Principles-Based Standards and Earnings Attributes

2017 ◽  
Vol 63 (8) ◽  
pp. 2592-2615 ◽  
Author(s):  
David Folsom ◽  
Paul Hribar ◽  
Richard D. Mergenthaler ◽  
Kyle Peterson
Keyword(s):  
Earnings Attributes

Earnings Attributes of Alternate Annual Reporting Periods

2009 ◽  
Author(s):  
Katherine Gunny ◽  
John Jacob ◽  
Bjorn N. Jorgensen
Keyword(s):  
Earnings Attributes ◽  
Annual Reporting

Measuring Accounting Asset Informativeness

2021 ◽  
Author(s):  
Qi Chen ◽  
Katherine Schipper ◽  
Ning Zhang
Keyword(s):  
Important Determinant ◽  
Earnings Quality ◽  
Cash Flows ◽  
Economic Capital ◽  
Empirical Measure ◽  
Productive Capacity ◽  
Firm Level ◽  
Intrinsic Values ◽  
Earnings Attributes ◽  
Validation Tests

We develop and validate an empirical measure of the informativeness of accounting assets in measuring firm-specific economic capital, an important determinant of both cash flows and intrinsic values. Our validation tests show that the asset informativeness measure is sensitive to differences in both accounting methods and implementation decisions at the firm level, and corresponds to the way equity investors use the information in accounting assets. We find that accounting assets contain substantial information about firms' productive capacity (economic capital) and the information is not summarized in several earnings attributes often associated with earnings quality.

Do Institutional Investors Enhance Accounting Earnings Attributes in the Korean Market?

2018 ◽  
Vol 55 (1) ◽  
pp. 39-58 ◽  
Author(s):  
Chune Young Chung ◽  
Donghyun Kim ◽  
Kyung Soon Kim ◽  
Jin Hwon Lee ◽  
Kyungjin Lee
Keyword(s):  
Institutional Investors ◽  
Accounting Earnings ◽  
Earnings Attributes ◽  
Korean Market

Costs of Equity and Earnings Attributes

2004 ◽  
Vol 79 (4) ◽  
pp. 967-1010 ◽  
Author(s):  
Jennifer Francis ◽  
Ryan LaFond ◽  
Per M. Olsson ◽  
Katherine Schipper
Keyword(s):  
Value Relevance ◽  
Positive Association ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Operating Cycle ◽  
Accrual Quality ◽  
Accounting Data ◽  
Earnings Attributes ◽  
The Cost

We examine the relation between the cost of equity capital and seven attributes of earnings: accrual quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism. We characterize the first four attributes as accounting-based because they are typically measured using accounting information only. We characterize the last three attributes as market-based because proxies for these constructs are typically based on relations between market data and accounting data. Based on theoretical models predicting a positive association between information quality and cost of equity, we test for and find that firms with the least favorable values of each attribute, considered individually, generally experience larger costs of equity than firms with the most favorable values. The largest cost of equity effects are observed for the accounting-based attributes, in particular, accrual quality. These findings are robust to controls for innate determinants of the earnings attributes (firm size, cash flow and sales volatility, incidence of loss, operating cycle, intangibles use/intensity, and capital intensity), as well as to alternative proxies for the cost of equity capital.

Principles-Based Standards and Earnings Attributes

2012 ◽  
Author(s):  
David Folsom ◽  
Paul Hribar ◽  
Richard Dean Mergenthaler ◽  
Kyle Peterson
Keyword(s):  
Earnings Attributes

How Does Culture Impinge Upon Managers’ Demeanor of Earnings Management? Evidence from Cross-Country Analysis

2021 ◽  
pp. 2150009
Author(s):  
Paul K. Chaney ◽  
Suman Lodh ◽  
Monomita Nandy
Keyword(s):  
Earnings Management ◽  
National Culture ◽  
Real Earnings Management ◽  
Corporate Boards ◽  
Accruals Management ◽  
Earnings Attributes ◽  
Accruals Quality ◽  
Country Analysis ◽  
Using Data ◽  
The Impact

We examine the impact of national culture on earnings. Specifically, we examine managers’ likelihood of using accrual or real earnings management (REM) and the role of culture on various attributes of earnings (accruals quality, persistence, smoothing, and predictability). We measure national culture using Hofstede’s six dimensions of culture (1984, 2001, 2010). Using data from 36 countries during 1997–2018, we find that managers are likely to use both accruals and REM in high power distance (PDI) countries. In long-term-oriented countries, managers are more likely to use REM. In uncertainty avoidance (UAI) countries, in high individualist countries, and in higher indulgent versus restraint countries, managers are less likely to use either type of earnings management. In masculine countries, managers tend to use lower accruals management and rely on production cost REM. We also find the use of accruals management and the use of REM are substitutes for each other. In addition, we are able to classify countries into four earnings quality groups based on the culture impact on the earnings attributes (primarily driven by accruals quality, predictability, and smoothing). Persistence is generally not significant in classifying countries by earnings attributes. Our findings indicate that a universal set of accounting standards is a challenging goal to achieve given the cultural diversity across countries. To improve the existing corporate governance framework and to ensure high quality and uniform financial statements, the enforcement of standards should be tailored to specific cultures, or at a minimum, corporate boards need to be more culturally diversified.

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