The research question we want to answer in this paper is: have the financial variables of the triple-entry framework of momentum accounting explanatory and predictive power? A detailed example is presented of Royal Philips Electronics N.V. Although in this study we cannot generalize the result...

The research is aimed at verifying the value relevance of accounting information with reference two different stock markets: the UK and the Italian one.Starting from the Edward, Bell and Ohlson's approach, different regression models have been implemented, analyzing – for a three year period...

We investigate whether investors' perception of a firm's trustworthiness affects underreaction to earnings news. We develop a model that predicts how trust helps explain underreaction to news, and test this prediction under three different empirical settings where a firm's perceived...

This study empirically analyzes the long term and short term accuracy of over 3000 individual firm pension accounting estimates of rates of return on pension assets over ten consecutive years (2001-2010). We find that the point estimates allowed by GAAP create verifiability challenges for...

Accounting conservatism is the tendency to require less evidence to recognize losses in the financial statements and require a higher degree of evidence to recognize gains in the financial statements. Conservatism has been difficult to measure on a firm by firm basis. This paper proposes a new...

This study examines whether the application of an accounting fundamental strategy to select stocks of a portfolio can systematically yield significant and positive excess market buy-and-hold returns after one year of portfolio formation. Using financial statement information and the “direct...

We show that the cost of trading on negative news, relative to positive news, increases before earnings announcements. Our evidence suggests that this asymmetry is due to financial intermediaries reducing their exposure to announcement risks by providing liquidity asymmetrically. This asymmetry...

Predicted stock issuers (PSIs) are firms with expected “high-investment and low-profit” (HILP) profiles that earn unusually low returns. We carefully document important features of PSI firms to provide insights on the economic mechanism behind the HILP phenomenon. Top-PSI firms are...

We establish a link between firms managing investors' performance expectations, earnings announcement premia, and cyclical patterns (i.e., seasonalities) in returns. Firms that are more likely to manage expectations toward beatable levels predictably earn lower returns before, and higher returns...

Prior research finds that taxable income is a more useful performance metric when book income quality is low (i.e., the “supplemental information role of taxable income”). We predict and find that taxable income's supplemental information role for future earnings growth increases over time...