FURTHER EVIDENCE OF THE TIME SERIES PROPERTIES OF ACCOUNTING INCOME

FURTHER EVIDENCE OF THE TIME SERIES PROPERTIES OF ACCOUNTING INCOME DECEMBER 1976 FURTHER EVIDENCE OF THE TIME SERIES PROPERTIES OF ACCOUNTING INCOME LERoy D. BROOKS AND DALE A. BUCKMASTER * I. INTRODUCTION THE BEHAVIOR OF ACCOUNTING INCOME TIME-SERIES is of considerable interest to researchers in accounting, finance, and related disciplines. For example, the properties of accounting income time-series are directly related to accounting questions of management manipulation of accounting income and interim reporting. However, increased knowledge of income time-series behavior will be of most benefit to the extent that it contributes to the improvement of models in finance and improvement of the quality of accounting income numbers that are variables in predictive models [4], [5], [6]. Beaver compiled an impressive list of studies that required assumptions concerning the time-series behavior of accounting income or used accounting income as a predictive variable. The studies included in the Beaver list related to: valuation models of the firm, valuation of firm securities, dividend policies, earnings growth rate forecasts, evaluation of the informational content of accounting numbers, forecasting the failure of firms, and industrial concentration and accounting rates of return [6, p. 64]. Most previous research provided convincing evidence that income changes are independent [1], [2], [8], [18], [19]. Without exception, these http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Finance Wiley

FURTHER EVIDENCE OF THE TIME SERIES PROPERTIES OF ACCOUNTING INCOME

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Publisher
Wiley
Copyright
1976 The American Finance Association
ISSN
0022-1082
eISSN
1540-6261
D.O.I.
10.1111/j.1540-6261.1976.tb03218.x
Publisher site
See Article on Publisher Site

Abstract

DECEMBER 1976 FURTHER EVIDENCE OF THE TIME SERIES PROPERTIES OF ACCOUNTING INCOME LERoy D. BROOKS AND DALE A. BUCKMASTER * I. INTRODUCTION THE BEHAVIOR OF ACCOUNTING INCOME TIME-SERIES is of considerable interest to researchers in accounting, finance, and related disciplines. For example, the properties of accounting income time-series are directly related to accounting questions of management manipulation of accounting income and interim reporting. However, increased knowledge of income time-series behavior will be of most benefit to the extent that it contributes to the improvement of models in finance and improvement of the quality of accounting income numbers that are variables in predictive models [4], [5], [6]. Beaver compiled an impressive list of studies that required assumptions concerning the time-series behavior of accounting income or used accounting income as a predictive variable. The studies included in the Beaver list related to: valuation models of the firm, valuation of firm securities, dividend policies, earnings growth rate forecasts, evaluation of the informational content of accounting numbers, forecasting the failure of firms, and industrial concentration and accounting rates of return [6, p. 64]. Most previous research provided convincing evidence that income changes are independent [1], [2], [8], [18], [19]. Without exception, these

Journal

The Journal of FinanceWiley

Published: Dec 1, 1976

References

  • Some Time Series Properties of Accounting Income
    Ball, Ball; Watts, Watts

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