Does Earnings Guidance Affect Market Returns The Nature And Information Content Of Aggregate Earnings Guidance PDF Download
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| Author | : Carol Anilowski Cain |
| Publisher | : |
| Total Pages | : 49 |
| Release | : 2007 |
| Genre | : |
| ISBN | : |
Download Does Earnings Guidance Affect Market Returns? The Nature and Information Content of Aggregate Earnings Guidance Book in PDF, ePub and Kindle
We investigate whether earnings guidance affects aggregate stock returns through its effects on expectations about overall earnings performance and/or aggregate expected returns. We find that aggregate guidance, especially relative levels of quarterly downward guidance, is associated with analyst- and time-series-based measures of aggregate earnings news. We find more modest evidence that guidance, again, largely downward guidance, is associated with market returns - market returns appear to respond to guidance toward the end of each calendar quarter, when most earnings preannouncements are released, and there is some evidence that firm-level guidance affects market returns in short windows around its release.
| Author | : Lakshmanan Shivakumar |
| Publisher | : |
| Total Pages | : 16 |
| Release | : 2007 |
| Genre | : |
| ISBN | : |
Download Aggregate Earnings, Stock Market Returns and Macroeconomic Activity Book in PDF, ePub and Kindle
Anilowski, Feng and Skinner (Journal of Accounting and Economics, 2006, this issue) examine the relationship between aggregate earnings guidance, aggregate earnings news and market returns. They provide evidence that changes in aggregate proportions of downward or upward earnings guidance are associated with aggregate earnings news and weakly associated with market returns. However, the study is unable to establish causality or the precise nature of the relationship between aggregate earnings guidance and market returns. To better understand the relationship, this paper analyses the relation between aggregate earnings, stock market returns and the macroeconomy. I empirically document that aggregate earnings primarily contain information about future inflation. This inflation information in aggregate earnings causes aggregate earnings to be negatively correlated with stock returns. The paper concludes with suggestions for future research.
| Author | : Carol Anilowski Cain |
| Publisher | : |
| Total Pages | : 53 |
| Release | : 2007 |
| Genre | : |
| ISBN | : |
Download Is Guidance a Macro Factor? the Nature and Information Content of Aggregate Earnings Guidance Book in PDF, ePub and Kindle
Although a great deal of research documents the information content of management earnings forecasts at the firm level, there is little research on the informativeness of aggregate earnings guidance. We argue that aggregate earnings guidance is potentially informative at the market/economy level through its effects on expectations about market-level expected future cash flows and expected returns. We find that aggregate guidance, especially relative levels of quarterly downward guidance, is associated with analyst- and time-series-based measures of aggregate earnings news. We also find some evidence that guidance - again, largely downward guidance - is associated with market returns.
| Author | : Jonathan A. Milian |
| Publisher | : |
| Total Pages | : |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Download The Information Content of Guidance and Earnings Book in PDF, ePub and Kindle
I compare the information content of quarterly earnings guidance and quarterly earnings by examining their associations with current and future stock returns when the two signals are bundled at earnings announcements. At the bundled announcement, I find a significantly stronger association between announcement returns and guidance news. From the day after the bundled announcement through the next earnings announcement, both signals generate abnormal return drifts of about 200 basis points. However, the timing of the post-announcement returns differs considerably. For guidance, about 50% of the post-announcement drift occurs at the next earnings announcement. In contrast, for earnings, about 20% of the preceding drift reverses at the next earnings announcement. Investor ignorance of the drift following guidance news coupled with a fixation on post-earnings announcement drift potentially explains this surprising difference in the timing of the post-announcement returns. Overall, this study indicates that bundled quarterly earnings guidance contains more information than quarterly earnings and that investors incorrectly overweight the earnings news and underweight the guidance news during the post-announcement period until the next earnings announcement.
| Author | : Lindsey A. Gallo |
| Publisher | : |
| Total Pages | : 49 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
Download Is the U.S. Unique? International Evidence on the Aggregate Earnings-Returns Association Book in PDF, ePub and Kindle
We exploit differences in institutional and macroeconomic environments to shed light on what drives variation in the aggregate earnings-returns relation over time within the U.S. and across countries. We find that both intertemporal and cross-country variation in the aggregate earnings-returns association are driven primarily by two factors, namely, the monetary policy news conveyed in aggregate earnings and the market reaction to that news, which suggest that the strength of the discount rate news channel plays an important role in explaining the aggregate earnings-returns relation both within and outside of the U.S. We further find that institutional characteristics have a significant effect on the information content of aggregate earnings and hence on the aggregate earnings-returns association--aggregate earnings are more informative about policy changes in countries with stronger investor protection and greater accounting transparency. Overall, our study provides new evidence on what drives the aggregate earnings-returns relation across the globe.
| Author | : Wen He |
| Publisher | : |
| Total Pages | : 39 |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
Download Aggregate Earnings and Market Returns Book in PDF, ePub and Kindle
Kothari, Lewellen and Warner (2006) document that in the U.S. market aggregate earnings changes are negatively related to contemporaneous market returns. This is puzzling given the well-documented evidence that firm-level earnings changes are positively related to stock returns. In this study we use a sample of 28 countries to provide international evidence on this important issue. In pooled cross-country and time-series regressions, we find that aggregate earnings changes are positively associated with contemporaneous market returns. When we run time-series regressions of market returns on aggregate earnings changes for each country, we find only four countries have negative coefficients for aggregate earnings changes and none of these negative coefficients are statistically significant. This evidence contrasts the U.S. evidence. Furthermore aggregate earnings exhibits substantial persistence, suggesting current earnings convey information about future earnings. Finally we find that the earnings-returns relation at aggregate becomes less positive in countries with more transparent accounting disclosure. This result supports the argument proposed by Sadka and Sadka (2009) that predictability of aggregate earnings leads to the negative relation between aggregate earnings and market returns in the U.S.
