Firm Size and Profitability

Hall, Marshall; Weiss, Leonard W.

doi:10.2307/1926642

Cited by 434 publications

(242 citation statements)

References 6 publications

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“…SIZE is also significantly positively associated with earnings, consistent with prior research and the notion that big firms have competitive advantages (e.g., Hall and Weiss 1967;Fiegenbaum and Karnani 1991;Feng et al 2015). In addition, the average adjusted R 2 is 41.8 %, demonstrating that there is a significant portion of earnings that is unexplained, which indicates a source of risk in firms' fundamentals.…”

Section: Resultssupporting

confidence: 82%

“…We include SIZE following the intuition of Hall and Weiss (1967), Fiegenbaum and Karnani (1991), and Feng et al (2015). We include ROA volatility (STD_ROA) and prior-period ROA to account for their possible effects on earnings predictability (e.g., Watts and Leftwich 1977;Dechow 1994;Minton et al 2002;Dichev and Tang 2009).…”

Section: An Earnings Downside Risk Measurementioning

confidence: 99%

“…To specify our model and ensure that the estimated EDR-subsequentperformance links are not biased or inconsistent due to potential omission of firm fundamental characteristic or risk variables, we identify k control variables for Eq. (4), denoted as CONTROLS1 kit , following prior research on profit margins (e.g., Hall and Weiss 1967;Hurdle 1974;Connolly and Hirschey 1984;Feng et al 2015) and implied sources for downside risk (e.g., Miller and Reuler 1996;Driouchi and Bennett 2010). Specifically, CONTROLS1 kit includes the following variables measured at fiscal year-end t: book-to-market ratio, BM; market value of equity, MVE; ROA; LEVERAGE; cash holdings, CASH; changes in cash holdings, DCASH; research and development investment intensity, Invest_RD; capital investment intensity, Invest_CAPX; operating options, OO; return volatility, SIGMA; and year dummies.…”

Section: Earnings Downside Risk and Subsequent Operating Performancementioning

confidence: 99%

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Accounting-based downside risk, cost of capital, and the macroeconomy

et al. 2015

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We hypothesize that earnings downside risk, capturing the expectation for future downward operating performance, contains distinct information about firm risk and varies with cost of capital in the cross section of firms. Consistent with the validity of the earnings downside risk measure, we find that, relative to low earnings downside risk firms, high earnings downside risk firms experience more negative operating performance over the subsequent period, are more sensitive to downward macroeconomic states, and are more strongly linked to earnings attributes and other risk-related measures from prior research. In line with our prediction, we also find that earnings downside risk explains variation in firms' cost of capital, and that this link between earnings downside risk and cost of capital is incremental to several earnings attributes, accounting and risk factor betas, return downside risk, default risk, earnings volatility, and firm fundamentals. Overall, this study contributes to accounting research by demonstrating the key valuation and risk assessment roles of earnings downside risk derived from firms' financial statements, also shedding new light on the link between accounting and the macroeconomy.

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Section: Resultssupporting

confidence: 82%

Section: An Earnings Downside Risk Measurementioning

confidence: 99%

Section: Earnings Downside Risk and Subsequent Operating Performancementioning

confidence: 99%

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Accounting-based downside risk, cost of capital, and the macroeconomy

et al. 2015

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“…Therefore, empirical models were estimated. The key factors such as size, sector and industry were included as control variables (Porter, 1980;Hall & Weiss, 1967).…”

Section: Methods Of Analysismentioning

confidence: 99%

Institutional legacies and HRM: similarities and differences in HRM practices in Portugal and Mozambique

Dibben

Brewster

Brookes

et al. 2016

The International Journal of Human Resource Management

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“…21 See the argument advanced above in connection with quoted firms. 22 See the discussion in Hall and Weiss (1967) and Brealy and Myers (1984, pp. 362).…”

mentioning

confidence: 99%

Does the Governed Corporation Perform Better? Governance Structures and Corporate Performance in Germany

Lehmann¹,

Weigand²

2000

Review of Finance

300

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Firm Size and Profitability

Cited by 434 publications

References 6 publications

Accounting-based downside risk, cost of capital, and the macroeconomy

Accounting-based downside risk, cost of capital, and the macroeconomy

Institutional legacies and HRM: similarities and differences in HRM practices in Portugal and Mozambique

Does the Governed Corporation Perform Better? Governance Structures and Corporate Performance in Germany

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