Loss contingency reports and stock prices: a replication and extension of Banks and Kinney

Article Abstract:

D.W. Banks and W.R. Kinney, Jr.'s (1982) research into loss contingency reports and stock prices was reexamined and extended. Banks and Kinney's research covered 92 new loss contingency firms in the years 1969-1975. The reanalysis covered 72 new loss contingency firms for the period 1976-1984, and included 28 firms receiving new qualified opinions for the years 1969-1984. Banks and Kinney's research was extended by testing the influence of several factors, including macroeconomic factors, unexpected earnings, and client size, on auditors' decisions. Research results supported Banks and Kinney's findings and showed that macroeconomic factors, unexpected earnings, and client size all affected auditors' decisions.

Management, Accounting and auditing, Auditing, Auditors, Business losses, Financial contingencies, Banks, D.W., Kinney, W.R., Jr.

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Detecting contemporaneous security market reactions to a sequence of related events

Article Abstract:

Several studies have examined market reactions to events. The test statistics commonly used in those studies are extended and improved. Two statistics are introduced: the H statistic and the G2 statistic (generalizations of the cumulative average residual statistic and of Beaver's ,1968, squared residuals formula, respectively). The statistics demonstrate their utility in a simulation using actual return data.

Models, Innovations, Securities

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Relation between market model prediction errors and omitted variables: a methodological note

Article Abstract:

Numerous studies have examined the effects that various events have on share prices. However, these studies have omitted several variables that could bias the results, such as firm size, dividend yield, and price-earnings ratio. A specific market model is developed which allows the portfolios to be compared without having to match each of these potentially biasing variables.

Usage

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