Putting an end to the “earnings game” requires that CEOs reclaim the initiative by avoiding earnings guidance and managing expectations in such a way that their stocks trade reasonably close to their intrinsic value. In place of earnings forecasts, management should provide information about...

The paper discusses common mistakes made by financial profession when valuating cash flows by applying inconsistent weighted average discount rates to cash flows to equity, to unlevered firm, to levered firm or other complex cash flows not regarding their type (constant or growing perpetuities,...

Financial analysts comprise one important group of information intermediaries between firms and investors (Healy & Palepu, 2001). They have great potential to decrease information asymmetry between firms and investors, resulting in better allocation of capital. Analysts' work is influenced by,...

Since 2005, all European Union listed firms must comply with IFRS. The resulting mandatory changes in accounting methods have substantially affected reported earnings predictions. Using the FactSet/JCF database that collects 2005 earnings forecasts under both IFRS and local GAAP for European...

This paper examines various factors affecting Chinese financial analysts' information comprehension, analyzing ability and job quality. We hypothesized that financial analysts with better educational background, more experience, superior resources provided by large brokerage firms and more...

Using an international sample, I investigate whether the extent of firms' disclosure of their accounting policies in the annual report is associated with properties of analysts' earnings forecasts. Controlling for firm- and country-level variables, I find that the level of accounting policy...

Recent work in management accounting offers several novel insights into firms' cost behavior. This study explores whether financial analysts appropriately incorporate information on two types of cost behavior in predicting earnings - cost variability and cost stickiness. Since analysts'...

This paper analyzes whether the new business segment reporting disclosure rules, SFAS 131, will actually provide capital market participants with more predictive ability than the previous rules. For this we conduct three experiments. Two experiments with advanced accounting students as subjects,...

This study examines whether key characteristics of analysts' forecasts — timeliness, accuracy, and informativeness — change when investor demand for information is likely to be especially high, i.e., during periods of high uncertainty. Findings reveal that when uncertainty is high, analysts'...

In this paper, we assess the equity value relevance of disclosure-derived financial statement adjustments. Prior literature has explored only the incremental explanatory power of individual adjustments, or has assessed the superiority of earnings recast using only a subset of prescribed...