How naive is the stock market's use of earnings information?

Article Abstract:

Studies by Rendleman, Jones and Latane (1987) and by Bernard and Thomas (1990) provide evidence that investors do not know that the seasonally-differenced quarterly earnings of firms are serially correlated. A new study is conducted that shows the stock market behaving as if it was aware of random walks in earnings, of seasonals when forming earnings expectations, and of the existence and form of serial correlation, but systematically underestimating the magnitude of serial correlation by about half on average. The results of the study are discussed.

Securities and Commodity Exchanges, Security and commodity exchanges, Securities Exchanges, Stock-exchange, Stock exchanges, Exchanges, Random walks (Mathematics), Random walk theory, Corporate profits

---

Market assessment of industry and firm earnings information

Article Abstract:

An examination of the timing of security returns showed that industry-wide returns are reported earlier compared to those returns for firm-specific performance. Investors can take advantage of the timing of security returns to increase the profit potential of their investments and the results of the analysis showed that an investment strategy based on the forecast of future earnings of an industry would point to viable investment options.

Reporting & Disclosure, Methods, Usage, Investments, Financial statements

---

Earnings quality in UK private firms: comparative loss recognition timeliness

Article Abstract:

Using time series method the recognition of timely loss and new accruals in private firms is analyzed. It is observed that the quality of earnings in UK private firms is lower that than that in public companies notwithstanding the fact that regulations relating to auditing, accounting standards and taxes are alike for both private and public firms. An inference is also drawn on the economics of accounting standards based on the study.

United Kingdom, United States, Corporate Profits, Capital funds & cash flow, Analysis, Economic aspects, Profit, Accounting and auditing, Private companies, Loss deductions

Similar abstracts:

• Abstracts: Producer prices in cotton markets: evaluation of reported price information accuracy. Empirical investigation of competition in Japan's raw cotton market: implications for US cotton exports
• Abstracts: A case of response rate success. The use of secondary information published by the PRC Government. Non-linear price effects
• Abstracts: Effects of bailout legislation: implications from the stock market for thrift shareholders. The influence on Congress by the thrift industry
• Abstracts: Reviewing the review process. Company sets up model for tracking ads. It's the name game: firms must weigh reasons before making changes
• Abstracts: Europe's great value worries. The clouds on Europe's investment horizon. Europe, less bearish

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.