Comprehensive income reporting and analysts' valuation judgments

Article Abstract:

A study examined the impact of the clear reporting of comprehensive income (CI) and its components on the ability of buy-side financial analysts to determine earnings management and to make common stock price judgments. This study focused on two types of CI reporting, the income statement (IS) CI display and the statement of changes in equity (SCE) CI display, and compared these prices to the judgments of analysts in another experiment. Findings revealed that clear IS display of CI and its components improved the transparency of earnings management activities of a firm and reduced the valuation judgments of analysts to the same level as those seen in an identical firm that does not perform earnings management. Moreover, SCE reporting of CI and its components was found to be not as effective as IS display in indicating earnings management and downgrading stock price judgments.

Investment advice, Investment Advisory Services, Income Accounting, Research, Profits, Investment advisers, Financial analysts, Stock price forecasting, Corporate profits

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Write-offs: manipulation or impairment?

Article Abstract:

Three studies on managerial reporting discretion in general and the impact of write-offs in particular have provided significant insights on what is expected to be a fertile accounting literature. They pose interesting questions and offer enough evidence and views to warrant publication, although their convincing power is weak. To the credit of researchers, the field poses major difficulties. The competitive advantage of accounting researchers has to be realized by involved organizations, since the former best understand how concepts and theories from economics, organizational behavior, finance and other disciplines affect and are affected by measurement and disclosure options in complex business and regulatory frameworks.

Analysis, Economics, Financial statements, Information theory, Accrual basis accounting, Information theory in economics

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