Trends in Earnings Volatility, Earnings Quality and Idiosyncratic Return Volatility: Managerial Opportunism or Economic Activity

2008 ◽  
Author(s):  
Changling Chen ◽  
Alan Guoming Huang ◽  
Ranjini Jha
Keyword(s):  
Economic Activity ◽  
Earnings Quality ◽  
Return Volatility ◽  
Earnings Volatility ◽  
Managerial Opportunism

Idiosyncratic Return Volatility, Earnings Quality and CEO Equity-Based Compensation

2008 ◽  
Author(s):  
Pervaiz Alam ◽  
Min Liu
Keyword(s):  
Earnings Quality ◽  
Return Volatility

Financial Analyst Assessment of Company Earnings Quality

1995 ◽  
Vol 10 (3) ◽  
pp. 541-554 ◽  
Author(s):  
Robert Bricker ◽  
Gary Previts ◽  
Thomas Robinson ◽  
Stephen Young
Keyword(s):  
Earnings Quality ◽  
Balance Sheet ◽  
Recent Time ◽  
Financial Analyst ◽  
Earnings Volatility ◽  
Conservative Accounting ◽  
Time Periods ◽  
Per Se ◽  
Core Earnings ◽  
Near Term

This study investigates sell-side financial analysts' interpretations of the phrase “earnings quality” and their preference for accounting methods. The data are a sample consisting of 479 sell-side financial analyst full-text reports for a set of companies stratified on exchange, SIC code, and size in three recent time periods. These reports illustrate the importance placed by analysts on identifying companies' core earnings. The results show that analysts associate high earnings quality with near-term earnings predictability. This predictability is defined in an economic sense in terms of a low level of earnings volatility, and in an accounting sense in terms of management discretion over the establishment and adjustment of certain conservative reserves, allowances, and off-balance-sheet assets. Limited association was found between earnings quality and the application of conservative accounting methods, per se.

Changes over Time in the Revenue-Expense Relation: Accounting or Economics?

2011 ◽  
Vol 86 (3) ◽  
pp. 945-974 ◽  
Author(s):  
Dain C. Donelson ◽  
Ross Jennings ◽  
John McInnis
Keyword(s):  
Earnings Quality ◽  
Accounting Standards ◽  
Item Recognition ◽  
Earnings Persistence ◽  
Dramatic Decrease ◽  
Earnings Volatility ◽  
Special Items ◽  
Contemporaneous Correlation ◽  
Or Economics ◽  
Changes Over Time

ABSTRACT: Dichev and Tang (2008) document a dramatic decrease over the last 40 years in the contemporaneous correlation between revenue and expense, along with an associated increase in earnings volatility and a decline in earnings persistence, suggesting a decline in earnings quality. We document that these changes are primarily attributable to an increase in the incidence of large special items. We then examine the extent to which this increase in special items is due to either more frequent real economic events related to special item recognition or to the adoption of new accounting standards. Our evidence suggests that changes in the frequency of economic events associated with special items have played a more important and sustained role relative to the role played by adoption of individual accounting standards. Finally, we find that the changing incidence of these economic events is at least in part related to the well-documented increase in competition in the U.S. economy over the last four decades.

scholarly journals CSR Disclosures: Role and Relationship to Accounting Conservatism in Improving Earnings of Quality

2021 ◽  
Vol 25 (3) ◽  
pp. 585-598
Author(s):  
Aspian Noor ◽  
Ibnu Abni Lahaya ◽  
Indra Suyoto Kurniawan ◽  
Shally Najat ◽  
Syifa Azzahra Hafidz
Keyword(s):  
Earnings Quality ◽  
Accounting Conservatism ◽  
Actual Condition ◽  
Manufacturing Companies ◽  
Research Issues ◽  
Managerial Opportunism ◽  
Earnings Information ◽  
Csr Disclosure ◽  
Corporate Social ◽  
Observation Period

