We ask nearly 400 CFOs about the definition and drivers of earnings quality, with a special emphasis on the prevalence and detection of earnings misrepresentation. CFOs believe that the hallmarks of earnings quality are sustainability, absence of one-time items, and backing by actual cash flows....

Using realized earnings over long periods of time, we investigate errors in earnings expectations implied by stock prices of firms. We compute lifetime earnings for 16,386 (3,711) domestic firms that started trading after (existed as of) January 1, 1975 for the years 1975-2019 and compare such...