Persistence of earnings and prediction of future cash flows: the role of timely recognition of bad news

Kordestani, Gholamreza; Taqiporian, Maryam; Biglari, Vahid; Minaei, Vahid

doi:10.3846/btp.17.11124

Cited by 4 publications

(6 citation statements)

References 31 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…99 [ 6 ], pressure on management comes from outside the company and takes the form of needing to meet the demands and targets of third parties and having responsibility for outcomes. Consistent earnings are demanded [ 44 ]. Management that manipulates earnings faces greater pressure in respect of the company's financial stability, leverage, and financial targets [ 30 ].…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Fraud triangle and earnings management based on the modified M-score: A study on manufacturing company in Indonesia

Narsa¹,

Afifa²,

Wardhaningrum³

2023

Heliyon

View full text Add to dashboard Cite

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Fraud triangle and earnings management based on the modified M-score: A study on manufacturing company in Indonesia

Narsa¹,

Afifa²,

Wardhaningrum³

2023

Heliyon

View full text Add to dashboard Cite

“…Jelodari and Kordshouli (2016) suggested that earnings quality provided highly rigorous forecasts for operating cash flows. Kordestani et al (2016) proved that the timely loss recognition did not affect the persistence and the predictive ability of earnings in Iranian listed companies during the period of 2003-2010, which implied that accounting conservatism did not distort earnings quality. Carvalho, Camargo and Kalatzis (2017) suggested that earnings quality attributes, including earnings predictive ability, were good explicators of operational and market performance of Latin American companies over the period of 1989-2009.…”

Section: __________________________________________________________________________ 2021 / 35mentioning

confidence: 96%

Persistence and Predictive Ability of Earnings: Evidence from France and the UK

Kimouche

2021

Economics and Business

View full text Add to dashboard Cite

The persistence and predictive ability are extensively requested as desirable attributes of earnings quality in the literature. The paper aims at investigating the persistence and predictive ability of earnings in French and UK companies. The study included a panel data of 1035 firm-year observations for 115 French listed companies from the CAC All-Tradable and 900 firm-year observations for 100 UK listed companies from the FTSE All-Share, during the period of 2011–2019. The research design was based on two equations starting from Sloan (1996) that were estimated using Fixed Effects Method. The study showed that earnings were persistent but they had no predictive ability regarding the future cash flows whether in French or UK companies and that earnings of UK companies were more persistent than those of the French companies. We argue that the persistence of earnings and the inability to predict future cash flows can be evidence of earnings management. The study contributes to the literature about earnings quality by studying earnings persistence and earnings predictive ability together in two different environments. The results require that users must take into consideration the illusory persistence of earnings, auditors must be cautious regarding the manipulation of earnings by managers, and accounting standard setters must review the reporting guidelines of cash flows to enhance their predictability by earnings.

show abstract

“…In this case, annual earnings form the basis of estimating earnings persistence. When a firm's earnings possess the quality of persistence, it is more likely than not, to continue into the foreseeable future (Kordestani et al, 2016).…”

Section: Literature Review 21 Earnings Persistencementioning

confidence: 99%

The Influence of Earnings Persistence on Financial Sustainability of Commercial Banks in Nigeria

Jeremiah,

Akpanuko

2024

AKSUJACOG

View full text Add to dashboard Cite

The thought-provoking misdemeanour of some commercial banks nose-diving into a financial crisis, even after presenting seemingly good yearly performance reports, motivated this study. Thus, the study was carried out to examine the relationship between earnings persistence and the financial sustainability of commercial banks in Nigeria. This relationship was examined after controlling for leverage, interest rate and firm size of the commercial banks. The ex-post facto research design was adopted in the study. Data were obtained from the annual reports of 12 selected, listed commercial banks in Nigeria from 2012 to 2022. The multiple regression technique was used to test the hypothesis of the study. The results of the analysis revealed that there is a significant positive relationship between earnings persistence and the financial sustainability of commercial banks in Nigeria (t = 4.318, p = 0.000, p < 0.05). Based on this finding, it was recommended that commercial banks should strive to enhance their earnings persistence by increasing their operational efficiency.

show abstract

Persistence of earnings and prediction of future cash flows: the role of timely recognition of bad news

Cited by 4 publications

References 31 publications

Fraud triangle and earnings management based on the modified M-score: A study on manufacturing company in Indonesia

Fraud triangle and earnings management based on the modified M-score: A study on manufacturing company in Indonesia

Persistence and Predictive Ability of Earnings: Evidence from France and the UK

The Influence of Earnings Persistence on Financial Sustainability of Commercial Banks in Nigeria

Contact Info

Product

Resources

About