Journal of Applied Finance & Banking

Construction of Investment Risk Measure by the Dispersion Degree of Estimation Errors of Working Capital

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• Abstract

  This study is based on investors’ viewpoint and adopts the accruals quality model [1] as proxy variable of earning quality. By applying the process capability concept in engineering application, we establish capability index of basis accrual quality and transform it into the investment risk assessment. It provides investors an effective way to control investment risk and to improve the investment decision-making process.