Investor and (Value Line) Analyst Underreaction to Information About Future Earnings: The Corrective Role of Non-Earnings-Surprise Information

2001 ◽  
Author(s):  
Philip B. Shane ◽  
Peter Brous
Keyword(s):  
Future Earnings ◽  
Earnings Surprise

scholarly journals Earnings Smoothing as Information Signaling or Garbling: A Review of Literature

2018 ◽  
Vol 10 (1) ◽  
pp. 131
Author(s):  
Nor Afifah Shabani ◽  
Saudah Sofian
Keyword(s):  
Private Information ◽  
Firm Value ◽  
Future Research ◽  
Journal Articles ◽  
Actual Performance ◽  
Future Earnings ◽  
Information Signaling ◽  
Earnings Smoothing ◽  
Reported Earnings

Earnings smoothing, which refers to the action of managers managing earnings to reduce fluctuations of reported earnings, is a special type of earnings management because while earnings smoothing may be used to distort shareholders and creditors’ view of corporate actual performance, it may also serve as a tool to communicate corporate private information of future earnings to the aforementioned stakeholders. Hence, it comes to no surprise when prior literatures reveal that the studies on the role of earnings smoothing are divided into two streams: as information signaling and information garbling. This paper aims to review prior literatures, specifically on the role of earnings smoothing either as information signaling or garbling based on four themes: firm value, financing need, compensation contract and outsiders’ intervention. This paper reviews journal articles gathered from Web of Science database. Based on the shortcomings of prior literatures, this paper highlights avenue for future research.

The Persistence and Pricing of Earnings, Accruals, and Cash Flows When Firms Have Large Book-Tax Differences

2005 ◽  
Vol 80 (1) ◽  
pp. 137-166 ◽  
Author(s):  
Michelle Hanlon
Keyword(s):  
Cash Flows ◽  
Earnings Persistence ◽  
Taxable Income ◽  
Future Earnings ◽  
Special Items ◽  
Potential Sources ◽  
Red Flag

I investigate the role of book-tax differences in indicating the persistence of earnings, accruals, and cash flows for one-period-ahead earnings. I also examine whether the level of book-tax differences influences investors' assessments of future earnings persistence. I find that firm-years with large book-tax differences have earnings that are less persistent than firm-years with small book-tax differences. Further, the evidence is consistent with investors interpreting large positive book-tax differences (book income greater than taxable income) as a “red flag” and reducing their expectation of future earnings persistence for these firm-years. I then investigate potential sources of the lower persistence for firm-years with large book-tax differences. I find that special items contribute in part to the results but that firm-years with large booktax differences continue to have lower persistence in earnings after controlling for the effect of the special items.

scholarly journals Earnings Surprise, Portfolio Inertia and Stock Price Volatility

2015 ◽  
Vol 3 (4) ◽  
pp. 301-320
Author(s):  
Shunwu Huang ◽  
Wang Chang ◽  
Lan Zheng
Keyword(s):  
Decision Making ◽  
Institutional Investors ◽  
Stock Prices ◽  
Stock Price ◽  
Price Volatility ◽  
Mediation Effect ◽  
Stock Price Volatility ◽  
Earnings Surprise ◽  
The Relationship

AbstractFrom the perspective of the mediation effect, this paper investigates whether institutional investors adjust their portfolios according to the listed companies earnings surprise. We find that the portfolio adjustments by institutional investors exert the mediation effect on the relationship between earnings surprise and stock price volatility. Institutional investors actively manage their portfolios in the rising market, which induces the stock price volatility; while they less adjust their portfolio in the falling market, the volatility declines. This paper helps understand the role of institutional investors in the fluctuation of stock prices, and provides a new basis for decision making of regulatory administration.

Optimal Collateralized Contracts

2020 ◽  
Vol 12 (4) ◽  
pp. 45-74
Author(s):  
Dan Cao ◽  
Roger Lagunoff
Keyword(s):  
Private Information ◽  
Optimal Contract ◽  
Optimal Contracts ◽  
Net Worth ◽  
Future Earnings ◽  
Endogenous Default ◽  
Initial Wealth ◽  
Credit Contracts ◽  
Collateralized Contracts

We examine the role of collateral in a dynamic model of optimal credit contracts in which a borrower values both housing and nonhousing consumption. The borrower’s private information about his income is the only friction. An optimal contract is collateralized when in some state, some portion of the borrower’s net worth is forfeited to the lender. We show that optimal contracts are always collateralized. The total value of forfeited assets is decreasing in income, highlighting the role of collateral as a deterrent to manipulation. Some assets—those that generate consumable services—will necessarily be collateralized, while others may not be. Endogenous default arises when the borrower’s initial wealth is low, as with subprime borrowers, and/or his future earnings are highly variable. (JEL D82, D86, G21, G51)

Role of dactinomycin in the improved survival of children with Wilms' tumor

JAMA ◽  
1966 ◽  
Vol 195 (12) ◽  
pp. 1005-1009 ◽  
Author(s):  
D. J. Fernbach
Keyword(s):  
Wilms Tumor
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