The three - day Central Economic Work Conference is expected to set major changes in economic indicators to
reflect more on the quality of the economic growth rather than mere growth speed, while tackling
specific issues such as mounting
debts, poverty and pollution.
We used three measures to capture the pertinent information: return on equity (ROE) to
reflect growth and profitability; the
debt coverage ratio to represent the likelihood of default; and the accruals - to - average - total - assets measure defined by Sloan (1996) to quantify possible accounting red flags.12 To arrive at company -
specific quality measures, we used the simple arithmetic average of each stock's percentile rank for these three variables.