The Gong, Young, and Zhou (GYZ) (Gong et al. 2023) paper examines potential earnings management by movie studio companies. Using a large sample of 3094 US-produced English-language movies released between 1997 and 2019, they find that movie studio companies, when faced with a below expected US box office revenue yield from their movies in a specific quarter, move up the release dates of movies with high expected revenues. This “move-up” release is an example of what the accounting research literature calls real earnings management. This commentary on GYZ (Gong et al. 2023) adds more structure to the decision-making context in which movie release dates are set, placing greater emphasis on the role of movie screening companies, which have the final say on the release dates for the movies they show on their screens. It also highlights the rich information setting that exists in the motion picture industry, which can be further exploited to probe the reliability of the earnings management findings reported by GYZ (Gong et al. 2023). This rich information includes security analyst reports and screen days available to quarter-end for each movie released. The commentary has relevance for other research in specific industries where the institutional domain has the potential to provide insight into real earnings management.

The impact that a firm's earnings releases have on the stock prices of other firms in its industry is examined. For an identifiable sub-set of firms, the results are consistent with a significant information transfer occurring between the earnings release firm and the other firms in its industry. This subset is identified by examining the impact of the release on the stock price of the announcing firm. The magnitude of this impact is more significant for a sample of firms which have a larger percentage of their revenues in the same line of business as the earnings release firm vis-á-vis a sample with a lower percentage of their revenues from the same line of business. Alternative interpretations of the empirical results are also discussed. The research findings have implications for information content and market efficiency research and for research on policy issues associated with disclosure regulation.

Briloff, Company news, Superior insights, Private information

Segment reporting, Disaggregation, Informational content, Insurance industry

Management forecast, EPS, Trading Volume, Informational content

The capital asset pricing model specifies that relative risk is a sufficient descriptor of security risk. This result holds under both the Sharpe-Lintner version, and the more general Black version of the model, where = expected rate of return on asset i, Rf = riskless rate of interest, = expected return on the market portfolio, = expected return on any “zero-beta” asset or portfolio of such assests, and = relative risk of asset i in the market portfolio of assests.

This paper empirically examines hypothesis from the accounting, manufacturing, and strategy literatures about volume-based, complexity-based, and efficiency-based drivers of manufacturing overhead costs. Cross-sectional data from a questionnaire of thirty-seven facilities of an electronics company are examined. Subject to caveats regarding the cross-sectional tests, strongest empirical association is found for volume-related cost drivers. There is not consistently strong empirical association for complexity- or efficiency-related drivers. Explanations for the limited association for the complexity- and efficiency-related drivers include proxy problems with the complexity and efficiency concepts and problems in developing uniform measures of variables across a broad cross-section of facilities.

The time-series behavior of the quarterly earnings, sales and expense series of 69 firms over the 1946-74 period is examined. A Box-Jenkins time-series methodology is adopted. Based on inspection of the cross-sectional autocorrelation function, it is concluded that each series has (a) an adjacent quarter-to-quarter component and (b) a seasonal component. One-step-ahead forecasting results reveal that these two components can be successfully modelled at the individual firm level. The use of various quarterly forecasting models in security price analysis is also examined. The results are consistent with the market adjusting for seasonality in quarterly earnings in interpreting each quarter's earnings change.

The article examines several aspects of the relationship between accounting earnings and stock prices. The author discusses the market reaction to accounting changes and whether any non-reported earnings measures have a higher association with stock prices than the reported measure. insurance stocks. The topic of insurance stocks is of added interest to the accounting profession as considerable resources have been devoted to analyzing two issues in the insurance industry, that is, the measurement of underwriting earnings and the measurement of capital gains and losses on marketable equity securities. The article also provides some evidence on the marketable securities issue. One argument against the inclusion of annual capital gains and losses in the income statement, rather than a separate surplus statement, was that the income statement alternative "may be a damaging factor to the orderly functioning of the stock market" and may cause "the stock of the company to decline when it should not." The evidence in this article suggests there is a small likelihood of such consequences.