What Has Gone Wrong With Japan’s Stock Performance Over the Last Three Decades?

AbstractIn this study, the hourly directions of eight banking stocks in Borsa Istanbul were predicted using linear-based, deep-learning (LSTM) and ensemble learning (LightGBM) models. These models were trained with four different feature sets and their performances were evaluated in terms of accuracy and F-measure metrics. While the first experiments directly used the own stock features as the model inputs, the second experiments utilized reduced stock features through Variational AutoEncoders (VAE). In the last experiments, in order to grasp the effects of the other banking stocks on individual stock performance, the features belonging to other stocks were also given as inputs to our models. While combining other stock features was done for both own (named as allstock_own) and VAE-reduced (named as allstock_VAE) stock features, the expanded dimensions of the feature sets were reduced by Recursive Feature Elimination. As the highest success rate increased up to 0.685 with allstock_own and LSTM with attention model, the combination of allstock_VAE and LSTM with the attention model obtained an accuracy rate of 0.675. Although the classification results achieved with both feature types was close, allstock_VAE achieved these results using nearly 16.67% less features compared to allstock_own. When all experimental results were examined, it was found out that the models trained with allstock_own and allstock_VAE achieved higher accuracy rates than those using individual stock features. It was also concluded that the results obtained with the VAE-reduced stock features were similar to those obtained by own stock features.

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The Benefits of Conservative Accounting to Shareholders: Evidence from the Financial Crisis

Accounting Horizons ◽

10.2308/acch-50431 ◽

2013 ◽

Vol 27 (2) ◽

pp. 319-346 ◽

Cited By ~ 59

Author(s):

Bill Francis ◽

Iftekhar Hasan ◽

Qiang Wu

Keyword(s):

Financial Crisis ◽

Firm Value ◽

Governance Mechanism ◽

Current Crisis ◽

Stock Performance ◽

Conservative Accounting ◽

Alternative Measures ◽

Recent Financial Crisis ◽

And Control ◽

Jel Classifications

SYNOPSIS Using the recent financial crisis as a natural quasi-experiment we test whether, and to what extent, conservative accounting affects shareholder value. We find that there is a significantly positive and economically meaningful relation between conservatism and firm stock performance during the current crisis. The result holds for alternative measures of conservatism and is validated in a series of robustness checks. We further find that the relation between conservatism and firm value is more pronounced for firms with weaker corporate governance or higher information asymmetry. Overall, our paper complements LaFond and Watts (2008) by providing empirical evidence to their argument that conservatism is an efficient governance mechanism to mitigate information risk and control for agency problems, and that shareholders benefit from it. JEL Classifications: M41; M48; G01.

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Equity Incentives and Earnings Management

The Accounting Review ◽

10.2308/accr.2005.80.2.441 ◽

2005 ◽

Vol 80 (2) ◽

pp. 441-476 ◽

Cited By ~ 696

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.

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