Earnings Quality on Bucharest Stock Exchange Regulated Market

The quality of earnings is an important issue regarding the correct assessment of the financial performance of an economic entity, of the sustainability of earnings. The quality of earnings is of real interest to investors and other stakeholders, giving them confidence that the earnings presented are relevant and reliable, are not affected by accounting manipulations and can be maintained in the future. An earnings quality index for companies with values between 1 and 100 is published annually by Thomson Reuters. The purpose of this research is to draw investors' attention to the importance of earnings quality and to present the quality of earnings on the regulated market of the Bucharest Stock Exchange. For the analyzed companies, 63 in number, the general average of the quality of earnings, for 8 years on average, is 40. Most companies, 65%, have an average located in the middle range [31-70]. No company has an average of over 90 and only 1 has an average of less than 10. Half have an average earnings quality below 39. Even if we do not have an average for any company located in the higher quality range, this level is reached however in 5% of the total number of observations of 16 companies, in at least one year for each of them.