Firms included in the Good Corporate Governance Index, in the LSE, present more value relevant, more persistent and more conservative accounting reports. These results hold after controlling for a self-selection bias. Originality/value It is the first paper to explore the impact of good corporate practices on earnings quality in Peru. Also, this study uses a two-state regression methodology to control for the self-selection bias in the sample.