What information matters to investors at different stages of a firm's life cycle?

Dickinson, Victoria; Kassa, Haimanot; Schaberl, Philipp D.

doi:10.1016/j.adiac.2018.07.002

Cited by 39 publications

(27 citation statements)

References 43 publications

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“…Furthermore, the findings of this paper extend research on the determinants of internal control weaknesses (e.g., Ashbaugh-Skaife, Collins, & Kinney, 2007;Doyle et al, 2007a), misstatement prediction (e.g., Dechow et al, 2011), and FSD scores (e.g., Jiang et al, 2019). Finally, our study contributes to the growing literature on accounting consequences of firm life-cycle stages (e.g., Dickinson, 2011;Dickinson et al, 2018;Hansen et al, 2017;Vorst & Yohn, 2018).…”

supporting

confidence: 72%

“…Specifically, we observe an inverted U-shaped pattern of financial reporting quality, that is, quality is lower (higher) during the introduction, growth, and decline (mature) stages. 6 These findings are potentially important considering the results in Dickinson et al (2018), suggesting that accounting numbers are highly value relevant information sources for investors especially in cases of introduction and decline firms, which are surrounded by uncertainty, and the reliability of financial information would be particularly important.…”

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confidence: 99%

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Does financial reporting quality vary across firm life cycle?

Krishnan

Myllymäki

Nagar

2020

Business Fin & Account

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This study provides empirical evidence that across firm life cycle there is considerable variation in financial reporting quality. Specifically, the focus is on matching quality captured by the contemporaneous correlation between revenues and expenses and on the likelihood of material misstatements in financial statements. On balance, we observe an inverted U-shaped pattern of financial reporting quality, that is, lower quality during the introduction, growth, and decline stages, compared to the mature stage of firm life cycle. First, we find poor matching of expenses with revenues in the introduction, growth, and decline stages. This implies conservative or aggressive recognition of expenses, leading to less informative earnings, and hence lower financial reporting quality. Then, we examine the likelihood of material misstatements, measured by weaknesses in internal control over financial reporting, financial statement restatements, Securities and Exchange Commission's (SEC) accounting and auditing enforcement releases (AAER), and financial statement divergence (FSD) scores. We find clear indications that firms in the introduction, growth, and decline stages are significantly more likely to have misstatements in their financial statements compared to firms in the mature stage. Overall, the findings of this study enhance our understanding of the role of life-cycle stages in causing variation in financial reporting quality.

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supporting

confidence: 72%

mentioning

confidence: 99%

Does financial reporting quality vary across firm life cycle?

Krishnan

Myllymäki

Nagar

2020

Business Fin & Account

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“…Neste contexto, Dickinson et al (2018) propuseram que o ciclo de vida da firma impacta nos valores patrimoniais. Os autores investigaram o value relevance das informações contábeis e das previsões de lucros por analistas, a partir do estágio de ciclo de vida da firma.…”

Section: Referencial Teóricounclassified

“…Contudo, uma vez que, as evidências presentes nos estudos de Hasan et al (2015) e Dickinson et al (2018) identificaram que o ciclo de vida influencia no custo de capital e previsão de preços e retornos a partir do modelo de Ohlson, respectivamente, aqui procurou-se investigar a ideia de que o mesmo influencia os resultados das regressões de retorno e de preço no modelo desenvolvido por Lyle et al (2013).…”

Section: Introductionunclassified

Previsão de retornos e preços das ações a partir de dados contábeis condicionado ao ciclo de vida das firmas

Mikosz

Roma

Louzada

et al. 2019

Rev. contab. organ.

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Este artigo investiga o efeito dos estágios do ciclo de vida das firmas na determinação dos retornos e preços esperados de ações brasileiras a partir do modelo contábil de avaliação desenvolvido por Lyle, Callen e Elliott (2013). Para definição dos estágios do ciclo de vida, adotou-se a metodologia de Dickinson (2011), utilizando uma proxy parcimoniosa para as firmas, estruturada a partir da demonstração do fluxo de caixa com forte aderência as teorias econômicas. Os dados foram coletados nas bases de dados Bloomberg, Quantum e do NEFIN/FEA/USP e as informações foram geradas no nível das firmas. Os resultados sugerem que o modelo para o período analisado não apresenta capacidade de previsão de retornos no Brasil, dada pela não significância das variáveis mesmo considerando os ativos em diferentes estágios de ciclo de vida da firma, já para as previsões de preços houve considerável poder explicativo, especialmente no estágio de maturidade.

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“…Hastuti, et al [11] used a sample of Indonesian listed companies; however, according to their findings, the life cycle has no effect on the detection of earnings management. Dickinson, et al [22] examined the relevance of profit in relation to market value prediction. Extreme performance determines SHS Web of Conferences 92, 0 (2021) Globalization and its Socio-Economic Consequences 2020…”

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confidence: 99%

Earnings Quality and Accruals over Company´S Life Cycle

Michalkova

2021

SHS Web of Conf.

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Research background: The increasing number of bankruptcies and the growing risk of financial distress highlight the need for quality financial statements, conservative accounting or increase the need for quality tools to detect the occurrence of earnings management. However, the life cycle of a company affects financial performance and key aspects of earnings management, which examined in the international context only to a small extent. Purpose of the article: The paper examines the impact of the life cycle and country-specific factor on the value of discretionary accruals in the tourism sector in the Visegrad countries, which are among the most vulnerable sectors in the coming economic crisis. Methods: This study uses the method of two-way analysis of variance with interaction, while also testing the assumptions of the model by normality tests, homogeneity test and post hoc tests (Scheffé and Tukey methods). Findings & Value added: Earnings quality changes during the life cycle of a business; whereas in the first stages (introduction, growth) and in decline they use downward earnings management. On the contrary, mature and shake-out companies have enough positive earnings before taxes, which is a prerequisite for tax profit optimization. The level of earnings management in tourism varies significantly at different stages of the life cycle, but also in different countries. The results imply that the qualitative variable corporate life cycle in interaction with the country is an important explanatory variable, the implementation of which can improve the explanatory power of earnings management models in Central European developing countries.

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What information matters to investors at different stages of a firm's life cycle?

Cited by 39 publications

References 43 publications

Does financial reporting quality vary across firm life cycle?

Does financial reporting quality vary across firm life cycle?

Previsão de retornos e preços das ações a partir de dados contábeis condicionado ao ciclo de vida das firmas

Earnings Quality and Accruals over Company´S Life Cycle

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