Accounting Quality Indicators and Sustainable Shareholder Value Creation

Abstract

This research introduces a novel, cross-disciplinary framework that re-conceptualizes
accounting quality not merely as a compliance or transparency metric, but as a dynamic, multi-dimensional driver of sustainable shareholder value creation. Departing
from traditional empirical finance and accounting studies that often treat accounting
quality as a static, unidimensional construct, we propose a bio-inspired, adaptive systems model. This model, termed the Accounting Quality Ecosystem (AQE), analogizes
financial reporting to a biological ecosystem where indicators such as earnings persistence, accrual quality, and disclosure timeliness interact in complex, non-linear ways
to either nourish or deplete long-term corporate vitality. Our methodology synthesizes
principles from complex adaptive systems theory, ecological resilience, and computational linguistics to construct a composite resilience index from conventional accounting signals. We apply this framework to a longitudinal dataset of firms, analyzing
how the configuration and interaction of quality indicators—rather than their isolated
levels—predict resilience during economic shocks and capacity for value creation over
extended horizons. The results demonstrate that specific synergistic configurations
of accounting quality indicators, which we label ’Symbiotic Quality Profiles,’ are robust predictors of sustainable excess returns and lower volatility of future earnings,
even after controlling for known risk factors. These findings challenge the prevailing
reductionist approach in the literature and offer a new paradigm for investors, regulators, and managers: that the holistic ’health’ of a firm’s information ecosystem,
characterized by balanced and reinforcing quality traits, is a critical, yet previously
unquantified, intangible asset. This research contributes original insights by bridging
ecological concepts with financial reporting theory, providing a novel diagnostic tool
for assessing corporate longevity, and re-framing the pursuit of accounting quality as
a strategic imperative for enduring shareholder value.