| Author | : Baruch Lev |
| Publisher | : John Wiley & Sons |
| Total Pages | : 268 |
| Release | : 2016-06-14 |
| Genre | : Business & Economics |
| ISBN | : 1119191084 |
Download The End of Accounting and the Path Forward for Investors and Managers Book in PDF, ePub and Kindle
An innovative new valuation framework with truly useful economic indicators The End of Accounting and the Path Forward for Investors and Managers shows how the ubiquitous financial reports have become useless in capital market decisions and lays out an actionable alternative. Based on a comprehensive, large-sample empirical analysis, this book reports financial documents' continuous deterioration in relevance to investors' decisions. An enlightening discussion details the reasons why accounting is losing relevance in today's market, backed by numerous examples with real-world impact. Beyond simply identifying the problem, this report offers a solution—the Value Creation Report—and demonstrates its utility in key industries. New indicators focus on strategy and execution to identify and evaluate a company's true value-creating resources for a more up-to-date approach to critical investment decision-making. While entire industries have come to rely on financial reports for vital information, these documents are flawed and insufficient when it comes to the way investors and lenders work in the current economic climate. This book demonstrates an alternative, giving you a new framework for more informed decision making. Discover a new, comprehensive system of economic indicators Focus on strategic, value-creating resources in company valuation Learn how traditional financial documents are quickly losing their utility Find a path forward with actionable, up-to-date information Major corporate decisions, such as restructuring and M&A, are predicated on financial indicators of profitability and asset/liabilities values. These documents move mountains, so what happens if they're based on faulty indicators that fail to show the true value of the company? The End of Accounting and the Path Forward for Investors and Managers shows you the reality and offers a new blueprint for more accurate valuation.
| Author | : Hamish Campbell Macalister |
| Publisher | : |
| Total Pages | : 300 |
| Release | : 2011 |
| Genre | : Corporate profits |
| ISBN | : |
Download Aggregate Earnings, Forecasts and Revisions Book in PDF, ePub and Kindle
I investigate the information in aggregated US equity analysts' earnings forecasts. Despite a voluminous body of research evaluating the information in, and characteristics of, equity analysts' forecasts, relatively little is known regarding aggregated forecasts. However, Kothari, Lewellen and Warner (2006) demonstrate how estimated relationships between, for example, earnings and returns may differ markedly at the aggregate level compared with the individual stock level. I generate time series of aggregated forecast earnings, aggregated forecast revisions and aggregated realized earnings for the period extending from the first quarter of 1979 through to the last quarter of 2009. These variables are employed in three examinations of aggregated earnings expectations. Firstly, prior research indicates significant information in analysts' forecasts for future realized earnings, and strong positive correlation between realized earnings and indicators of macroeconomic activity. I therefore hypothesize significant information in aggregated analysts' forecasts for future realized economic activity. Secondly, I investigate the informational efficiency of analysts' forecasts with respect to realized macroeconomic variables, and implications of earnings revision predictability for return predictability. Thirdly, I employ aggregated earnings revisions as proxies for market earnings surprise in tests of cash flow and discount rate effects in market returns. I find evidence of statistically significant information for future US industrial production growth in aggregated analysts' forecasts, the magnitude of which is a partial function of earnings smoothing by management, firm size and earnings cyclicality. I also find evidence of systematic underreaction by analysts to realized macroeconomic factors, resulting in revision predictability which in turn is able to explain significant systematic variation in future industry returns. In addition, my results suggest that the negative relationship between aggregated earnings surprise and contemporaneous returns identified by Kothari et al. (2006) is at least partially a product of the period they evaluate. In robustness tests employing both aggregated realized earnings and aggregated forecast revisions, I find evidence of positive (albeit insignificant) relationships between these proxies for earnings surprise and contemporaneous market returns. My results do not support the notion of a discount rate effect dominating a cash flow effect at the aggregate level.
| Author | : Cheng F. Lee |
| Publisher | : Center for PBBEFR & Airiti Press |
| Total Pages | : |
| Release | : 2014-01-01 |
| Genre | : Business & Economics |
| ISBN | : 9866286681 |
Download Advances in Quantitative Analysis of Finance and Accounting (New Series) Vol．12 Book in PDF, ePub and Kindle
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 | : Amir Amel-Zadeh |
| Publisher | : Routledge |
| Total Pages | : 331 |
| Release | : 2020-04-29 |
| Genre | : Business & Economics |
| ISBN | : 1000066525 |
Download Accounting for M&A Book in PDF, ePub and Kindle
Spending on M&A has, in aggregate, grown so fast that it has even overtaken capital expenditure on increasing and maintaining physical assets. Yet McKinsey, the leading management consultancy, reports that "Anyone who has researched merger success rates knows that roughly 70% fail". The idea that businesses might be using huge and increasing sums of shareholders’ money for an activity that more often than not leads to failure calls into question the information on which M&A decisions are based. This book presents statistical studies, case material, and standard-setters’ opinions on company accounting before, during, and after M&A. It documents the manipulation of annual accounts by acquirers ahead of share for share bids, biased forecasts of post-merger earnings by bidders, and devices to flatter earnings when recording the deal. It explores the challenges for standard-setters in regulating information flows during and after M&A, and for account-users wishing to learn from financial statements how a deal has affected performance. Drawing on a wide range of international examples, this readable book is targeted not just at accounting specialists but at anyone who is comfortable reading the serious financial press, is intrigued by what is going on in the massive M&A market, and is concerned with achieving better-informed M&A. As such it might be of particular interest to business executives, lawyers, bankers, and investors involved in M&A as well as graduate students interested in researching or learning about the role of accounting in M&A.
