The Information Content of Accounting Reports: An Information Theory Perspective

Ross, Jonathan F.

doi:10.3390/info7030048

Cited by 12 publications

(11 citation statements)

References 14 publications

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“…The descriptive statistics also indicate that at the year 2009 in which earnings reported by the sampled firms was minimum (-4.76), the unemployment rate was at the highest level of 19.70%. This finding supports the view of [7] that positive earnings news leading to additional investment and hiring whereas negative earnings tending to be downsizing and layoff and in tandem with [27] idea that persistent shocks determine to the extent of changes in employment (i.e., hiring or firing of workers), while transitory shocks result in changes in wages.…”

Section: Discussion Of Findingssupporting

confidence: 89%

“…(Un) Employment Rate is the dependent variables (criterion variables), as noted in [7], from a neoclassical economics perspective, the demand for labour by firm's is determined by its product demand and shape of its production function. [7,27] further explained that the extent of earnings news captures shocks to future profitability due to shift in product demand, that positive earnings news should lead to additional investment and hiring, and vice versa can cause downsizing and layoffs. This understanding agrees with the sectoral shift hypothesis by [28] that unemployment is driven in part by crosssectional shifts across sectors.…”

Section: Variables and Measuresmentioning

confidence: 99%

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Aggregate Earnings and (Un)employment Rate: Evidence from Nigeria

Odoemelam

Ofoegbu

Okafor

2019

AJEBA

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The purpose of this study is to investigate the association between aggregate accounting earnings of quoted Nigerian firms and (un)employment changes. This study examined the influence of selected macroeconomic variables on the relationship between aggregate earnings and (un)employment change. This study analyzes aggregated earnings of 101 quoted firms and (un)employment rate data from the year 2006 to 2017. Aggregated earnings yearly observations were used in this study, with each yearly observation equal to the cross-sectional sum of sample firms’ yearly earnings. Results show that corporate aggregate earnings growth is (negatively) positively and significantly associate with (un)employment changes. Selected macroeconomic indicators statistically and significantly influence the aggregate earnings growth association with (un)employment changes. Robustness of our analysis in this study allowed us to document in strong terms that in an emerging economy, corporate aggregate earnings significantly associated with (un)employment (i.e., as corporate earnings increases, more investment will be made, and job seekers will be employed thereby reducing the unemployment rate). One implication of our results is that aggregate accounting earnings contain information about (un)employment changes in Nigeria. Our results suggest that effective monetary policies aimed at reducing inflation and interest rate as well as enabling economic policies encouraging and efficient mobilizing of fund from surplus side to deficit side of the economy will reduce unemployment and lead to employment.

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Section: Discussion Of Findingssupporting

confidence: 89%

Section: Variables and Measuresmentioning

confidence: 99%

Aggregate Earnings and (Un)employment Rate: Evidence from Nigeria

Odoemelam

Ofoegbu

Okafor

2019

AJEBA

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“…The value relevance of accounting information of unlisted biotechnology firms is not different from that of listed biotechnology firms [14,15]. Temporary profits are less relevant to share prices than continuous profits.…”

Section: Prior Research and Research Hypothesismentioning

confidence: 91%

The Usefulness of Accounting Information Derived by Applying the Percentage of Completion Method to Enhance Sustainable Business Practices: Evidence from South Korea

2018

Sustainability

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In South Korea, accounting fraud based on the recognition of revenue occurs frequently. The operating profit will be inaccurate if incorrect project completion rates are applied. In order to apply the percentage of completion method (PCM), the project completion rate should be calculated correctly. There has been much controversy regarding the accuracy of the progress rate and the usefulness of the revenue information calculated from the PCM. Therefore, this study investigated whether the quality level of operating profit information using the PCM is actually low in terms of information usefulness. The study period was from 2011 to 2017, the sample was 10,050 firm-year observations among the listed companies in the Korea Stock Exchange, and financial data from the KIS-Value database was used. Empirical analyses showed that investors evaluated the information value of the operating profit by applying the PCM. In other words, there was a low correlation between the stock price and the operating profit when the PCM was used. These results suggest that the practical application of reliable PCM standards and strict supervision by supervisory institutions are necessary. The limitation of this study is that the verification period, i.e., 2011-2017, is short. This is because Korea was obligated to apply the Korean International Financial Reporting Standards (K-IFRS) from 2011. Therefore, in order to ensure comparability of the sample period, only the period after the application of K-IFRS was examined.

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“…However, no financial statement can provide a complete picture of the company, if it is viewed and analyzed separately from other statements. "The purpose of accounting is to record, and communicate to interested users, the effect of economic events or transactions on an entity‖ (Ross, 2016).On the other hand, financial statements can be used to obtain unlawful benefits from certain individuals in the company. In a situation where the information in the financial statements is presented untrue and does not present an objective financial position, then the published financial statements certainly do not fulfil the mission they are generated for.…”

Section: Introductionmentioning

confidence: 99%

Detection of fraudulent actions in the financial statements with particular emphasis on hotel companies

Васильев

Cvetković

Grgur³

2019

Menadž u hotelijerstvu i turiz

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Financial statements are one of the key sources of information for stakeholders of companies. Therefore, financial reporting aims at presenting an objective and transparent state of an enterprise. In order to protect the interests of all stakeholders of companies, whether external or internal, the role of financial accountants is very important, which is related to the detection of fraudulent activities in the financial statements. Forensic accountants with the knowledge they possess in the field of accounting, auditing, management and other skills, have the ability to clearly understand the irregularities and injustices that occur within the company. Fraudulent actions are most often a case of using an enterprise management strategy to gain benefits to the interests of other marketers that surround it. The aim of the paper is to show the significance of the role of a financial accountant in detecting fraudulent actions in the financial statements. The subject of this paper is to investigate the possibility of fraudulent actions and to look into the specific role forensic accountants have in this process.

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The Information Content of Accounting Reports: An Information Theory Perspective

Cited by 12 publications

References 14 publications

Aggregate Earnings and (Un)employment Rate: Evidence from Nigeria

Aggregate Earnings and (Un)employment Rate: Evidence from Nigeria

The Usefulness of Accounting Information Derived by Applying the Percentage of Completion Method to Enhance Sustainable Business Practices: Evidence from South Korea

Detection of fraudulent actions in the financial statements with particular emphasis on hotel companies

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