Are Accounting Standards Diversifiable? Evidence of the Aggregate Valuation Effects of Standards

Jørgensen, Bjørn N.; Li, Jing; Sadka, Gil

doi:10.2139/ssrn.1265146

Cited by 10 publications

(9 citation statements)

References 38 publications

(15 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Beyer et al (2010) find no evidence that the explanatory power of accounting variables on prices changed. Jorgensen et al (2009) do not find evidence of fundamental changes in the relationship between accounting and macroeconomic numbers. 7 Our purpose in this study is not to evaluate the alternative empirical measures of reporting quality, or to argue that one is better than the other.…”

Section: The Modelcontrasting

confidence: 55%

“…No less surprising is that accounting numbers are the primary source of information used for valuation and national growth accounting, and may be closely linked to aggregate fluctuations (Ball et al, 2009;Balakrishnan, 2009;Crawley, 2009;Jorgensen et al, 2009;. In this area, several classic papers have studied the informational determinants of business cycles and credit market crises (Bernanke and Gertler, 1988;Kiyotaki and Moore, 1997); however, the quality of the information available in the marketplace is usually taken as exogenous.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

From low-quality reporting to financial crises: Politics of disclosure regulation along the economic cycle

Bertomeu¹,

Magee²

2011

Journal of Accounting and Economics

View full text Add to dashboard Cite

Section: The Modelcontrasting

confidence: 55%

Section: Introductionmentioning

confidence: 99%

From low-quality reporting to financial crises: Politics of disclosure regulation along the economic cycle

Bertomeu¹,

Magee²

2011

Journal of Accounting and Economics

View full text Add to dashboard Cite

“…I measure the state of the economy using the recession indicator downloaded from the Federal Reserve Bank of St. Louis Economic Data database. Finally, Jorgensen, Li, and Sadka [] show that aggregate earnings changes are unusually low in 2001 and unusually high in 2003 because of the implementation of SFAS 142. These unusual levels of aggregate earnings changes might conceivably distort the aggregate earnings‐returns relation.…”

Section: Untabulated Robustness Testsmentioning

confidence: 99%

Aggregate Earnings and Corporate Bond Markets

Gkougkousi¹

2013

J of Accounting Research

View full text Add to dashboard Cite

I examine the previously unexplored relation between aggregate earnings changes and corporate bond market returns. I find that aggregate earnings changes have a negative relation to investment‐grade corporate bond market returns and a positive relation to high‐yield corporate bond market returns. The aggregate earnings‐returns relation is lower (i.e., less positive or more negative) for bonds with higher credit ratings and longer maturities. Further, I show that the aggregate earnings‐returns relation is driven by both the expected and the news component of aggregate earnings changes. The expected component is negatively related to expected returns, and the news component is positively related to cash flow news and changes in nominal interest rates, and negatively related to changes in default premia. My results contribute to the understanding of the role of earnings in corporate bond markets as well as the macroeconomic role of accounting information.

show abstract

“…Third, prior finance and accounting literature attempt but have not yet found conditional accounting conservatism at the aggregate level. Jorgensen, Li, and Sadka (2009) investigate whether or not accounting conservatism changes across different accounting regimes. Using equal-weighted and value-weighted aggregate returns calculated based on all individual stocks for each year in their sampled period, they find no evidence of conditional accounting conservatism at the aggregate level.…”

Section: Introductionmentioning

confidence: 99%

“…We address our research question by following prior studies that aggregate firm-level data for further analyses (refer to Kothari et al 2006;Jorgensen et al 2009;Cready & Gurum, 2010). Our sample period spans over the years from 1963 to 2009.…”

Section: Introductionmentioning

confidence: 99%

Conditional Conservatism of Aggregate Accounting Earnings

Lim

Zheng

2014

AFR

View full text Add to dashboard Cite

Using both the Basu (1997) model and the Ball and Shivakumar (2006) models, we examine whether or not conditional conservatism is observed at the aggregate level. We find some evidence consistent with conditional accounting conservatism at the aggregate level. Our results show that the slope coefficient on the interaction variable measuring the difference in sensitivity of aggregate accounting earnings to equal-weighted aggregate stock market returns is approximately three times as high in periods with negative market returns as is in periods with positive market returns. Our results also demonstrate that the inclusion of macroeconomic indicators and discount rate variables into the conditional conservatism models improves model specification significantly. For example, when equal-weighted return is used as the gain or loss proxy, the inclusion of macroeconomic indicators and discount rate proxies in the regression model increases the adjusted R 2 from 5% to 53%. Based on the empirical evidence from this study, we recommend that researchers who study the fundamental characteristics of accounting information in the context of aggregate accounting earnings include both macroeconomic indicators and discount rate variables as explanatory variables in their regression models in order to improve model specification.

show abstract

Are Accounting Standards Diversifiable? Evidence of the Aggregate Valuation Effects of Standards

Cited by 10 publications

References 38 publications

From low-quality reporting to financial crises: Politics of disclosure regulation along the economic cycle

From low-quality reporting to financial crises: Politics of disclosure regulation along the economic cycle

Aggregate Earnings and Corporate Bond Markets

Conditional Conservatism of Aggregate Accounting Earnings

Contact Info

Product

Resources

About