Do investors anticipate the future earnings of firms in a homogeneous industry?

2019 ◽  
Vol 27 (5) ◽  
pp. 577-590
Author(s):  
Hyejeong Shin ◽  
Heejeong Shin ◽  
Su-In Kim
Keyword(s):  
Future Earnings ◽  
The Future

scholarly journals Equity Incentives and Earnings Management

2005 ◽  
Vol 80 (2) ◽  
pp. 441-476 ◽  
Author(s):  
Qiang Cheng ◽  
Terry D. Warfield
Keyword(s):  
Earnings Management ◽  
Stock Ownership ◽  
Stock Performance ◽  
Future Earnings ◽  
Equity Incentives ◽  
Time Period ◽  
Earnings Surprises ◽  
The Future

This paper examines the link between managers' equity incentives—arising from stock-based compensation and stock ownership—and earnings management. We hypothesize that managers with high equity incentives are more likely to sell shares in the future and this motivates these managers to engage in earnings management to increase the value of the shares to be sold. Using stock-based compensation and stock ownership data over the 1993–2000 time period, we document that managers with high equity incentives sell more shares in subsequent periods. As expected, we find that managers with high equity incentives are more likely to report earnings that meet or just beat analysts' forecasts. We also find that managers with consistently high equity incentives are less likely to report large positive earnings surprises. This finding is consistent with the wealth of these managers being more sensitive to future stock performance, which leads to increased reserving of current earnings to avoid future earnings disappointments. Collectively, our results indicate that equity incentives lead to incentives for earnings management.

Analisis Ratio Keuangan terhadap Perubahan Kinerja pada Perusahaan di Industri Food and Baverages yang Terdaftar pada BEJ

2005 ◽  
Vol 1 (2) ◽  
pp. 104
Author(s):  
DIAN MERIEWATY ◽  
ASTUTI YULI SEIYANI
Keyword(s):  
Stock Exchange ◽  
Financial Statements ◽  
Financial Statement ◽  
Financial Ratios ◽  
Future Earnings ◽  
Financial Condition ◽  
Total Capital ◽  
Future Earning ◽  
The Future ◽  
And Performance

Financial statements users need financial informotion of companies to analyze their financial condition and performance. Finacial rotios are useful rneasares for explaning the future earning changes. The study focuses on the usefulness of ftnancial ratios in explaning future eamings.The objective of the study is to empirically examine whether financial statement based tinancial ratios hove ability for explaning future earnings. Data in this study were in food and beverages firms listed on the Jaknrta Stock Exchange. Regression analysis were used in testing the ability financial ratios for explaning changes. The multicollinearity test shows that there is no assosiation between independent variables, indicating multieollinearity is not a seriaus problem. The heteroscedasticity test shows that voriances of disturbances are constant for all observation in independentt variables. Therefore heteroscedasticity is not a problem. The empiricolly result showed that, financial ratios in/luences the futureearnings changes for earning after tax are total debt to total capital assets, total assets turnover, and return on investment. Among those sevent financial ratios that are significant influences the future earnings changes for operating prortt is current ratio.Keywords : Financial Ratios, Performance changes of firms, significantlyinfluence.

scholarly journals The efficiency of accounting normalization in the matter Of intangibles: Asset versus Expense

2011 ◽  
Vol 1 (1) ◽  
pp. 72
Author(s):  
Ben Brahim Houneida ◽  
Mounira Ben Arab
Keyword(s):  
Balance Sheet ◽  
Accounting Information ◽  
The Other ◽  
Intangible Asset ◽  
Earnings Volatility ◽  
Future Earnings ◽  
Quality Of Accounting Information ◽  
Intangible Investments ◽  
The Future

Abstract In this paper, we seek to show if the intangible investments may accomplish the recognition’s criteria of an intangible asset and we show, thus, if these criteria are capable to preserve the quality of accounting information. We find that the capability of the intangible investments (R&D), immediately expensed, in the generation of future benefits is more important than the other investments (tangibles and intangibles investments recognized in the balance sheet). This capability is largely influenced by the engagement’s degree of the managers. Further, these investments are susceptible to diminish the future earnings volatility and, consequently, their future profits may be measured with reliability and capitalized in the balance sheet as an asset essentially for the firms that have a strong alignment between the manager’s and shareholder’s interest.

scholarly journals Dividend Changes and Future Profitability: Evidence from the Turkish Stock Market

2016 ◽  
Vol 8 (3) ◽  
pp. 196 ◽  
Author(s):  
Eyup Kadioglu ◽  
Nurcan Ocal
Keyword(s):  
Panel Data ◽  
The Other ◽  
Strongly Correlated ◽  
Data Set ◽  
Future Earnings ◽  
Panel Data Regression ◽  
Data Regression ◽  
Dividend Signaling ◽  
The Future ◽  
Dividend Announcements

<p>Most of the previous studies on dividends in Turkey have focused on the effects of dividend announcements. There has been no study investigating the relation between dividend changes and the future profitability of firms. This study investigates this relation by using both ordinary and panel data regression on a data set consisting of 1,239 dividend payouts from 123 companies listed in Borsa Istanbul during the period 2004-2014. This study is unable to demonstrate that dividend changes are related to changes in future earnings. No evidence is found to support the dividend signaling theory, which claims that dividends serve as indicators of the future profitability of firms. On the other hand, future profitability is found to be strongly correlated with profitability in the previous year.</p>

