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SOME TIME SERIES PROPERTIES OF ACCOUNTING INCOME

SOME TIME SERIES PROPERTIES OF ACCOUNTING INCOME . .. .. where E is an expectation operator. The martingale is a specific case of a submartingale. The sequence {Y,} i a martingale if s E Y + IYo,.,Yt) Yt (,, .. = 663 f o r d t. The Joiimal of Finance smoothing. To our knowledge, no study has addressed the possible futility of alleged smoothing practices. As it is presented in the literature, smoothing is an attempt to reduce the variance of income around its expectation. Income is assumed to be generated by a process whose expectation is constant or is a deterministic function of time? For example, Schiff writes [36, p. 661 : Some years ago, Boulding referred to the “homeostasis of the balance sheet-that there is some desired quantity of all the various items in the balance sheet, and that any disturbance of this structure immediately sets in motion forces which restore the status quo.” I t can be suggested that we now have a “homeostasis of earnings per share” and that the application of generally accepted accounting principles facilitates the reporting of earnings per share in a constant or rising pattern . . . . Gordon writes [22, p. 2231 : If http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Finance Wiley

SOME TIME SERIES PROPERTIES OF ACCOUNTING INCOME

The Journal of Finance , Volume 27 (3) – Jun 1, 1972

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References (39)

Publisher
Wiley
Copyright
1972 The American Finance Association
ISSN
0022-1082
eISSN
1540-6261
DOI
10.1111/j.1540-6261.1972.tb00991.x
Publisher site
See Article on Publisher Site

Abstract

. .. .. where E is an expectation operator. The martingale is a specific case of a submartingale. The sequence {Y,} i a martingale if s E Y + IYo,.,Yt) Yt (,, .. = 663 f o r d t. The Joiimal of Finance smoothing. To our knowledge, no study has addressed the possible futility of alleged smoothing practices. As it is presented in the literature, smoothing is an attempt to reduce the variance of income around its expectation. Income is assumed to be generated by a process whose expectation is constant or is a deterministic function of time? For example, Schiff writes [36, p. 661 : Some years ago, Boulding referred to the “homeostasis of the balance sheet-that there is some desired quantity of all the various items in the balance sheet, and that any disturbance of this structure immediately sets in motion forces which restore the status quo.” I t can be suggested that we now have a “homeostasis of earnings per share” and that the application of generally accepted accounting principles facilitates the reporting of earnings per share in a constant or rising pattern . . . . Gordon writes [22, p. 2231 : If

Journal

The Journal of FinanceWiley

Published: Jun 1, 1972

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