INFORMATION CONTENT OF PRO FORMA EARNINGS

2016 ◽  
Vol 05 (07) ◽  
pp. 22-34
Author(s):  
Shu-Ling Hsu
Keyword(s):  
Information Content ◽  
Stock Prices ◽  
Stock Exchange ◽  
Net Income ◽  
Future Earnings ◽  
Taiwan Stock Exchange ◽  
Pro Forma Earnings ◽  
Economic Journal ◽  
Current Returns ◽  
Pro Forma

An increasing number of firms release “pro forma” earnings along with net income in their financial reports in the press. The pro forma earnings are defined by individual firms which are different from the net income defined under Generally Accepted Accounting Principles (GAAP). Lougee and Marquardt (2004) indicated that companies with less informative GAAP earnings were more likely to engage in reporting pro forma earnings than others. This study examines whether the pro forma earnings provide information to investors about future earnings in the Taiwanese stocks market. A condition of information asymmetry exists between investors and managers, and pro forma earnings are a way to disclose the latter’s ideas about their firms’ future profitability to investors. The quality of the financial information that is provided will impact investors’ predictions about firms’ future earnings, and so affect stock prices. The purpose of this study is thus to investigate the information content of pro forma earnings, and examine whether pro forma earnings can provide details of future earnings to the investors in the Taiwanese stock market. We collect 3,287 firm-year observations listed on the Taiwan Stock Exchange or Gre Tai Securities Market from 2008 to 2012, and our data is from the Taiwan Economic Journal (TEJ) database. Our results show that the disclosure of pro forma earnings can improve the association between current returns and future earnings. This implies that the disclosure of pro forma earnings reveals credible information, which is then incorporated into current returns.

Research of Building Intelligent Investment Decision Mode for Investment Portfolio — Using Taiwan Electronic Stock as an Example

2010 ◽  
Vol 13 (04) ◽  
pp. 621-645 ◽  
Author(s):  
Wen-Rong Jerry Ho ◽  
C. H. Liu ◽  
H. W. Chen
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Strategy ◽  
Return Rate ◽  
Selection Strategy ◽  
Stock Selection ◽  
Taiwan Stock Exchange ◽  
Book To Market Ratio

This research uses all of the listed electronic stocks in the Taiwan Stock Exchange as a sample to test the performance of the return rate of stock prices. In addition, this research compares it with the electronic stock returns. The empirical result shows that no matter which kind of stock selection strategy we choose, a majority of the return rate is higher than that of the electronics index. Evident in the results, the predicted effect of BPNN is better than that of the general average decentralized investment strategy. Furthermore, the low price-to-earning ratio and the low book-to-market ratio have a significant long-term influence.

Dividend Changes as Predictors of Future Profitability

2021 ◽  
Vol 15 (1) ◽  
Author(s):  
Fakhrul Hasan
Keyword(s):  
Information Content ◽  
Stock Prices ◽  
Special Interest ◽  
Dividend Policy ◽  
Future Earnings ◽  
New Information ◽  
Dividend Increases ◽  
Using Data ◽  
The Uk ◽  
Dividend Tax

This study investigates “the information content of dividends hypothesis” using data on UK firms from 1990-2015. Dividends act as an important conveyor of information. Dividend changes may trigger changes in stock prices because they may convey new information about the firm’s future earnings and profitability. Why do companies pay dividends (or analogously why are stockholders interested in receiving dividends), given that it is well known that dividends are often taxed heavily? This question is of special interest in the UK, where the dividend tax is higher than the capital gain tax. Previous research has used a number of dividend policy theories to explain the dividend policy puzzle. We carry out several estimations and find out that contrary to some other studies, there is no evidence that dividend increases (decreases) provide information about the future profitability or earnings of UK firms.

scholarly journals An Effective Enterprise Earnings Management Detection Model for Capital Market Development

2020 ◽  
pp. 77-91
Author(s):  
Suduan Chen ◽  
Zong-De Shen
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Classification Performance ◽  
Elastic Net ◽  
Market Development ◽  
Taiwan Stock Exchange ◽  
Detection Model ◽  
Logit Regression ◽  
Average Accuracy ◽  
Economic Journal

This study focuses on accrual-based earnings management. The purpose of this study is to establish an innovative and high-accuracy model for detecting earnings management using hybrid machine learning methods integrating stepwise regression, elastic net, logistic regression (Logit regression), and decision tree C5.0. Samples of this study are the electronic companies listed on the Taiwan Stock Exchange, and data are derived from the Taiwan Economic Journal (TEJ) for a period of ten years from 2008 to 2017. Results show that the earnings management detection model, as established by elastic net and C5.0, provides the best classification performance, and its average accuracy reaches 97.32%.

