We add to the concerns raised in Ljungqvist, Malloy and Marston, 2009, Rewriting History, Journal of Finance, 64, 1935-1960, about the reliability of the I/B/E/S data provided by Thomson Reuters (TR). Many of the dates reported as earnings announcement dates are not earnings announcement dates; there are inconsistencies between these dates and those reported in Worldscope, another TR database; and summaries of financial analysts’ forecasts can be misleading. Following discussions with the authors, TR has reviewed approximately 2 million records and is in the process of correcting some 50,000 of them. Further reviews are under way.
{"title":"On the Reliability of I/B/E/S Earnings Announcement Dates and Forecasts","authors":"Daniella Acker, N. Duck","doi":"10.2139/SSRN.1505360","DOIUrl":"https://doi.org/10.2139/SSRN.1505360","url":null,"abstract":"We add to the concerns raised in Ljungqvist, Malloy and Marston, 2009, Rewriting History, Journal of Finance, 64, 1935-1960, about the reliability of the I/B/E/S data provided by Thomson Reuters (TR). Many of the dates reported as earnings announcement dates are not earnings announcement dates; there are inconsistencies between these dates and those reported in Worldscope, another TR database; and summaries of financial analysts’ forecasts can be misleading. Following discussions with the authors, TR has reviewed approximately 2 million records and is in the process of correcting some 50,000 of them. Further reviews are under way.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-11-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129148288","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Scholars of finance and accounting propose several models on equity valuation. One of these models, namely Ohlson Model, relates market value with accounting numbers and thereby, offers an opportunity of equity valuation based on accounting data. This paper aims to weight the explanatory power of the Ohlson Model on determination of market value of ATX (Austrian Traded Index) companies. For this purpose, the model parameters are estimated on the basis of past data and its precision is weighted with dataset of validation period. Although the differences between estimated market value and value calculated based on stock price are not statistically significant, the model is limited mainly with the abnormal consequences of the recent financial crisis.
{"title":"Market Value Evaluation with Ohlson Model: An Empirical Analysis of ATX Indexed Companies in Vienna Stock Exchange","authors":"A. Kuşakcı","doi":"10.2139/ssrn.1491496","DOIUrl":"https://doi.org/10.2139/ssrn.1491496","url":null,"abstract":"Scholars of finance and accounting propose several models on equity valuation. One of these models, namely Ohlson Model, relates market value with accounting numbers and thereby, offers an opportunity of equity valuation based on accounting data. This paper aims to weight the explanatory power of the Ohlson Model on determination of market value of ATX (Austrian Traded Index) companies. For this purpose, the model parameters are estimated on the basis of past data and its precision is weighted with dataset of validation period. Although the differences between estimated market value and value calculated based on stock price are not statistically significant, the model is limited mainly with the abnormal consequences of the recent financial crisis.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122486159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is widely believed that disclosure quality improves investors’ welfare by reducing cost of capital in a competitive market. This paper examines this conventional wisdom by studying a production economy in which disclosure influences a firm’s investment decisions. I demonstrate three points. First, cost of capital could increase with disclosure quality when new investment is sufficiently elastic. Second, there are plausible conditions under which disclosure quality reduces the welfare of current and/or new investors. Finally, cost of capital is not a sufficient statistic for the effects of disclosure quality on the welfare of either current or new investors. These results may help interpret the mixed empirical findings on the relation between disclosure quality and cost of capital, inform the empirical efforts to measure the economic consequences of accounting disclosure, and add to the ongoing debate on the reform of financial reporting and disclosure regulation.
{"title":"Disclosure Quality, Cost of Capital, and Investors' Welfare","authors":"Pingyang Gao","doi":"10.2139/ssrn.1156407","DOIUrl":"https://doi.org/10.2139/ssrn.1156407","url":null,"abstract":"It is widely believed that disclosure quality improves investors’ welfare by reducing cost of capital in a competitive market. This paper examines this conventional wisdom by studying a production economy in which disclosure influences a firm’s investment decisions. I demonstrate three points. First, cost of capital could increase with disclosure quality when new investment is sufficiently elastic. Second, there are plausible conditions under which disclosure quality reduces the welfare of current and/or new investors. Finally, cost of capital is not a sufficient statistic for the effects of disclosure quality on the welfare of either current or new investors. These results may help interpret the mixed empirical findings on the relation between disclosure quality and cost of capital, inform the empirical efforts to measure the economic consequences of accounting disclosure, and add to the ongoing debate on the reform of financial reporting and disclosure regulation.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133944272","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Human resource accounting (HRA) is an attempt to identify, quantify and report investment made in Human resources of an organization that are not presently accounted for under conventional accounting practice. Businesses which require a considerable creativity or are science-based show a significant difference between market value and net book value. This difference is for intangible assets (including human skills). However the Human Resources are yet to get recognition in Balance Sheet. Researches in this field have been slow and researchers are not able to develop a model which are free from major limitations. In this paper I have given a new method to value human resource. This method is specially relevant in knowledge companies.
{"title":"How to Value Human Resources","authors":"Dr. Amitabh Deo Kodwani, R. Tiwari","doi":"10.2139/SSRN.981967","DOIUrl":"https://doi.org/10.2139/SSRN.981967","url":null,"abstract":"Human resource accounting (HRA) is an attempt to identify, quantify and report investment made in Human resources of an organization that are not presently accounted for under conventional accounting practice. Businesses which require a considerable creativity or are science-based show a significant difference between market value and net book value. This difference is for intangible assets (including human skills). However the Human Resources are yet to get recognition in Balance Sheet. Researches in this field have been slow and researchers are not able to develop a model which are free from major limitations. In this paper I have given a new method to value human resource. This method is specially relevant in knowledge companies.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132600709","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study extends our understanding of the impact that conservative accounting has on the equity valuation role of firms' summary accounting numbers. In particular, I evaluate the effect of conservative accounting for research and development (R&D) and past growth in R&D on the relation between aggregate earnings (deflated by price) and contemporaneous stock return and the usefulness of earnings and equity book values for developing estimates of equity market value. I find that the capitalization of R&D improves the value relevance of aggregate earnings only for firms with high past growth in R&D. Moreover, the deleterious effects of the conservative treatment of R&D on the value relevance of estimates of equity market value based on the discounted residual income model are increasing in the level of past growth in R&D. My results contribute to the extant literature by providing more precise evidence regarding the magnitude of the benefits (in terms of value relevance) associated with capitalizing R&D costs. In addition, my results provide us with a deeper understanding of how accounting measurement rules and firms' economic fundamentals interact to determine the valuation role of firms' financial statement numbers.
{"title":"Conservatism, Growth and the Role of Accounting Numbers in the Equity Valuation Process","authors":"S. Monahan","doi":"10.2139/ssrn.189892","DOIUrl":"https://doi.org/10.2139/ssrn.189892","url":null,"abstract":"This study extends our understanding of the impact that conservative accounting has on the equity valuation role of firms' summary accounting numbers. In particular, I evaluate the effect of conservative accounting for research and development (R&D) and past growth in R&D on the relation between aggregate earnings (deflated by price) and contemporaneous stock return and the usefulness of earnings and equity book values for developing estimates of equity market value. I find that the capitalization of R&D improves the value relevance of aggregate earnings only for firms with high past growth in R&D. Moreover, the deleterious effects of the conservative treatment of R&D on the value relevance of estimates of equity market value based on the discounted residual income model are increasing in the level of past growth in R&D. My results contribute to the extant literature by providing more precise evidence regarding the magnitude of the benefits (in terms of value relevance) associated with capitalizing R&D costs. In addition, my results provide us with a deeper understanding of how accounting measurement rules and firms' economic fundamentals interact to determine the valuation role of firms' financial statement numbers.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"54 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1999-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117012773","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper provides evidence on the relation between the timeliness of voluntary earnings disclosures and the outcomes of related stockholder litigation. Like Francis Philbrick and Schipper (1994a) I find that many lawsuits result from voluntary disclosures of adverse earnings news. However I also document that: (1) many voluntary earnings disclosures are not made on a timely basis; (2) less timely voluntary disclosures result in more costly lawsuit outcomes; (3) a simple model that predicts that lawsuits occur if large firms release adverse earnings news on earnings announcement dates works well in predicting stockholder litigation. Overall it seems lawsuit outcomes depend at least to some degree on the "merits" of stockholders' claims so that managers can benefit by making more timely earnings disclosures.
{"title":"Earnings Disclosures and Stockholder Lawsuits","authors":"Douglas J. Skinner","doi":"10.2139/ssrn.55489","DOIUrl":"https://doi.org/10.2139/ssrn.55489","url":null,"abstract":"This paper provides evidence on the relation between the timeliness of voluntary earnings disclosures and the outcomes of related stockholder litigation. Like Francis Philbrick and Schipper (1994a) I find that many lawsuits result from voluntary disclosures of adverse earnings news. However I also document that: (1) many voluntary earnings disclosures are not made on a timely basis; (2) less timely voluntary disclosures result in more costly lawsuit outcomes; (3) a simple model that predicts that lawsuits occur if large firms release adverse earnings news on earnings announcement dates works well in predicting stockholder litigation. Overall it seems lawsuit outcomes depend at least to some degree on the \"merits\" of stockholders' claims so that managers can benefit by making more timely earnings disclosures.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1997-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115420145","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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