Intertemporal variation in the information content of aggregate earnings and its effect on the aggregate earnings-return relation

Kim, Jae-Woo; Schonberger, Bryce; Wasley, Charles E.; Land, Hunter

doi:10.1007/s11142-020-09538-9

Cited by 8 publications

(1 citation statement)

References 30 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Second, growth in aggregate accounting earnings proxies for corporate profit growth, which is a leading driver of economic growth. For example, aggregate earnings have been found to lead growth in real output (Kim et al ., 2020). We are not aware of similar evidence for the Australian economy so the importance of accounting earnings as a leading indicator of growth in real output is unclear in the Australian context.…”

Section: Literature and Hypothesis Developmentmentioning

confidence: 99%

Aggregate accounting earnings, special items and growth in gross domestic product: evidence from Australia

Zhang

Fargher

2021

Accounting & Finance

View full text Add to dashboard Cite

Macroeconomic analysts have been found to not take full account of aggregate accounting earnings when forecasting future growth in US gross domestic product (GDP). Using Australian data, we confirm this finding and find that the association between aggregate earnings and GDP growth is robust to inclusion of economic factors to capture the importance of the resources sector and the open nature of the Australian economy. We also find that this association is higher in the post‐IFRS period. Finally, we document that both aggregate earnings and negative special items are important for explaining future GDP growth and forecast errors.

show abstract

Section: Literature and Hypothesis Developmentmentioning

confidence: 99%

Aggregate accounting earnings, special items and growth in gross domestic product: evidence from Australia

Zhang

Fargher

2021

Accounting & Finance

View full text Add to dashboard Cite

show abstract

From micro to macro: Aggregate accruals, mergers, and returns. A discussion of Heater, Nallareddy and Venkatachalam (2021)

Chen

Ogneva

2021

Journal of Accounting and Economics

View full text Add to dashboard Cite

A Structural Break in the Aggregate Earnings–Returns Relation

Curtis,

Kim,

2024

Journal of Financial Econometrics

View full text Add to dashboard Cite

This study empirically estimates the date of the structural change in the aggregate earnings–returns relation and reports it as the fourth quarter of 1991. We identify three sources of the structural change: (i) an increase in the relative importance of cash flow news contained in stock returns; (ii) a decrease in the importance of discount rate news contained in aggregate earnings; and (iii) a decrease in the persistence or the predictability of aggregate earnings and returns. Next, we examine the components of aggregate earnings and find that the change in the aggregate earnings–returns relation is largely driven by intertemporal changes in aggregate inventory accruals, suggesting the structural change is attributable to improved inventory management systems.

show abstract

Intertemporal variation in the information content of aggregate earnings and its effect on the aggregate earnings-return relation

Cited by 8 publications

References 30 publications

Aggregate accounting earnings, special items and growth in gross domestic product: evidence from Australia

Aggregate accounting earnings, special items and growth in gross domestic product: evidence from Australia

From micro to macro: Aggregate accruals, mergers, and returns. A discussion of Heater, Nallareddy and Venkatachalam (2021)

A Structural Break in the Aggregate Earnings–Returns Relation

Contact Info

Product

Resources

About