Financial performance following discontinued operations

IF 3.6 Q1 BUSINESS, FINANCE
Binod Guragai, P. Hutchison
{"title":"Financial performance following discontinued operations","authors":"Binod Guragai, P. Hutchison","doi":"10.1108/raf-10-2019-0224","DOIUrl":null,"url":null,"abstract":"\nPurpose\nPrior literature provides empirical evidence that financial performance improves for core remaining operations after a firm discontinues some of their operations. This study aims to examine whether the association between discontinued operations and future financial performance improvement is affected by a regulatory rule (i.e. Statement of Financial Accounting Standards 144 [SFAS 144]) that significantly altered the reporting requirements of discontinued operations. This study also examines whether the association is dependent on the profitability of the operations discontinued.\n\n\nDesign/methodology/approach\nOrdinary least square regressions are used to test the association between discontinued operations and financial performance improvement, conditional on the profitability of operations discontinued in the pre-SFAS 144 and SFAS 144 regulatory regimes. Data on profitability of operations discontinued is hand-collected.\n\n\nFindings\nResults suggest that firms experience improvement in financial performance following the reporting of discontinued operations in the pre-SFAS 144 era. Using hand-collected data on the profitability of operations discontinued, this research study also shows that improvement in performance is stronger for firms that discontinue loss operations compared to those that discontinue profitable operations.\n\n\nOriginality/value\nThis study explores the impact of regulatory change on the association between discontinued operations and future performance. Furthermore, unique hand-collected data is used to understand whether financial performance improvement is conditional on the profitability of the operations discontinued. Results documented in this paper should be of interest to investors, regulators and analysts in understanding the long-term strategic implications of discontinued operations.\n","PeriodicalId":21152,"journal":{"name":"Review of Accounting and Finance","volume":"19 1","pages":"429-447"},"PeriodicalIF":3.6000,"publicationDate":"2020-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1108/raf-10-2019-0224","citationCount":"4","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Review of Accounting and Finance","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/raf-10-2019-0224","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 4

Abstract

Purpose Prior literature provides empirical evidence that financial performance improves for core remaining operations after a firm discontinues some of their operations. This study aims to examine whether the association between discontinued operations and future financial performance improvement is affected by a regulatory rule (i.e. Statement of Financial Accounting Standards 144 [SFAS 144]) that significantly altered the reporting requirements of discontinued operations. This study also examines whether the association is dependent on the profitability of the operations discontinued. Design/methodology/approach Ordinary least square regressions are used to test the association between discontinued operations and financial performance improvement, conditional on the profitability of operations discontinued in the pre-SFAS 144 and SFAS 144 regulatory regimes. Data on profitability of operations discontinued is hand-collected. Findings Results suggest that firms experience improvement in financial performance following the reporting of discontinued operations in the pre-SFAS 144 era. Using hand-collected data on the profitability of operations discontinued, this research study also shows that improvement in performance is stronger for firms that discontinue loss operations compared to those that discontinue profitable operations. Originality/value This study explores the impact of regulatory change on the association between discontinued operations and future performance. Furthermore, unique hand-collected data is used to understand whether financial performance improvement is conditional on the profitability of the operations discontinued. Results documented in this paper should be of interest to investors, regulators and analysts in understanding the long-term strategic implications of discontinued operations.
终止业务后的财务业绩
目的先前的文献提供了经验证据,证明在公司停止部分业务后,核心剩余业务的财务绩效会有所改善。本研究旨在检验已终止业务与未来财务绩效改善之间的关联是否受到一项监管规则(即财务会计准则声明144 [SFAS 144])的影响,该规则显著改变了已终止业务的报告要求。本研究还探讨了该协会是否依赖于已终止业务的盈利能力。设计/方法/方法使用普通最小二乘回归来测试终止业务与财务绩效改善之间的关系,条件是在SFAS 144之前和SFAS 144监管制度下终止业务的盈利能力。已终止业务的盈利能力数据是手工收集的。研究结果表明,在sfas 144之前的时代,公司在报告终止业务后的财务绩效有所改善。利用手工收集的已终止业务的盈利能力数据,本研究还表明,与停止盈利业务的公司相比,停止亏损业务的公司业绩改善更强。原创性/价值本研究探讨了监管变化对已终止业务与未来绩效之间关系的影响。此外,使用独特的手工收集的数据来了解财务业绩的改善是否取决于已停止业务的盈利能力。本文记录的结果应该对投资者、监管机构和分析人员了解终止业务的长期战略影响感兴趣。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 求助全文
来源期刊
CiteScore
4.30
自引率
0.00%
发文量
18
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
确定
请完成安全验证×
copy
已复制链接
快去分享给好友吧!
我知道了
右上角分享
点击右上角分享
0
联系我们:info@booksci.cn Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。 Copyright © 2023 布克学术 All rights reserved.
京ICP备2023020795号-1
ghs 京公网安备 11010802042870号
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术官方微信