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On Transitory Earnings

On Transitory Earnings The paper develops a concept of transitory earnings and contrasts this source of earnings to “core” (or recurring) earnings. It is shown that any two of the following three attributes of transitory earnings imply the third: (i) forecasting irrelevance with respect to next-period aggregate earnings, (ii) value irrelevance, and (iii) unpredictability. The paper makes the case that the current “dirty surplus” items make sense, especially if one expands the valuation perspective to also allow for agency considerations. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

On Transitory Earnings

Ohlson, James
Review of Accounting Studies , Volume 4 (4) – Sep 30, 2004
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18 pages

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References (4)

Publisher
Springer Journals
Copyright
Copyright © 1999 by Kluwer Academic Publishers
Subject
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
ISSN
1380-6653
eISSN
1573-7136
DOI
10.1023/A:1009653114699
Publisher site
See Article on Publisher Site

Abstract

The paper develops a concept of transitory earnings and contrasts this source of earnings to “core” (or recurring) earnings. It is shown that any two of the following three attributes of transitory earnings imply the third: (i) forecasting irrelevance with respect to next-period aggregate earnings, (ii) value irrelevance, and (iii) unpredictability. The paper makes the case that the current “dirty surplus” items make sense, especially if one expands the valuation perspective to also allow for agency considerations.

Journal

Review of Accounting Studies – Springer Journals

Published: Sep 30, 2004

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