Forecasting earnings and returns: A review of recent advancements

Green, Jeremiah; Zhao, Wanjia

doi:10.1016/j.jfds.2022.04.004

Cited by 8 publications

(5 citation statements)

References 141 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The study also computed earnings predictability to determine whether past earnings can predict future earnings, calculated as the square root of the residual variance, obtaining the residual from the persistence regression model [ 30 ] as shown in Eq ( 9 ). The study estimated the predictability values as the dependent variable with independent and control variables and ran the regression models, but found that the models were not statistically significant.…”

Section: Resultsmentioning

confidence: 99%

“…The literature contests that earnings persist across periods as a measure of earnings quality for all firms, stating that it is a firm-specific measure. A strand of research in income smoothing argues that firms that want to report stable income can contribute to persistent earnings [ 29 , 30 ]. Underlying firm performance and accounting measurement rules can also contribute differently to earnings persistence.…”

Section: Relevant Literaturementioning

confidence: 99%

See 1 more Smart Citation

Financial reporting quality of ESG firms listed in China

Abeysekera

2023

PLoS ONE

View full text Add to dashboard Cite

Given the growing importance of environmental protection in China, this study investigated the determinants of the financial reporting quality of environmental, social and governance (ESG) firms listed in China. The quality of financial reporting shows how informative the accounting numbers are for decision-making. Because business outlook can influence financial reporting quality, this study examined predictable, moderately predictable and unpredictable business outlooks. The study randomly selected 100 firms from the 2021 China ESG Top 500 Outstanding Enterprises published by the Sina Finance ESG Rating Centre and then analysed those firms in 2018, 2019 and 2020. It investigated determinants (financial health, governance and earnings management), controlling for the influence of known variables (firm age and firm-specific risk) on financial reporting quality measured as accruals quality and earnings smoothness. Ordinary robust least square regression was conducted. Financial health had a negative influence, but governance variables and earnings management did not affect financial reporting quality. Firm-specific risk had a positive effect, but firm age did not influence financial reporting quality. Changes in business outlook had no impact on the determinants’ effect on financial reporting quality. The study found that ESG firms did not engage in earnings management and aggressively manage earnings, pointing to ethical behaviour. This is the first study to contribute to understanding the financial reporting quality of ESG firms listed in China. It examined different business outlooks to understand ESG firms’ behaviour towards financial reporting quality. The findings invite replicable studies outside China to understand the contextual validity and reliability of the financial reporting quality of ESG firms, and to investigate the effect of determinants not examined in this study.

show abstract

Section: Resultsmentioning

confidence: 99%

Section: Relevant Literaturementioning

confidence: 99%

Financial reporting quality of ESG firms listed in China

Abeysekera

2023

PLoS ONE

View full text Add to dashboard Cite

show abstract

“…Commercial banks should also uphold their responsibility in a way that is excessive and proportionate to their actual costs to boost profits and market prices (Obeid R., & Adeinat, M. 2017). Despite the recent or continuing returns, forecasting market prices the forecaster with significant challenges (Green, J., & Zhao, W. 2022). Managers know that if they produce returns that exceed the firm's efficiency, they are creating value for their shareholders (Walker et al, 2021).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Determinants of Banking Operational Efficiency and the Relationship Between the Factors to Market Price: Evidence from Indonesia

Siagian

2023

Economics

View full text Add to dashboard Cite

Banks play an essential role in the economy, therefore, their performance must be maintained. Compared to other business sectors, the banking sector has continually achieved the greatest market shares over several periods. When a bank becomes more efficient, it can raise its income and market prices as well as investor confidence. This study examines various factors that influence operational efficiency and the implication for market prices. In 2016 – 2021 years, 28 banking companies were sampled from all banking companies listed on the Indonesia Stock Exchange. Purposive sampling was used for data collection, and linear multiple regression was used for data processing by running tests such as descriptive statistics, determination, regression equations, hypotheses, and implications. The findings reveal a statistically significant relationship between a firm’s size, capital adequacy, loan-to-deposit ratio, net interest, and inflation with operational efficiency, while non-performing loans and exchange rates have no a substantial impact. Additionally, capital adequacy, loan-to-deposit ratio, inflation, and exchange rates had statistically significant effects on market prices, although operational efficiency, non-performing loans, and net interest did not. The mediating analysis reveals that there is no interaction between non-performing loans and net interest with market prices, but it is a mediator for other variables. The research is important for a variety of stakeholders, including managers, investors, and policymakers, who are interested in resolving banking business operations, increasing financial performance, and preserving market prices by establishing mitigation strategies related to specific-internal and external factors.

show abstract

“…In the present context of great uncertainty and volatility, the valuation of single assets or enterprises can be extremely complicated. Regardless of the specific approach adopted, estimating the value of an enterprise or single asset is fundamentally based on forecasting future results, and consequently, the valuation process should incorporate the intrinsic uncertainty of the future (Green & Zhao, 2022;Komara et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

The Multiple-Scenario Valuation Method: When Robust Strategy Meets Valuation Needs

Zanoni,

Vernizzi

2023

IBR

View full text Add to dashboard Cite

In the presence of great uncertainty and volatility, the valuation of single assets or enterprises can be extremely complicated. Over the last few years, the European Securities and Market Authority (ESMA) has analyzed the potential impacts of these uncertainties on the application of the Impairment of Assets (IAS 36) accounting standards and exhorted firms adopting the IAS/IFRS accounting standards to consider multiple scenarios in forecasting information. This study, adopting a theoretical and conceptual perspective, aimed to analyze the theoretical and practical implications of the shift from single-path to multiple-scenario analysis. This paper contributes to the literature in the following ways: first, it suggests a new perspective of analysis that combines valuation needs with a strategic approach (a robust strategy). Second, it contributes to clarifying the antecedents and consequences of the ESMA recommendations. Furthermore, the paper also has practical implications as it highlights some critical issues associated with every valuation process, including the need to cope with growing uncertainty, the necessity of clarifying the great misunderstanding related to the confusion between the multiple-scenario valuation method and sensitivity analysis, and, last but not least, the importance of the relationship between strategy and the valuation process.

show abstract

Forecasting earnings and returns: A review of recent advancements

Cited by 8 publications

References 141 publications

Financial reporting quality of ESG firms listed in China

Financial reporting quality of ESG firms listed in China

Determinants of Banking Operational Efficiency and the Relationship Between the Factors to Market Price: Evidence from Indonesia

The Multiple-Scenario Valuation Method: When Robust Strategy Meets Valuation Needs

Contact Info

Product

Resources

About