Changes in the fraction of workers experiencing job separations can account for most of the increase in earnings dispersion that occurred both between, as well as within educational groups in the United States from the mid-1970s to the mid-1980s. This is not true of changes in average earnings losses following job separations. A search model with exogenous human capital accumulation calibrated ...

This study links the trend in two earnings quality metrics: 1) the standard deviation of residuals from the Dechow and Dichev (2002) model, and 2) squared residuals from the Jones (1991) model to firm age (defined using data about firm incorporation/founding dates). The results reveal the significant increasing trends in both measures during the 1962-2006 period are related to the dramatic decr...

Accounting accruals anticipate future economic benefits. They are intended to reverse upon the realization of the anticipated future benefits, such that their reversals have no net impact on future earnings. In practice, however, we show that extreme accruals exhibit a high frequency of subsequent reversals that do impact future earnings. We demonstrate that these reversals explain a number of ...

By using a large new panel of individual data, including objective measures of worker performance, we provide some of the most rigorous evidence to date on several related dimensions of enduring debates surrounding upward-sloping earnings-tenure profiles. Most importantly we provide the first direct test of the relative validity of human capital and agency explanations in accounting for upward-...

5.1. Measurements of variables Dependent variable: firm performance Both accounting and market measures of firm performance are used to investigate the relationship between forms of shareholders and firm performance. The most common accounting profitability measure is return on assets. 23 Considering discretionary accounting measures that are the common critique for accounting data, core operat...

In today's investment world there is emphasis on the role of accounting information. Behavioral factors always play an important role in financial markets. All investors are not rational and their demand for riskiness of assets is influenced by their beliefs and feelings. Optimism, pessimism, self-confidence, ambiguity-aversion, etc. help changing the manner of decision-making process over time...

We conduct a laboratory experiment to study how advice affects the gender gap in the entry into a real-effort tournament. Our experiment is motivated by the concerns raised by approaching the gender gap through affirmative action. Advice is given by subjects who have already had some experience with the participation decision. We show that advice improves the entry decision of subjects, in that...

Motivated by the availability of high-frequency data on trading activity, this paper proposes the use of order aggressiveness as a metric to evaluate the usefulness of accounting information. I test, through an analysis of order aggressiveness, whether earnings announcements of firms listed on the Italian Stock Exchange limit order book have information content. I estimate an ordered probit rel...

Time series models based upon the reported accounting data of Abbott Laboratories Inc. are used to forecast its one-year-ahead raw returns over hold-out periods of 1, 4 and 10 years. The sample data is annual, from 1955 to 2003. A general-to-specific, testing down, modelling method is used. The models suggest market values are corrected for imbalances between expected and actual market values i...

DuPont analysis, a common form of financial statement analysis, decomposes return on net operating assets into two multiplicative components: profit margin and asset turnover. These two accounting ratios measure different constructs and, accordingly, have different properties. Prior research has found that a change in asset turnover is positively related to future changes in earnings. This pape...