The More Capable Management, the Better Earning Quality

Abstract

Investors are willing to devote their resources to companies with excellent performance and one of the criteria of productivity for the company is profitability. Investor's over emphasize on the profitability reminds that market ignore other indicators of performance. But managers are able to influence on this criterion. Therefore, the quality of the corporate earnings is affected by reports and managers discretion and their ability .Thus, understanding the managers' ability and its application in corporate monitoring, would be effective in economical decisions for the investors. Nevertheless, a professional management is usually complicated and they require a set of specific capability and capacities. Also, companies try to hire qualified managers, in order to achieve higher profitability. Hence, most of the investors prefer to devote their resources to corporate with higher quality of profitability and therefore, according to the importance of prices and manager's earnings investigation on the relationship between management productivity and quality of the profitability is essential for both decision makers and the Board of Directors.