We develop a flexible framework to study the nonlinear relationship between shocks to household earnings and consumption over the life cycle. Log-earnings are the sum of a general Markovian persistent component and a transitory innovation. Consumption is modelled as an age-dependent nonlinear function of assets and the two earnings components. We establish the nonparametric identification of th...

This paper looks at longitudinal aspects of changes in Italian male earnings inequality since the late 1970s by decomposing the earnings autocovariance structure into its persistent and transitory parts. Cross-sectional earnings differentials are found to grow over the period. The longitudinal analysis shows that such growth is determined by the permanent earnings component and is due both to a...

T he U.S. distribution of labor earnings is highly skewed to the right. Roughly, the lowest 50 percent of U.S. households, as measured by individual labor earnings, make 10 percent of total labor earnings. The next lowest 30 percent earn approximately 30 percent and highest 10 percent make 40 percent.1 Earnings are also related to a person’s position within a firm and employment at a particular...

Compensating Wage Differentials for Schooling Risk in Denmark ∗ In this paper we test for risk compensation in wages using Danish panel data. With the conviction that the type of education is as important as the education length, we use a very detailed description of the type of education reached by the Danish population to calculate different measures of earnings risk by education. Our long pa...

This study explores how firms’ ownership structures affect their earnings quality and long-term performance. Focusing on a unique sample of private firms for which there is financial data available in the years before and after their initial public offering (IPO), I differentiate between those that have private equity sponsorship (PE-backed firms) and those that do not (non-PEbacked firms). The...

We develop a new quantile-based framework to study the nonlinear relationship between shocks to household earnings and consumption over the life cycle. Log-earnings are the sum of a general Markovian persistent component and a transitory innovation. Consumption is modeled as an age-dependent nonlinear function of assets and the two earnings components. We establish the nonparametric identificat...

An information usefulness approach to decision making points out that only the information is regarded as useful that will bring valuable messages to investors and lead to stock price adjustments. This study examines the effectiveness of audit committees in improving earnings quality and informativeness, particularly among family-owned firms. Earnings informativeness was measured through the re...

We document the distortionary effects of accounting-based regulation on reported earnings. In India only firms with negative book value of equity (networth) can seek bankruptcy protection. Using a novel dataset of bankrupt firms from India, we show that firms manage earnings downward to seek bankruptcy protection. Strengthening creditor rights reduces downward earnings management among non-grou...

This study examines the association between different institutional investors’ ownership and earnings management practice using a neural networks approach. It investigates this relationship for a sample of 121 US firms. We examine also the effect of institutional ownership on the level of accruals management of firms having different information environment (S&P 500 versus non S&P 500). Results...

This study explores the phenomenon of rounding earnings numbers and the relationship between this phenomenon and insider ownership. Beyond the findings of previous studies, our results provide evidence that not only the first digit, but also the second and third digits are used as cognitive reference points for rounding earnings numbers. Another major contribution of this study is that, in comp...