The Vuolteenaho (2002) return decomposition is linear because it assumes that the market’s return expectations are obtained solely from accounting information. By restricting accounting recognition rules to specific (and primarily) negative future cash flow shocks, conservative accounting drives a wedge between the market’s return expectations that are based upon all positive and negative cash ...

The objective of this analysis is to examine the joint effect audit committee and external on conservatism accounting how a company’s rate growth influences these relationships. sample used in study comprises all non-financial listed Portuguese firms from 2005 2017. A fixed-effects regression performed association between Using an accruals-based proxy compute conservatism, indicates that compan...

Financial analysts’ earnings forecasts are a key determinant of stock prices and understanding how these forecasts evolve over time is important. This paper studies the asymmetric behavior of negative and positive values of analysts’ earnings revisions and links it to the conservatism principle of accounting. Using a new three-state mixture of log-normals model that accounts for differences in ...

Purpose: Based on signal theory and legitimacy theory, this paper examines whether firms with financial reporting misstatements (restatements) would prefer conservative to send signals regarding their determinants of improving credibility legitimate organizational image in Taiwan. This further these reduce the demand for after replacing managers reveal restatements.

We examine a firm’s P/E ratio in the context of a model wherein firms make sequential investments in production capacity. In addition to investment growth, our analysis seeks to identify pricing power in the firm’s product markets and accounting conservatism as determinants of the P/E ratio. A benchmark result demonstrates that, given unbiased accounting, the firm’s P/E ratio can be expressed a...

This paper examines the consequences of Financial Reporting Quality (FRQ) on Corporate Performance, using three proxies of FRQ: (i) earnings quality; (ii) conservatism; and (iii) accruals quality. Our purpose is to analyze the effect of a good FRQ on financial performance (FP) measured by the market to book ratio. To this end, the proposed hypotheses are tested on an unbalanced sample of 1, 960...