We use a sample of 46 non-financial firms, listed in the Lisbon Stock Exchange between 1987 and 2016, to examine the relation between the valuation of the firms and earnings attributes which reflect information quality to test whether the firms that present higher levels of information quality have greater valuation. We follow the approach used by Francis et al (2004) and define seven earnings attributes associated with information quality: Accrual Quality, Persistence, Predictability, Smoothness, Timeliness, Conservatism and Value Relevance. We test these measures against market valuation using Tobin’s Q measure and control the results for innate firm characteristics (firm size, capital structure, capital intensity, growth opportunities, insider ownership of shares and holding structures), as well as industry and year fixed effects. We check the robustness of our results to alternative measures of corporate performance and an alternative way of measuring earning attributes. The main results are that from the earning attribute measures used only persistence is statistically associated with greater firm valuation. The market based measures are not statistically significant and the measures for Smoothness and Predictability have a statistically significant negative impact on firm valuation. As better outcomes for these earnings attributes can be explained by earnings manipulation, we interpret the negative relation under this light. The Accrual Quality attribute is also found to have a statistically negative impact as well.

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Earnings Quality,Earnings Management,Corporate Performance