A Study of Negative Earnings: Information and Measurement Perspectives
| Autor: | Huang Chan-Chang, 黃正誠 |
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| Rok vydání: | 1999 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 87 After Ball and Brown (1968) confirmed the information content of accounting earnings, the research of earnings response coefficient (ERC) has become the mainstream of financial accounting research. It manifests, however, the phenomenon of weak ERC. One of the possible reasons is the existence of negative earnings. Based on Hayn''s empirical research results (1995), the relationship between negative earnings and stock returns is weak. Besides, the research method in financial accounting has been changed from an information to a measurement perspective since 1990s. Especially Ohlson''s accounting-based firm valuation model (1995) considers earnings and book value simultaneously, and thus, the importance of the balance sheet has increased gradually. This research intends to find out how investors use negative earnings and what the role the balance sheet plays when companies report this information by using both the information and the measurement perspective. The empirical results are as follows: (1) Negative earnings are an irrelevant information in investing-decision making. (2) Book value is relevant to the valuation of firms that report negative earnings. (3) Book value is not just a variable for controlling scale differences in econometrics, but the relevant information on the firm valuation. (4) The book value of positive-earnings firms is a better indication of expected future normal earnings; the book value of negative-earnings firms may represent the exit value. (5) Book value is not a proxy for the accumulation of past earnings. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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