This study provides evidence relevant for estimating and evaluating the terminal value term used in DCF valuation. Consistent with common practice, exit multiples based on EBITDA dominate those based on either net operating profit after tax (NOPAT) or net operating assets (NOA). However, both...

We investigate the impact of recurring fair value versus amortized cost measurement for accounting recognition purposes on the timeliness of insurers' other-than-temporary (OTT) impairments of non-agency residential mortgage-backed securities (NAMBS) around the 2007–2009 financial crisis....

Overproduction reduces cost of goods sold by spreading fixed costs over an inflated number of units. An estimate of the overproduction bias helps predict future profitability, and adjusting profitability measures to undo this distortion improves their explanatory power for future profitability....

Over the last thirty years there has been a strong positive trend in the magnitude of amortization charges, due to both economic and accounting changes. This trend has accelerated over the last decade, following the implementation of a revised accounting standard for business combinations....

This paper develops an analytically coherent yet parsimonious framework which explains market returns in terms of contemporaneous information. It anchors on the idea that valuation (static perspective) can be connected to the dynamics that explains returns, and vice versa. The framework requires...

Bank lending standards vary over time. Periods in which firms find it relatively easy to borrow are followed by periods in which banks scrutinize borrowers more and tighten lending. We predict that changes in lending standards affect the accounting conservatism of bank-dependent firms. Using (i)...

This study develops and evaluates a model that generates synthetic credit ratings using accounting and market based information. The model performs very well in explaining agency ratings, suggesting that fitted values for unrated companies are likely to be reasonably precise. In addition, the...

We investigate the relation between corporate performance and overall economic growth in the United States. In particular, we focus on the impact of the U.S. corporate tax regime on this relation. Exploiting time-series variation and a tax shock, we document that the relatively higher corporate...

This study predicts and finds that the interaction of firm-level and aggregate-level shocks explains a significant portion of shocks to macroeconomic activity. Specifically, we hypothesize that the relation between uncertainty and economic growth is most pronounced when both firm-level and...

The Securities and Exchange Commission (SEC) is considering the pros and cons of moving to semi-annual reporting from quarterly reporting at least for certain segments of the market. However, documenting causal evidence on the consequences of mandatory quarterly reporting has been difficult, due...