The Role of Main Indicators of Earnings Quality in Estimating Credit Risk

Subject Areas : International Journal of Finance, Accounting and Economics Studies

reza bondari ¹ , Abolghasem Masihabadi ² , Mohammad Reza Shourvarzi ³

1 - Faculty Member, Department of Accounting, Payame Noor University, Tehran, Iran.
2 - Assistant Professor of Accounting, Sabzevar Branch, Islamic Azad University, Sabzevar, Iran.
3 - Associate Professor of Accounting, Neyshabur Branch, Islamic Azad University, Neyshabur, Iran.

Received: 2020-08-12 Accepted : 2020-11-19 Published : 2022-12-01

Keywords: credit rating, credit risk, Earnings Quality,

Abstract :

When estimating credit risk by experts and analysts, financial indicators are one of the tools used. The relationship between these indicators and credit risk has been extensively investigated by domestic and foreign researchers. According to the surveys, no research has been carried out on the relationship between earnings quality and credit risk. Therefore, this study aims to investigate the relationship between the credit rating of companies listed on the Tehran Stock Exchange and their earnings quality. For this purpose, 156 companies as the sample in the period of 10 years between 2005 and 2015 were used to test the research hypotheses. In this research, Excel, Master, and Eviews software were used for data analysis. The results of this study indicate that there is a significant relationship between the credit rating of the companies listed on the Tehran Stock Exchange and their main indicators of earnings quality. The results of this research can help increase the efficiency of credit risk estimation by banks and credit rating agencies.