This paper examines systematic differences in earnings persistence between high-tech (HT) and non-high-tech (NHT) firms in the presence of economic- and accounting-driven factors. We document that (1) HT firms, relative to NHT firms, show lower levels of earnings persistence, even after economic and accounting factors identified in prior research are controlled; (2) the type of HT products (durables) increases earnings persistence; and (3) the association between earnings persistence and discretionary accruals is higher in HT firms, possibly because HT mangers use discretionary accruals to convey private information about future cash flows.
Review of Quantitative Finance and Accounting – Springer Journals
Published: Dec 8, 2013
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