Stock returns and accounting earnings

Article Abstract:

A relation between current-period unexpected returns and unexpected earnings that incorporates revisions in forecasting is derived and tested with an emphasis on the mis-specification in returns/earnings regressions that omit information available. Simple regression is used to derive the relation and additional regressors added. It is concluded that inferences based on simple regressions used in prior literature are potentially misleading and should be re-examined. Adding forecast revisions and discount rate changes is a possible solution.

United States, Science & research, Analysis, Management, Stock price forecasting, Earnings per share

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Monetary unit acceptance sampling

Article Abstract:

A new statistical sampling strategy is proposed for audit testing situations. The need for such statistical tests is elaborated and it is demonstrated that the new strategy, a monetary (dollar) unit acceptance sampling (MUAS), is better than conditional randomizations. A Monte Carlo study is performed which demonstrates that major reductions in sample size can be obtained by using the sequential MUAS approach.

Monte Carlo method, Monte Carlo methods

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Stratified sampling using a stochastic model

Article Abstract:

A superpopulation model is used to evaluate stratified random samples. The model is explained, expected values are derived, and a decision rule is examined. The model needs only an approximate normality of the estimator and permits auditors to avoid some of the difficulties related to stratified sampling designs.

Auditors, Stochastic processes

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