scholarly journals The Value Of Growth At A Reasonable Price: Evidence From The Taiwan Stock Exchange

2012 ◽  
Vol 11 (9) ◽  
pp. 1041
Author(s):  
Kathleen Hodnett ◽  
Heng-Hsing Hsieh
Keyword(s):  
Stock Prices ◽  
Stock Exchange ◽  
Growth Potential ◽  
Stock Selection ◽  
Selection Technique ◽  
Examination Period ◽  
Taiwan Stock Exchange ◽  
Study Results ◽  
Investment Styles ◽  
Reasonable Price

Value and growth represent two opposite investment styles when price multiples such as the price-to-earnings ratio and the price-to-market ratio are used to classify the investment styles of equities. Motivated by the argument of Peters (1991) and Broussard, Michayluk and Needy (2005) that price multiples are imperfect valuation measures for firms other than firms in mature industries, and also the argument of Ahmed and Nanda (2001) that value and growth investing strategies should not be mutually exclusive, this study attempts to identify stocks with above-average sales growth that trade at average or below-average price-to-sales multiples. Their performance relative to pure growth portfolios is subsequently analyzed. Using variants of historical growth rates relative to previous month, previous year, historical low and historical high as measures of growth potential, and the price-to-sales multiple as the measure of the reasonableness of the stock prices, we construct growth-at-a-reasonable-price (GARP) portfolios on the Taiwan Stock Exchange over the period from 01 January 2000 through 31 March 2010. Study results indicate that the GARP portfolios outperform their counterpart pure growth portfolios over the examination period. The incremental contributions of GARP measured in terms of the return improvements, risk reduction and improvements in the Sharpe ratios when switching from the pure growth stock selection technique to the GARP selection technique, is found to be significant over the examination period.

scholarly journals ANALISIS KORELASI KINERJA KEUANGAN PERUSAHAAN DENGAN HARGA SAHAM ( STUDI KASUS BANK MANDIRI Tbk )

2019 ◽  
Vol 12 (1) ◽  
pp. 98-112
Author(s):  
Meiffa Herfianti
Keyword(s):  
Correlation Analysis ◽  
Performance Indicators ◽  
Stock Prices ◽  
Stock Exchange ◽  
Profit Margin ◽  
Strong Positive Correlation ◽  
Net Income ◽  
Return On Assets ◽  
Return On Equity ◽  
Net Profit

The purpose of this research is to determine the correlation between the internal performance with the stock prices of Bank Mandiri Tbk. During the period of the year 1999 up to the year of 2008. Those internal performance are Net income, Return On Assets, Return On Equity, Net Profit Margin, and Total Assets. The stock prices of Bank Mandiri Tbk. is the closing prices each the end of year1999 up to year of 2008. The data of this research are selected from the Jakarta Stock Exchange Waeth wich is published in the year of 2008/2009. The analysis was based on the bi- variate correlation analysis of SPSS. The result shows only the performance of Return On Assets (ROA) and Net Income (NI) that having strong positive correlation with the stock prices of Bank Mandiri Tbk. The performance indicators such as Return On Equity (ROE), NetProfit Margin (NPM), and Total Assets (TA) in case of Bank Mandiri Tbk. is not relevance with the stock prices movement.

scholarly journals DOES INCOME SMOOTHING IMPROVE INFORMATIVENESS OF STOCK PRICES?

2017 ◽  
Vol 15 (2) ◽  
pp. 225-239
Author(s):  
Shinta Ningtiyas Nazar
Keyword(s):  
Empirical Evidence ◽  
Stock Prices ◽  
Stock Price ◽  
Stock Exchange ◽  
Income Smoothing ◽  
Earnings Persistence ◽  
Future Earnings ◽  
Earnings Response ◽  
Negative Effect ◽  
Using Data

The purpose of this research is to get empirical evidence from effect Income smoothing  to Informativeness of Stock Prices  in Indonesian Stock Exchange (IDX). Population from this research is take from companies that have been listing Index LQ 45 in IDX form 2003 until 2015. Income Smoothing is masured by Jones’s Model which have been modified by Kothari et. all (2005).  Informativeness of stock price using Zarowin and Tucker Model (2006) Future Earnings Response Coeficient, and  the relations to earnings persistence, which is can been seen from  relation from current earnings dan future earnings.   The research is using data from year 2003 until 2015 period, and  year 2014 used as terminal year.  That found  income smoothing have a negative effect to informativeness of stock  price and also found  the managers’ income smoothing action always decreases earnings from 2013 to 2015. Current earnings have related to future earnings.

