Assessment of Quality of Financial Statements, using Exploratory Factor Analysis

Authors: 
Valentin Burca
JEL codes: 
M40 - General, M42 - Auditing.
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.
Full text PDF file: