Income Smoothing, Information Uncertainty, Stock Returns, and Cost of Equity PDF Download
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Author: Linda H. Chen
Publisher: ProQuest
ISBN: 9781109105308
Category :
Languages : en
Pages : 67
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Book Description
Author: Linda H. Chen
Publisher: ProQuest
ISBN: 9781109105308
Category :
Languages : en
Pages : 67
Get Book Here
Book Description
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Income smoothing, information uncertainty, stock returns, and cost of equity.
Author: Randall K. Morck
Publisher: University of Chicago Press
ISBN: 0226536823
Category : Business & Economics
Languages : en
Pages : 404
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Book Description
Standard economic models assume that many small investors own firms. This is so in most large U.S. firms, but wealthy individuals or families generally hold controlling blocks in smaller U.S. firms and in all firms in most other countries. Given this, the lack of theoretical and empirical work on tightly held firms is surprising. What corporate governance problems arise in tightly held firms? How do these differ from corporate governance problems in widely held firms? How do control blocks arise and how are they maintained? How does concentrated ownership affect economic growth? How should we regulate tightly held firms? Drawing together leading scholars from law, economics, and finance, this volume examines the economic and legal issues of concentrated ownership and their impact on a shifting global economy.
Author: Chad R. Larson
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
Asset pricing theory notes that different types of investor uncertainty can have directionally different effects on cost of equity. Empirical studies of costs of equity, however, generally assume that different types of uncertainty are independent or have the same directional effect. We relax this assumption and jointly test the effects of two types of investor uncertainty, one related to future firm performance and unrelated to accruals (cash flow uncertainty) and one directly related to accrual estimation errors (information quality uncertainty). Distinct from prior studies, our uncertainty estimates are based on a matched-firm design that minimize the mechanical relation between the two uncertainty variables. We find a strong negative relation between cash flow uncertainty and multiple estimates of cost of equity. With respect to information quality uncertainty, we find a strong positive association with both expected stock returns and implied costs of equity, but only in settings that control for cash flow uncertainty. Collectively, our study suggests the need to consider different types of investor uncertainty when examining how investor uncertainty affects cost of equity.
Author: Si Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
Existing literature on income smoothing primarily focuses on the effect of earnings smoothing on the equity market. This paper investigates the effect of income smoothing on the debt market. Using the Tucker-Zarowin (TZ) statistic of income smoothing, we find that firms with higher income smoothing rankings exhibit lower cost of debt, suggesting that the information signaling effect of income smoothing dominates the garbling effect. We also find that the effect of earnings smoothing on debt cost reduction is stronger in firms with more opaque information and greater distress risk.
Author: Paul Zarowin
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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Book Description
This paper presents a new approach to studying the effects of earnings management, by testing whether income smoothing, a particular form of earnings management, is associated with more informative stock prices. Stock price informativeness is defined as the amount of information about future earnings and cash flows reflected in current period stock returns, and ismeasured as the coefficient on future earnings (cash flows) in a regression of current stock return against current and future earnings (cash flows and accruals). I find that firms with greater smoothing have more informative stock prices, implying that managers use income smoothing to reveal their private information about the firm s future profitability.
Author: Patricia M. Dechow
Publisher: Research Foundation of the Institute of Chartered Financial Analysts
ISBN: 9780943205687
Category : Corporate profits
Languages : en
Pages : 152
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Book Description
Author: Cheng F. Lee
Publisher: Center for PBBEFR & Airiti Press
ISBN: 9864370391
Category : Business & Economics
Languages : en
Pages :
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Book Description
Advances in Quantitative Analysis of Finance and Accounting (New Series) is an annual publication designed to disseminate developments in the quantitative analysis of finance and accounting. The publication is a forum for statistical and quantitative analyses of issues in finance and accounting as well as applications of quantitative methods to problems in financial management, financial accounting, and business management. The objective is to promote interaction between academic research in finance and accounting and applied research in the financial community and the accounting profession.
Author: Garen Markarian
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
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Book Description
In this paper we empirically evaluate the widespread belief of managers that income smoothing results into lower stock market risk. Multivariate regressions confirm that a negative relation exists between discretionary income smoothing and idiosyncratic volatility. Further analysis indicates that smoothing is also related to analyst forecast patterns, institutional investors, share liquidity, and firm risk, all of which are independently related to volatility. Finally, we find that in cases where income smoothing appears to reduce information quality and/or otherwise lacks credibility as a signal of reduced equity risk, it is associated with higher stock return volatility, which suggests that in practice investor responses to income smoothing may be both more sophisticated and variable than previously realized.
Author: Cheng F. Lee
Publisher: Center for PBBEFR & Ainosco Press
ISBN: 9866286738
Category : Business & Economics
Languages : en
Pages :
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Book Description
Advances in Quantitative Analysis of Finance and Accounting (New Series) is an annual publication designed to disseminate developments in the quantitative analysis of finance and accounting. The publication is a forum for statistical and quantitative analyses of issues in finance and accounting as well as applications of quantitative methods to problems in financial management, financial accounting, and business management. The objective is to promote interaction between academic research in finance and accounting and applied research in the financial community and the accounting profession.
