The computation of implied cost of capital (ICC) is constrained by the fact that around half of all firms do not have analysts’ earnings forecasts. Hou, van Dijk and Zhang (2012, HVZ) present a cross-sectional model to generate forecasts and compute ICC from these forecasts. However, the forecasts from the HVZ model perform worse than those from a naïve random walk model and show anomalous corr...

Suppose there is a principal-agent relationship between employer and employee in which effort is not contractible, but is elicited through employer incentive mechanisms. We term preferences that allow the employer to elicit effort at lower cost incentive enhancing. We analyze how such preferences affect earnings, nd then provide evidence that one of the relevant behavioral traits, efficacy, as ...

We reexamine the existence of earnings announcement-day premia and find that they persist beyond the sample period of earlier studies, over different disclosure environments and remain robust to the refinement of using the expected announcement day rather than the actual announcement day. We provide evidence that the premia are reduced in the presence of earnings pre-announcements. We document ...

In this study, we investigate the role of IT innovation capability (ITIC) on earnings persistence during the recession of the early 2000s. Introducing dynamic ITIC as an explanatory variable in a zero-sum game setting, we classify firms in terms of their ITIC strategy. We argue that a systematic approach to ITIC leads to sustainable value creation, improved ability to recover from negative earn...

We analyze the changes in earnings of paid workers (wage earners) in rural India from 2004/05 to 2011/12. Real earnings increased at all percentiles, and the percentage increase was larger at the lower end. Consequently, earnings inequality declined. Recentered influence function decompositions show that throughout the earnings distribution, except at the very top, both changes in “worker chara...

This study aims to analyze the role of managerial ownership in moderating leverage, firm size, and earnings persistence. The research was conducted by manufacturing companies listed on Indonesia Stock Exchange. sample selection used purposive sampling criteria, while data analysis this multiple regression moderated analyses. Before analyzing data, first, perform classical assumption test; after...

This paper examines the earnings and cash flow persistence of selected agriculture Serbian enterprises as a measure their quality. We study income statements statement items medium-sized in Serbia. Agriculture is relevant sector for national economy are main drivers her economic growth. use panel regression analysis with annual data over period from 2010 to 2018. The results our research indica...

We examine the impact of national culture on earnings. Specifically, we managers’ likelihood using accrual or real earnings management (REM) and role various attributes (accruals quality, persistence, smoothing, predictability). measure Hofstede’s six dimensions (1984, 2001, 2010). Using data from 36 countries during 1997–2018, find that managers are likely to use both accruals REM in high powe...