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Real ploughback earnings as an indicator of enterprise performance: FAS no. 33 disclosures revistited

Real ploughback earnings as an indicator of enterprise performance: FAS no. 33 disclosures... Existing and potential investors are vitally interested in the improvement of their wealth prospects. Receipt of cash, whether in the form of cash dividends or capital gains, represents fulfilment of this expectation. Such fulfilment is only possible when an enterprise registers growth in its resource base. Reported income is considered a good indicator of success achieved by an enterprise because it represents increase in available resources. An important link between reported income and stock prices is the link between future earnings and current earnings. This study utilizes data from FAS No. 33 to develop real ploughback measure indicating a firms ability to continue its operations successfully and to enhance its future earnings potential. The results of the study show that the market uses sophisticated models in evaluating the signal contained in ploughback earnings. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

Real ploughback earnings as an indicator of enterprise performance: FAS no. 33 disclosures revistited

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References (1)

Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
0307-4358
DOI
10.1108/03074350010766819
Publisher site
See Article on Publisher Site

Abstract

Existing and potential investors are vitally interested in the improvement of their wealth prospects. Receipt of cash, whether in the form of cash dividends or capital gains, represents fulfilment of this expectation. Such fulfilment is only possible when an enterprise registers growth in its resource base. Reported income is considered a good indicator of success achieved by an enterprise because it represents increase in available resources. An important link between reported income and stock prices is the link between future earnings and current earnings. This study utilizes data from FAS No. 33 to develop real ploughback measure indicating a firms ability to continue its operations successfully and to enhance its future earnings potential. The results of the study show that the market uses sophisticated models in evaluating the signal contained in ploughback earnings.

Journal

Managerial Finance – Emerald Publishing

Published: Aug 1, 2000

Keywords: Accounting research; Share prices; Inflation accounting; Information; USA

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