Individuals' perceptions and misperceptions of time series properties of quarterly earnings
Article Abstract:
Three experiments were conducted to directly investigate whether individuals correctly perceive and reflect the time series properties of quarterly earnings per share (EPS) in their forecasts. In the experiments, the subjects were given a minimum of 10 years of previous quarterly EPS for each of the two series and required to predict the earnings for the succeeding quarter. They were then told the actual EPS and rewarded based on the accuracy of their forecast. The process was repeated 16 times for each series. Results showed that the forecasts of the subjects were sensitive to the magnitude of the time series components. Nevertheless, they usually underweighed the moving average term. They also underweighed/overweighed the latest seasonal quarterly change when it has a strong/weak impact on future earnings. Lastly, they assigned more weight on quarterly changes when reports of earnings are made relative to the four previous quarters.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1996
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Did firms undertake debt-equity swaps for an accounting paper profit or true financial gain?
Article Abstract:
Firms that took debt-equity swaps between the period August 1981 to June 1984 are analyzed to test two hypotheses regarding debt-equity swaps. One hypothesis states that swaps allowed businesses to relax potentially binding sinking fund limitations in an inexpensive, feasible manner. The second hypothesis states that businesses used swaps to smooth unanticipated and fleeting decreases in earnings per share. Empirical research results indicate that businesses participated in debt-equity swaps for both reasons, but that there was much stronger support for the second hypothesis.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1989
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Unusual patterns in reported earnings
Article Abstract:
Unusual patterns in reported earnings are examined using firms to analyze whether reported earnings for US businesses follow similar patterns reported in previous research for New Zealand corporations which have been found to round up earnings per share figures. Research results indicate that while US corporations' earnings numbers deviate less from what was expected, a number of patterns are observed which substantiate and add additional information to previous findings. These patterns are described in detail.
Publication Name: Accounting Review
Subject: Business, general
ISSN: 0001-4826
Year: 1989
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