Testing the information quality of the degree of operating leverage disclosed in financial reports

Autor:	Yu-Cheng Chen, Chien-Hung Hsueh, Shaio-Yan Huang
Rok vydání:	2006
Předmět:	Finance Organizational Behavior and Human Resource Management Leverage (finance) Actuarial science business.industry Financial ratio Information quality Accounting Commission Operating leverage Operational risk Business Futures contract Amateur
Zdroj:	International Journal of Accounting, Auditing and Performance Evaluation. 3:98
ISSN:	1740-8016 1740-8008
DOI:	10.1504/ijaape.2006.010101
Popis:	Taiwan is the only country requiring public firms to disclose the degree of leverage (DOL). Mandatory disclosure of DOL could help amateur investors to get a clear picture of a firm's financial position. This paper tests the relationship between the DOL and the operating risk of companies in Taiwan. The consistency quality of DOL disclosed in financial reports is also examined. DOLs transformed by Model 1 (regulated by the Securities and Futures Commission, Taiwan) and Model 2 (Mandelker and Rhee, 1984) have a more significant relationship with risk. This finding is an important contribution of this paper. We also find that DOL information presented in financial statements is not consistent by time-series comparisons. This paper concludes that the degree of operating leverage presented in financial statements from Taiwanese public companies might lack reliability and relevance.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::21999a928e2adc1f4d24da0e5a8edcd6 https://doi.org/10.1504/ijaape.2006.010101 Zobrazit plný text záznamu