Access the full text.
Sign up today, get DeepDyve free for 14 days.
Peter Easton, M. Zmijewski (1989)
Cross-sectional variation in the stock market response to accounting earnings announcements☆Journal of Accounting and Economics, 11
James Ohlson (1991)
The theory of value and earnings, and an introduction to the Ball‐Brown analysis*Contemporary Accounting Research, 8
James Ohlson (1980)
FINANCIAL RATIOS AND THE PROBABILISTIC PREDICTION OF BANKRUPTCYJournal of Accounting Research, 18
E. Altman, R. Haldeman, P. Narayanan (1977)
ZETATM analysis A new model to identify bankruptcy risk of corporationsJournal of Banking and Finance, 1
Terry Warfield, J. Wild, Kenneth Wild (1995)
Managerial ownership, accounting choices, and informativeness of earningsJournal of Accounting and Economics, 20
James Ohlson, Pervin Shroff (1992)
Changes Versus Levels In Earnings As Explanatory Variables For Returns - Some Theoretical ConsiderationsJournal of Accounting Research, 30
R. Lipe (1990)
THE RELATION BETWEEN STOCK RETURNS AND ACCOUNTING EARNINGS GIVEN ALTERNATIVE INFONNATION, 65
Carla Hayn (1995)
The information content of lossesJournal of Accounting and Economics, 20
Peter Easton, T. Harris (1991)
EARNINGS AS AN EXPLANATORY VARIABLE FOR RETURNSJournal of Accounting Research, 29
D. Dhaliwal, K. Lee, N. Fargher (1991)
The association between unexpected earnings and abnormal security returns in the presence of financial leverageContemporary Accounting Research, 8
Merton Miller, Kevin Rock (1985)
Dividend Policy under Asymmetric InformationJournal of Finance, 40
James Ohlson (1995)
Earnings, Book Values, and Dividends in Equity Valuation*Contemporary Accounting Research, 11
J. Wild (1992)
Stock price informativeness of accounting numbers: Evidence on earnings, book values, and their componentsJournal of Accounting and Public Policy, 11
D. Burgstahler, J. Jiambalvo, Eric Noreen (1989)
Changes in the probability of bankruptcy and equity valueJournal of Accounting and Economics, 11
H. White (1980)
A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for HeteroskedasticityEconometrica, 48
William Kross, Douglas Schroeder (1989)
Firm Prominence and the Differential Information Content of Quarterly Earnings AnnouncementsJournal of Business Finance & Accounting, 16
Q. Vuong (1989)
Likelihood Ratio Tests for Model Selection and Non-Nested HypothesesEconometrica, 57
V. Bernard (1987)
CROSS-SECTIONAL DEPENDENCE AND PROBLEMS IN INFERENCE IN MARKET-BASED ACCOUNTING RESEARCHJournal of Accounting Research, 25
D. Collins, S. Kothari (1989)
An analysis of intertemporal and cross-sectional determinants of earnings response coefficientsJournal of Accounting and Economics, 11
E. Altman (1968)
FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCYJournal of Finance, 23
Roger Kormendi, R. Lipe (1987)
Earnings Innovations, Earnings Persistence, and Stock ReturnsThe Journal of Business, 60
R. Freeman, Senyo Tse (1992)
A NONLINEAR MODEL OF SECURITY PRICE RESPONSES TO UNEXPECTED EARNINGSJournal of Accounting Research, 30
Abstract. Valuation theory recognizes that the relation between earnings innovations and changes in security valuation is increasing in the persistence of the earnings innovations. Analyses in this article reveal that the present value of revisions in expected future benefits is a function of the length of revision horizon, suggesting that earnings persistence is determined, in part, by an entity's going‐concern status. These analyses predict an inverse relation between earnings informativeness and an entity's probability of termination. Drawing on a sample of quarterly earnings and returns data from more than 1,500 distinct firms for the period 1981–1990, a statistically significant inverse relation is documented between an entity's probability of termination and the informativeness of earnings—the latter measured as the coefficient from a regression of returns on earnings. Further empirical analyses reveal that this result is a pervasive economic phenomenon not attributable to extreme conditions or other prevailing explanations of earnings informativeness. This inference is robust to variations in research design, including measurement of earnings informativeness and of termination probability and alternative specifications of the relation between returns and earnings. Consequently, the evidence in this article is consistent with a fundamental role for an entity's going‐concern status in determining the usefulness of earnings. Résumé. La théorie de l'évaluation reconnaît le fait que la relation entre les nouvelles informations relatives au bénéfice net et les changements dans l'évaluation des titres s'intensifie lorsque persistent lesdites informations. Les analyses réalisées par les auteurs révèlent que la valeur actualisée des rajustements dans les gains futurs espérés dépend de l'horizon du rajustement, ce qui donne à penser que la persistance du bénéfice net est en partie fonction de la continuité de l'exploitation de l'entreprise. Selon ces analyses, le potentiel informatif du bénéfice net devrait être en relation inverse avec la probabilité de fermeture de l'entité. En s'appuyant sur un échantillon de données trimestrielles relatives au bénéfice net et au rendement recueillies auprès de plus de 1500 entreprises distinctes pour la période 1981–1990, les auteurs observent une relation inverse statistiquement significative entre la probabilité de fermeture d'une entité et le potentiel informatif du bénéfice—ce dernier étant mesuré sous forme de coefficient, au moyen d'une régression des rendements sur les bénéfices. D'autres analyses empiriques révèlent que cette conclusion est un phénomène économique répandu qui n'est pas attribuable à des conditions extrêmes ou à d'autres explications prédominantes du potentiel informatif du bénéfice net. Cette inference résiste aux variations dans le plan de recherche, y compris la mesure du potentiel informatif du bénéfice net et de la probabilité de fermeture, et les autres caractéristiques possibles de la relation entre le rendement et le bénéfice. Les résultats obtenus confirment donc que la continuité de l'exploitation joue un rôle fondamental dans la détermination de l'utilité du bénéfice net.
Contemporary Accounting Research – Wiley
Published: Mar 1, 1996
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.