Changes in the value-relevance of earnings and book values over the past forty years
Article Abstract:
Systematic changes in the value-importance of earnings and book values over time were studied. Three main findings were obtained. First, the combined value-relevance of earnings and book values did not decrease since the 1950s as against previous claims. Second, while the incremental value-relevance of bottom line earnings has decreased, it was replaced by growing value-relevance of book values. Lastly, much of the shift in value-relevance from earnings to book values is due to the increasing frequency and magnitude of one-time items, the increasing frequency of negative earnings and changes in average firm size and intangible intensity over time.
Publication Name: The Journal of Accounting and Economics
Subject: Business
ISSN: 0165-4101
Year: 1997
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Do insider trades reflect both contrarian beliefs and superior knowledge about future cash flow realizations?
Article Abstract:
A study showing that insider trading is generally against what could be termed conventional investor wisdom is presented. Insider trades are directly proportionate to future earnings and firm's book-to-market ratio, and inversely proportionate to firm's recent returns. Such trades occur because insiders possess some additional information based on which they assess future earnings potential of their investments.
Publication Name: The Journal of Accounting and Economics
Subject: Business
ISSN: 0165-4101
Year: 2005
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Discussion of: " Testing behavioral finance theories using trends and sequences in financial performance,"
Article Abstract:
A different interpretation of the findings of Chan, Frankel and Kothari (CFK) is presented. CFK have presented new empirical evidence on a broad class of behavioral models as potential explanations of long-horizon return predictability.
Publication Name: The Journal of Accounting and Economics
Subject: Business
ISSN: 0165-4101
Year: 2004
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