Earnings and Firm Value in the Presence of Real Options

2020 ◽  
Vol 95 (6) ◽  
pp. 263-289
Author(s):  
Moritz Hiemann
Keyword(s):  
Real Options ◽  
Firm Value ◽  
The Real ◽  
Future Earnings ◽  
Time Dynamics ◽  
Investment Opportunities ◽  
The Future ◽  
Earnings Response ◽  
Profit Maximizing ◽  
Future Growth

ABSTRACT To explain the empirically documented nonlinear, non-monotonic relationship between earnings and firm value, it suffices to assume that firms continually take profit-maximizing decisions in response to newly arriving investment opportunities. The real options embedded in these opportunities create hysteresis effects that lead to the well-known, but so far poorly understood, negative earnings-to-value relation among loss-making firms. Optionality also predicts the future growth component of firm value to be a decreasing function of earnings among highly profitable firms. More generally, the dynamic options model implies an earnings-to-value mapping that can be non-monotonic even over narrow earnings intervals. The commonly used linear earnings-response estimation may, therefore, be a poor approximation even locally. These phenomena arise because optionality makes past and future earnings the product of an unobservable flow of opportunities and decisions whose time dynamics cannot be described by direct linear past-to-future extrapolation.

The Effect of the Loss of a Parent on the Future Earnings of a Minor Child

2010 ◽  
Vol 36 (3) ◽  
pp. 370-390 ◽  
Author(s):  
John Kane ◽  
Lawrence M Spizman ◽  
James Rodgers ◽  
Rick R Gaskins
Keyword(s):  
Future Earnings ◽  
The Future ◽  
A Minor ◽  
Loss Of A Parent

scholarly journals An Examination Of The Economic Impact Of Pension Rate Reductions On Future Pension Expense, Earnings, And Cash Flows: A Simulation

2011 ◽  
Vol 1 (7) ◽  
Author(s):  
Alan I. Blankley ◽  
Philip G. Cottell ◽  
Richard H. McClure
Keyword(s):  
Small Firms ◽  
Pension Plan ◽  
Cash Flows ◽  
Pension Plans ◽  
Large Firms ◽  
Asset Return ◽  
Future Earnings ◽  
Economic Climate ◽  
The Future ◽  
The Impact

In this paper, we develop a two-period analytical model of pension cost, which allows us to simulate pension expense and the associated earnings impact. These estimates are important because they provide information to the market, and because they are useful in estimating future cash flows or for other analytical purposes. This is especially true now, because the economic environment has deteriorated to a point that many investors perceive increased uncertainty with respect to pension plans and the effect they have on future income. Some plan sponsors have not been faced with pension plan losses for over a decade or longer, having enjoyed reduced or eliminated funding holidays as a result of high returns to pension plan assets. Given the current economic climate, however, these results (boosts to earnings due to pension credits and reduced or eliminated funding requirements) may change abruptly. In fact, several authors in the popular financial press have speculated on the impact of such fundamental changes in pension assets, liabilities and estimates. We simulate the potential results for two periods in the future based upon percentiles drawn from a sample of 1,116 firms taken from Compustat. We compute projected pension expense for the 25th percentile firm, the median firm, and the 75th percentile firm by varying the discount rates, expected rates of return, and actual asset return assumptions. Our results indicate that while the pension expense effect is large in both periods across small, mid-sized and large firms, large firms show the greatest increase in pension expense. Interestingly, however, the earnings impact is the smallest for large firms in both periods, and is not material in period one for both large and mid-sized firms. It is material for small firms. Firms with small pension plans appear to have the greatest earnings drag both one and two years into the future. In period two, all firms face significantly greater expense and earnings reductions, although again, smaller firms face the greatest impact. In addition, all firms face significantly increased cash funding requirements in order to prevent funding ratios (plan assets scaled by pension liabilities) from deteriorating. These results suggest not only future earnings reductions form pension rate changes, but also a potential cash flow impact as well.

scholarly journals Income Smoothing and CEO Job Security

2012 ◽  
Vol 4 (3) ◽  
pp. 95-106
Author(s):  
Lanouar Charfeddine
Keyword(s):  
Job Security ◽  
Multivariate Model ◽  
Income Smoothing ◽  
Future Earnings ◽  
Empirical Results ◽  
Future Performance ◽  
Ceo Tenure ◽  
The Future

The purpose of this paper is to examine the link between income smoothing and CEO tenure on a sample of 271 U.S companies over the period 1993 to 2003. Moreover, in order to test the extent of income smoothing for job security and specifically for a lengthen tenure; we also have considered some CEOs characteristics such as age and tenure. Empirical results of Wilcoxon statistics and discriminating analysis show that when the current (future) performance is good, the CEOs find the sufficient margins to manage the earnings to leave in reserve for the future performance (or borrow for the current performance). In addition, the results of the multivariate model show that the CEO smooth the income by decreasing accruals, so they shift current earnings to future periods when current earnings is high and future earnings is low to lengthen their tenure.

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