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The impact of the global economic crisis of 2008 on earnings quality in Mexico

Jose Miranda-Lopez (Collins College of Business, University of Tulsa, Tulsa, Oklahoma, USA)
Ivan Valdovinos-Hernandez (EGADE Business School, Tecnológico de Monterrey, Monterrey, México)

Journal of Accounting in Emerging Economies

ISSN: 2042-1168

Article publication date: 19 June 2019

Issue publication date: 2 August 2019




The purpose of this paper is to examine the earnings quality of companies listed on Mexico’s primary stock market, the Bolsa Mexicana de Valores (Bolsa) before and during the global economic crisis of 2008. Previous research has shown that these economic events can have potentially conflicting effects on the quality of earnings of listed companies in capital markets around the world.


This paper operationalizes earnings quality based on earnings management. Therefore, four constructs to proxy for earnings quality are developed from previous literature, and multiple regression analysis along with tests of differences across two time periods, 2005–2007 and 2008–2010, are used to determine if there is a significant change in the accounting quality of companies listed on the Bolsa before and after the start of the global economic crisis.


Results indicate a statistically significant decrease of earnings quality on three out of the four constructs used to proxy for earnings management. There is only one construct in this category that shows a significant increase of earnings quality.

Research limitations/implications

There are different number of constructs and methodologies used to test for earnings quality. This study draws on four different constructs on two dimensions of earnings quality from previous literature, but other methodologies and constructs can potentially be used as well, such as discretionary accruals. Furthermore, there is a chance that there can be confounding factors affecting the results of this study besides the effects of the global economic crisis. Finally, the sample used in this study comprises non-financial public companies listed on the Bolsa, which can affect the generalization of the results to countries other than Mexico.

Practical implications

The results of this study can be of interest to Mexican and foreign investors, standard setters and regulators of the Bolsa, as the results show a strong incentive to manage companies’ earnings using income smoothing in an emerging economy during an economic crisis even after converging to a higher-quality set of accounting standards. Results can also be of interests to investors and regulators in other Latin-American countries with economies similar to that of Mexico.


This is the first study to test the quality of earnings of Mexican companies before and during the global economic crisis of 2008. Thus, this study contributes to the accounting quality literature by offering evidence showing a significant increase of income smoothing during the global economic crisis for companies listed in a developing economy with a relevant history of economic crises, even when these companies were using recently converged, higher-quality accounting standards.



Miranda-Lopez, J. and Valdovinos-Hernandez, I. (2019), "The impact of the global economic crisis of 2008 on earnings quality in Mexico", Journal of Accounting in Emerging Economies, Vol. 9 No. 3, pp. 407-421.



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Copyright © 2019, Emerald Publishing Limited

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