Several research issues argue, in general, companies that focus and are oriented towards the implementation of Corporate Social Responsibility (CSR). It is relative to accounting conservatism to suppress information asymmetry and/or managerial opportunism to provide higher quality earnings information as a reflection of the actual condition of the company. This study was conducted to look at the effect of CSR disclosure on earnings quality by adding accounting conservatism as a mediating variable. This study uses path analysis techniques in 90 manufacturing companies for an observation period of 4 (four) periods from 2016 to 2019. The results of this study indicate that CSR disclosure influences Accounting Conservatism. Then, CSR affects earnings quality. Furthermore, earnings quality is influenced by accounting conservatism, and finally, CSR disclosure does not affect earnings quality according to accounting conservatism. CSR Disclosure, Accounting Conservatism, Earnings Quality.DOI: 10.26905/jkdp.v25i3.5030

Firm Risk and Disclosures about Dispersion of Asset Values: Evidence from Oil and Gas Reserves

2019 ◽  
Vol 95 (1) ◽  
pp. 1-29 ◽  
Author(s):  
Marc Badia ◽  
Mary E. Barth ◽  
Miguel Duro ◽  
Gaizka Ormazabal
Keyword(s):  
Credit Risk ◽  
Stock Price ◽  
Oil And Gas ◽  
Systematic Risk ◽  
Return Volatility ◽  
Firm Risk ◽  
Managerial Opportunism ◽  
Asset Values ◽  
The Difference ◽  
Bid Ask Spreads

ABSTRACT The question we address is whether mandated disclosure about dispersion of nonfinancial asset values can provide information relevant to assessing firm risk. Using a sample of Canadian oil and gas (O&G) firms between 2004 and 2011, we find that the difference between the disclosed 10th and 50th percentiles from the O&G reserves distribution, which measures dispersion of the distribution, is positively associated with future total and idiosyncratic equity return volatility, systematic risk, and credit risk. We also find that disclosure of increased reserves dispersion is associated with weaker stock price reactions to increases in reserves and with increases in bid-ask spreads, both of which indicate the disclosures convey information about risk associated with reserves. Additional tests reveal little evidence of managerial opportunism in the reserves disclosures. Taken together, our evidence suggests that quantitative disclosures about the dispersion of nonfinancial asset values can provide information relevant to assessing firm risk.

scholarly journals Pengaruh Struktur Modal Dan Volatilitas Laba terhadap Kualitas Laba PT. Bank Sumut

2021 ◽  
Vol 7 (1) ◽  
pp. 81-89
Author(s):  
Aditya Amanda Pane ◽  
Sari Nuzullina Rahmadhani
Keyword(s):  
Regression Analysis ◽  
Capital Structure ◽  
Earnings Quality ◽  
Financial Statement ◽  
Loan Loss ◽  
Earnings Volatility ◽  
First Semester ◽  
Loan Loss Provisions ◽  
Result Show ◽  
The Capital Structure

The purposes of this research was to determined the influence of the capital structure and earnings volatility on the earnings quality PT. Bank Sumut. This research also aims to assess how the condition of the capital structure, earnings volatility and earnings quality at PT. Bank Sumut for 10 years lately. The proxy of capital structure is leverage, earnings volatility is standard deviasi of earnings and for the earnings quality the proxy is discretionary loan loss provisions. The samples used in this study are the quarterly financial statement of PT. Bank Sumut for the period of 2010 until the first semester of 2020.  The analytical method used was multiple regression analysis. The result show  that the capital structure  has a negative significant effect on the earnings quality and earnings volatility does not has a significant effect on the earnings quality in PT. Bank Sumut. Meanwhile, the capital structure and earnings volatility simultaneous have a significant effect on the earnings quality.

Hedging on the Hill: Does Political Hedging Reduce Firm Risk?

