Earnings quality among high-share liquidity companies: evidence from Central and Eastern European firms

Paper's objectives: The main aim of the paper is to analyze the earnings quality of high-share liquidity companies from Poland, Romania, and Hungary whose activities are outside the finance sector. Methods applied: Earnings quality, i.e., earnings persistence, predictability, and accruals quality, was assessed using the Kruskal-Wallis test, the U Mann-Whitney test, the Wilcoxon Signed Ranks test, and Spearman's rank correlation coefficients. Findings: The research demonstrates that companies listed in the Bucharest Stock Exchange tend to provide higher earnings quality than other firms in the CEEplus index. In the tested sample, there was a noticeable domination of managerial practices aimed at managing the earnings downward. This also happened in 2020, the period negatively affected by the SARS-CoV-2 pandemic. Originality/value: This study fills a gap in the literature regarding the quality of accounting data reported among listed companies from Central and Eastern Europe (CEE) countries that are characterized by high liquidity of shares.