scholarly journals ANALISIS PENGARUH TOTAL ASSET, LABA BERSIH, INFLASI, DAN BI RATE TERHADAP PERGERAKAN HARGA SAHAM: STUDI PADA PERUSAHAAN MANUFAKTUR BEI

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Wahyu Ika Kusuma Ningrum
Keyword(s):  
Significant Influence ◽  
Stock Prices ◽  
Random Sampling ◽  
Stock Price ◽  
Sampling Method ◽  
Stock Exchange ◽  
Secondary Data ◽  
Net Income ◽  
Manufacturing Companies ◽  
Net Revenue

This study aimed to test whether the effect of Total Assets, Net Income (Net Revenue), Inflation, and the BI Rate to shares in companies isted on the Stock Exchage in 2005-2014. Another purpose of this study was to see if there is a significant influence on the movement of stock prices BEI manufacturing company to Total Assets, Net Income (Net Revenue), Inflation, and the BI Rate. his research sample is manufacturing companies listed on the Stock Exchange in 2005-2014 and selected by random sampling method. Data used is panel data by type of secondary data collected by the method of documentation. ypothesistesting was conducted using multiple regression analysis as seen from the quared with Eviews program. The results of this study indicate that the Total Assets, Net Income (Net evenue), Inflation, have a significant influence on stocks. While the BI Rate has a significant influence on stock price. This research ontributes to the development of capital markets, especially related to stock price.

scholarly journals The Information Content of Earnings on Stock Prices: The Kuwait Stock Exchange

2002 ◽  
Vol 6 (3/4) ◽  
pp. 197-221 ◽  
Author(s):  
Rashid Al-Qenae ◽  
◽  
Carmen Li ◽  
Bob Wearing ◽  
◽  
...  
Keyword(s):  
Information Content ◽  
Stock Prices ◽  
Stock Exchange ◽  
Kuwait Stock Exchange

scholarly journals Alternative performance measures: An assessment after ESMA Guidelines

2019 ◽  
Vol 17 (1) ◽  
pp. 50-59
Author(s):  
Vincenzo Foglia Manzillo ◽  
Alessandro Giannozzi ◽  
Gianluca Vittorioso ◽  
Oliviero Roggi
Keyword(s):  
Performance Measures ◽  
Stock Prices ◽  
Positive Impact ◽  
Relevant Information ◽  
European Regulation ◽  
Asymmetry Of Information ◽  
Pro Forma Earnings ◽  
The Press ◽  
The Impact ◽  
Pro Forma

In July 2016, ESMA Guidelines that set out principles regarding the presentation of non-GAAP measures (ESMA Guidelines on Alternative Performance Measures – APMs) became effective. The guidelines should reduce the mispricing caused by pro forma earnings, and improve investor protection and the transparency of financial information. We provide a preliminary assessment of the impact of these guidelines on 2016 reports on a sample of European Small and medium-sized enterprises (SMEs) listed on regulated markets. Using univariate and multivariate regressions, we demonstrate a significant relationship between Alternative performance measures disclosed in the press releases and stock prices in the period after the ESMA Guidelines. APMs are relevant information for investors and more adherence to the ESMA reporting guidelines may generate a positive impact on stock prices and short-term returns. The findings also contribute to demonstrate that the European regulation about non-GAAP measures will reduce the asymmetry of information between users, particularly between capital owners and management, which may lead to increased users’ confidence since they will be able to evaluate more effectively issuers’ performance.

The Information Content from Releases of the Deferred Tax Valuation Allowance

2019 ◽  
Vol 41 (2) ◽  
pp. 83-101 ◽  
Author(s):  
Andrew R. Finley ◽  
Anthony Ribal
Keyword(s):  
Information Content ◽  
Abnormal Returns ◽  
Additional Analysis ◽  
Control Group ◽  
Net Income ◽  
Future Earnings ◽  
Valuation Allowance ◽  
Historical Fact ◽  
Deferred Tax

ABSTRACT We examine the extent to which deferred tax valuation allowance (VA) releases—a discretionary accounting judgment that increases net income based on estimated future tax benefit realizations—are predictive of future earnings. We first find that profitable firms releasing at least a portion of a full VA have higher subsequent earnings relative to a control group that maintains a full VA. These results vary depending on firms' cumulative profitability in recent years and suggest some firms appear to rely on historical fact patterns rather than estimations of future profitability to justify the VA release. In additional analysis, we observe that among firms lacking cumulative profits in recent years, VA releasers generate higher subsequent abnormal returns than VA maintainers, suggesting investors are not timely responding to the information content from the VA release decision.

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