2021 ◽  
Author(s):  
Dane M. Christensen ◽  
Hengda Jin ◽  
Suhas A. Sridharan ◽  
Laura A. Wellman
Keyword(s):  
Management Tool ◽  
Crash Risk ◽  
Partisan Politics ◽  
Return Volatility ◽  
Policy Uncertainty ◽  
Firm Risk ◽  
Income Volatility ◽  
Effective Tax Rate ◽  
Policy Proposal ◽  
Earnings Volatility

We examine whether firms’ political hedging activities are effective at mitigating political risk. Focusing on the risk induced by partisan politics, we measure political hedging as the degree to which firms’ political connections are balanced across Republican and Democratic candidates. We find that greater political hedging is associated with reduced stock return volatility, particularly during periods of higher policy uncertainty. Similarly, greater political hedging is associated with reduced crash risk, investment volatility, and earnings volatility. Moreover, the reduction in earnings volatility appears to relate to both a firm’s taxes and its operating activities, as we find that greater political hedging is associated with reduced cash effective tax rate volatility and pretax income volatility. We further find investors are better able to anticipate future earnings for firms that engage in political hedging, suggesting that political hedging helps improve firms’ information environments. Lastly, we perform an event study using President Obama’s Clean Power Plan. We find that on the days this policy proposal was debated in Congress, energy and utility firms experienced heightened intraday return volatility (relative to other firms and nonevent days). However, this heightened volatility is mitigated for energy and utility firms that are more politically hedged. Overall, we conclude that political hedging is an effective risk management tool that helps mitigate firm risk. This paper was accepted by Suraj Srinivasan, accounting.

The association between earnings quality and firm-specific return volatility

2016 ◽  
Vol 15 (3) ◽  
pp. 294-316 ◽  
Author(s):  
Ranjan Kumar Mitra
Keyword(s):  
Stock Prices ◽  
Research Study ◽  
Earnings Quality ◽  
Systematic Risk ◽  
Idiosyncratic Volatility ◽  
Specific Information ◽  
Return Volatility ◽  
Content Type ◽  
Economic Fundamentals ◽  
Highly Correlated

Purpose This paper aims to examine the association between earnings quality and firm-specific return volatility for a large sample of Japanese manufacturing firms. Design/methodology/approach This archival research uses idiosyncratic volatility and asynchronicity as two analogous proxies for firm-specific return volatility to investigate its association with earnings quality. Findings Using idiosyncratic volatility and asynchronicity as two comparable proxies for firm-specific return volatility, the author finds contradictory results. The author relates this contradiction to another debate in accounting and finance literature about whether firm-specific return volatility captures firm-specific information or noise. Initially, the author obtains conflicting results because the systematic risk, one of the components of asynchronicity, is highly correlated with earnings quality. After controlling for the systematic risk, the author finds that higher earnings quality is associated with lower firm-specific return volatility. This finding is consistent with the noise-based explanation of firm-specific return volatility. The author also separates earnings quality into an innate component driven by economic fundamentals and a discretionary component driven by managerial discretionary behavior and finds that both components have significant impact on firm-specific return volatility but the innate component has significantly stronger effect than the discretionary component. Originality/value This is the first research study presenting evidence on the association between earnings quality and firm-specific return volatility in the Japanese setting. The findings of this paper are likely to contribute to the resolution of a well-known debate on whether firm-specific return volatility captures more firm-specific information being impounded in stock prices or noise in stock prices.

Economic Activity

1967 ◽  
Author(s):  
G. C. Harcourt ◽  
P. H. Karmel ◽  
R. H. Wallace
Keyword(s):  
Economic Activity

ADMINISTRATIVE AND LEGAL REGULATION OF SOME SPECIES OF FOREIGN ECONOMIC ACTIVITY TO BE LICENSED

2018 ◽  
Vol 64 (3) ◽  
pp. 114-119
Author(s):  
Anastasiia Filipenko ◽  
Keyword(s):  
Economic Activity ◽  
Legal Regulation
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