ABSTRACT: Although the reported earnings by firms is considered as one of the major decision-making fundamentals in capital market, earning quality plays an important role in earning’s efficiency in decision-making process. Nowadays, financial statements are identified as the most important information resources in reflecting the performance results and financial status and cash flows of business units, and this is why the fundamentals of preparing financial statements, i.e. accounting standards, are of great importance. In this research we will examine whether development and implementation of accounting standards lead to earning quality improvement. Among earning quality assessment criteria earning stability model and Jones’ adjusted model are selected and are tested in listed firms in Tehran Stock Exchange in two periods of time, three years before and after accounting standards implementation. Investigating the research hypotheses by regression analysis in 1997-1999 and 2005-2007 using SPSS 19 software indicate that in the earning stability model, accounting standards have managed to impose a significant effect on earning quality improvement, but in Jones’ adjusted model, accounting standards implementation had no effect on earning quality improvement.

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