The Impact of Earnings Quality in stock Returns: An Empirical Study on Banks Listed on the Damascus Securities Exchange (DSE).

Abstract

This study aims to analyze the impact of earnings quality in stock returns in banks listed on the Damascus Securities Exchange, using a sample of 13 banks during the period 2016–2023. Earnings quality was measured using two indicators: accruals quality and earnings persistence, while stock returns were measured based on price changes in the market value of shares. Bank size was used as a control variable, represented by the natural logarithm of total assets. The relationship between the variables was tested using a simple regression model. The results indicated that earnings quality has no statistically significant effect on stock returns, in addition to a negative relationship between bank size and stock returns when accruals quality is used as a measure of earnings quality. The study also found a negative relationship between earnings quality—when measured by persistence—and stock returns, while bank size showed no significant effect on stock returns.