The stock market boosts its rewards for increasing earnings patterns

IF 1.9 Q2 BUSINESS, FINANCE
Yu-An Chen, Dan Palmon
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Abstract

Barth et al. (J Account Res 37:387–413, 1999. https://doi.org/10.2307/2491414) find that the market rewards firms showing increasing earnings patterns with larger price-earnings multiples from 1982 to 1992. This paper examines whether the rewards for increasing earnings patterns have changed since then. The declining relevance of accounting earnings for equity valuation or accounting scandals in the early 2000s would predict a lower valuation for earnings numbers. On the other hand, earnings-related disclosures and post-scandal regulatory efforts, such as the Sarbanes–Oxley Act (SOX), may boost earnings relevance and restore investor confidence in the accounting system, predicting increased rewards for increasing earnings patterns. We find that the earnings multiples for firms with increasing earnings patterns decrease temporarily in the years with major accounting scandals, but the market boosts its rewards to firms showing increasing earnings patterns in the reshaped reporting environment after 1993, and SOX is associated with this boost.

Abstract Image

股市因盈利模式的增加而提高回报率
Barth 等人(J Account Res 37:387-413, 1999. https://doi.org/10.2307/2491414)发现,从 1982 年到 1992 年,市场以更大的市盈率奖励盈利模式不断增长的公司。本文将探讨自那时起,对盈利模式增长的奖励是否发生了变化。会计收益与股票估值的相关性下降或 2000 年代初出现会计丑闻,都预示着收益数字的估值会降低。另一方面,与盈利相关的信息披露和丑闻后的监管努力,如《萨班斯-奥克斯利法案》(SOX),可能会提高盈利的相关性,恢复投资者对会计制度的信心,从而预示着增加盈利模式的回报会增加。我们发现,在发生重大会计丑闻的年份,盈利模式呈上升趋势的公司的盈利倍数会暂时下降,但在 1993 年后重塑的报告环境中,市场会提高对盈利模式呈上升趋势的公司的回报,而《萨班斯-奥克斯利法案》与这种提高有关。
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来源期刊
CiteScore
3.20
自引率
17.60%
发文量
87
期刊介绍: Review of Quantitative Finance and Accounting deals with research involving the interaction of finance with accounting, economics, and quantitative methods, focused on finance and accounting. The papers published present useful theoretical and methodological results with the support of interesting empirical applications. Purely theoretical and methodological research with the potential for important applications is also published. Besides the traditional high-quality theoretical and empirical research in finance, the journal also publishes papers dealing with interdisciplinary topics.
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