The Timeliness Of Corporate Reporting : A Comparative Study Of South Asia

The standard statements focus on accounting income for the entire corporation, not cash flows, and the two can be quite different during any given accounting period. However, for valuation purposes we need to discount cash flows, not accounting income. Moreover, since many firms have a number of separate divisions, and since division managers should be compensated on their divisions' performance, not that of the entire firm, information that focuses on the divisions is needed. These factors have led to the development of information that

A great number of studies further identified several factors which particularly concerns market capitalisation, effective of stock market, etc., which explains the dynamic forces of stocks returns during the earnings announcements date in an organised manner. For instance, Atiase (1985) found that unexpected information pass on to the market by actual earnings report is inversely correlated to the company’s capitalisation. Grant (1990) observed that the market in which a company’s securities are traded often determined the behaviour of stocks return around the earnings announcements. Several other studies have aimed to organise for synchronise factors by using time series data such as intra-day and daily data. However, a fairly number of more robust studies has examined the information content of macroeconomics news releases. Elsharkawy and Garrod (1996), Pope and Inyangete (1992).

Consequently, insider trading becomes an alternative way by which a firm can pass on private information to financial analyst about the company’s future earnings. Because analysts are people who investors usually rely on for earnings forecasts. As (Schipper and Katherine, 1991) describes how analysts, as informed intermediaries, can provide insights into the activities and beliefs of investors that cannot be observed directly. Insider trading is when people, who have access to private information about the company, i.e. executives, managers or key employees, purchase or sales, stocks of the company, which is considered as unfair trading to other investors who do not have access to this information.

Baruch Lev and Feng Gu authors of “The End of Accounting and The Path Forward for Investors and Managers” indicate that over the past 110 years, the structure and content of financial reports has not changed, and that the role that these reports play in influencing the decisions of investors has greatly diminished. Lev and Gu make a case that non-transaction events that are not captured by the financial reports such as those disclosed through 8-k filings with the Securities and Exchange Commission (“SEC”) have a greater impact on stock prices, and thus more useful to investors. In addition, they suggest that one of reasons for the decline in usefulness of financial reports stems from the increase of estimates that has made its way into these reports (Lev and Gu 2016).

SYNOPSIS: An extensive body of academic research in accounting develops theory and empirical evidence on the relation between earnings information and stock returns. This literature provides important insights for understanding the relevance of financial reporting. In this article, we summarize the theory and evidence on how accounting earnings information relates to firms’ stock returns, particularly for the benefit of students, practitioners, and others who may not yet have been exposed to this literature. In addition, we

EHRLICH, J. H. (1986). INTERNATIONAL OF STOCK MARKETS: POTENTIAL PROBLEMS FOR UNITED STATES SHAREHOLDERS. J. INT'L L. & BUS.

Research Proposal The Quality of financial Reporting after the passage of Sarbanes-Oxley Act Dr. Hassan Ahmed Assistant Professor at Cameron University

With this newfound skillset, I wanted to continue my research on the relationship between earnings surprises and stock returns. I found the perfect opportunity during a class on Alternative Investments taught by Dr. John Sedunov, where students were required to create and backtest a hedge fund strategy. I collaborated with two classmates and devised a strategy to buy and hold, on a quarterly basis, companies that experienced positive earnings revisions followed by positive earnings surprises. Earnings revision was measured in terms of dollar amount and majority analyst decision. For the analysis, we used analysts’ forecasts and earnings data from IBES database for all S&P 500 companies from 2011-2016. We found that the selected firms, on average, outperformed the S&P 500 index by 2.15% per quarter. While there is considerable literature on the effects of earnings surprises on stock prices, to my knowledge, the incorporation of earnings revision into this equation is limited. This is surprising given the apparent relationship between the two. Including earnings revision led to a 57% successful prediction of positive

To begin Mr. Williams, I would like to start off by addressing the financial benefits of foregoing the short term reporting model. “ The obsession with short-term results by investors, asset management firms, and corporate managers collectively leads to the unintended consequences of destroying long-term value, decreasing market efficiency, reducing investment returns, and impeding efforts to strengthen corporate governance”. The quote above depicts a clear picture that most managers, even Suncor’s managers seem to have engrained in their minds. Short term goals to meet the quarterly demands. However, this mindset is counterintuitive to long term sustainability. No manager, board member, or executive is likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer. With this information Mr. Williams, we must

The Global Research Analyst Settlement is an agreement between the Securities and Exchange Commission (SEC) and ten of the leading investment banks, it was announced April 28, 2003. The agreement came to fruition after vast investigations into possible conflicts of interests amongst security analysts working at investment banks. This agreement lead Barber, Lehavy and Trueman to write the paper; Comparing the stock recommendation performance of investment banks and independent research firms. The agreement spurred two important questions amongst the authors: (1) are the recommendations from independent research firms (IR) superior to recommendations from investment banks (IB); (2) was the implicit

Many researchers have tested the validity of the semi-strong form of the Efficient Market Hypothesis through testing major announcement event such as dividend announcements and bonus issue announcements. (Khan and Ikram, 2010), This is because the announcements may offer desirable factors to the market which will influence stock prices. Observing the performance of mutual funds and brokerage companies is the second aspect for evaluating the semi-strong form of market efficiency (Khan and Ikram,2010). This is because brokers and fund managers are believed to have access to non public information that gives them an advantage when trading on the stock market.

Investors and analysts have a tendency to rely too heavily on the record of past earnings growth (La Porta et al. 1997). According to Lakonishok, Shleifer & Vishny (1994) popular strategies like 'extrapolating past earnings growth too far into the future' or 'assuming a trend in stock prices', 'overreacting to good or bad news', or 'simply equating a good investment with a well-run company

“Management Earnings Forecasts: A Review and Framework” by D. E. Hirst, L. Koonce and S. Venkataraman explained the antecedents, characteristics and consequences interlinked with earnings forecasts. Antecedents are characteristics that are prevalent prior to the consequence such as the existing environment/firm specific characteristics; and consequence is the outcome from antecedents and characteristics. Characteristics are the choices the management has deciding on how the report will be issued. The article guides the reader giving explanations of why management decides to release earnings forecasts, interactions of the three variables and its findings and how these findings may impact one period to another. Studies

In the underlying paper the author re-examines the conservatism principle and its asymmetric effects on earnings. With samples consisting of all firm-year observations from 1963 to 1990 with returns data on the CRSP NYSE/AMEX Monthly files and respective accounting data on the COMPUSTAT Annual Industrial and Research files, he formulates and tests four major hypotheses to find evidence for his predictions. At first he chracterizes “conservatism in accounting as the more timely recognition in earnings of bad news regarding future cash flows than good news”.1 In his first hypothesis he predicts a more sensitive response of earnings towards bad news in comparison to good news, proxied by negative and positve annual stock returns. His second prediction is that earnings are more timely than cash flow, indicating a stronger association of accruals to conservative accounting effects. Hypotheses three and four account for a test on the

The compensation has changed drastically and will continue to change in correlation to the cultural change in the market place. Prior research finds that financial analysts often issue biased earnings forecasts to please firm management (Ke & Yu, 2006). Companies started looking hard at who is part of the compensation pool and what type of compensation will be the best to facilitate the retention of the best. The problem companies face is how to keep the best in their mist but at the same time not fall under the same issues that Sarbanes-Oxley try to fight off. The Sarbanes-Oxley challenge has prompted some public companies to all but do away with stock