In this study, we investigate why earnings underperform relative to cash flows in explaining future cash flows. Using analytical and empirical analyses of the components of R2 values, we demonstrate an ‘opposing covariances effect’ in which covariances of opposite sign are summed and thus...

We examine whether the disclosure of tax-related uncertainty through unrecognized tax benefits (UTBs) resolves or exacerbates investors’ uncertainty about firm value based on evidence from investor trading behavior and information asymmetry around the time of the disclosure. We find that...

We examine why, as a summary statistic, earnings is better than cash flows at explaining contemporaneous returns despite being a worse predictor of future operating cash flows. Several studies compare the ability of earnings and operating cash flows to predict valuation-related outcome variables...

Defining managerial sentiment as managers' beliefs about future firm outcomes that are unjustified by the information available to them, we hypothesize and find that managerial sentiment is associated with unintentional errors in accrual estimates. Using a sample of public banks, we find that:...

Objective: To outline the importance of the clarity of data analysis in the doing and reporting of interview-based qualitative research. Approach: We explore the clear links between data analysis and evidence. We argue that transparency in the data analysis process is integral to determining the...

An important function of asset management is forecasting risks and returns. However, investment decisions are made on the basis of relative performance within an expected set of financial and economic conditions. The aim of this paper is to examine if a model could be developed to explain the...