Breakeven analysis, Capital Budgeting, Long-run costs

PERT, CPM, Auditing

Konchitchki and Patatoukas Journal of Accounting and Economics 57 (1-2), 76–88, (2014a) show that aggregate accounting earnings growth predicts future nominal gross domestic product (GDP) growth and that professional macro forecasters do not fully incorporate the information contained in aggregate accounting earnings. Based on results from prior literature, which find that accounting earnings reflect bad economic news in a timelier manner than good news, we condition Konchitchki and Patatoukas’s GDP growth forecast model on the sign of earnings changes. We show that negative changes in aggregate earnings predict future GDP growth while positive changes in earnings do not. Furthermore, we show that professional macro forecasters underreact to the information contained in negative changes in aggregate earnings about future GDP growth. Additional tests suggest our findings are a result of conservative accruals in earnings.

While intercorporate shareownership is common among publicly traded firms, systematic empirical evidence on this particular aspect of corporate ownership structure is sparse. Based largely on aggregated ownership data provided by various stock exchanges, we know that intercorporate holdings represent a relatively large proportion (above 40%) of the total equity value of exchange- listed firms in Japan and Germany, and a relatively low proportion (less than 10%) in the U.S. and the U.K. Thus, the Anglo-American corporate governance system appears to produce substantially lower levels of intercorporate shareholdings than does the German– Japanese governance model. While financial institutions in Germany and Japan play an integral role in the governance structures of those countries, securities laws inspired by early populist sentiments in the U.S. have prevented American financial institutions from playing a similar active role.1 Much like the Anglo-American system, securities laws in Norway, the empirical laboratory of Bøhren and Norli (1997), also restrict the equity ownership and direct corporate governance participation of financial institutions. Perhaps as a result the level of intercorporate

Journal Article Some Effects of Taxes on Risk-Taking Get access B. Näslund B. Näslund Stockholm University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 35, Issue 3, July 1968, Pages 289–306, https://doi.org/10.2307/2296663 Published: 01 July 1968

This study examines the effect of accounting flexibility on managers’ forecasting behavior prior to seasoned equity offerings (SEOs). Although SEO firms have a strong incentive to convey optimistic information to boost the pre-SEO stock price, they also face enhanced litigation risk arising from SEO-related regulations. Thus, I hypothesize that managers will release positive news through their forecasts (relative to the prevailing analyst consensus) prior to an SEO only if they have the accounting flexibility to manage subsequent reported earnings to meet or exceed their forecasts. I find that managers with greater accounting flexibility are more likely to issue a forecast prior to the SEO and that their forecasts are more likely to convey positive news and are more specific. Furthermore, I find no effect of accounting flexibility for non-SEO control firms or for non-SEO periods. My results suggest that when managers experience a tension between the incentive for voluntary disclosure and high litigation risk, accounting flexibility is an important factor that determines their forecasting behavior.

This paper provides an analysis of the implications of the Feltham and Ohlson (1995) model for the relationship between unexpected security returns and unexpected earnings and cash flows. A simplified version of the Feltham and Ohlson linear information model is utilized to provide an intuitive explanation of the coefficients in the unexpected returns equation and to show that incremental information content for unexpected free cash flow beyond accounting earnings in the model depends on the existence of positive net present value (NPV) investment opportunities. The paper concludes by arguing that the model provides useful insights into factors that may influence the empirical relationship between security returns and accounting data. Résumé. L'auteur expose les résultats d'une analyse des répercussions du modèle de Feltham et Ohlson (1995) sur la relation entre les rendements imprévus des titres, d'une part, et les bénéfices et les flux monétaires imprévus, d'autre part. Il a recours à une version simplifiée du modèle d'information linéaire de Feltham et Ohlson pour expliquer intuitivement les coefficients de l'équation des rendements imprévus et pour montrer que, dans le modèle, le contenu marginal en information supérieur des flux monétaires disponibles imprévus par rapport aux bénéfices comptables dépend des possibilités d'investissement existantes offrant une valeur actualisée nette (VAN) positive. L'auteur conclut en affirmant que le modèle livre des renseignements utiles quant aux facteurs susceptibles d'influencer la relation empirique entre les rendements des titres et les données comptables.