inflation and nominal financial reporting: implications for performance and stock prices

Inflation and Nominal Financial Reporting: Implications for Performance and Stock Prices

The monetary unit assumption of financial accounting assumes a stable currency (i.e., constant purchasing power over time). Yet, even during periods of low inflation or deflation, nominal financial statements violate this assumption. I posit that, while the effects of inflation are not recognized in nominal statements, such effects may have economic consequences. I find that unrecognized inflat...

Inflation and Nominal Financial Reporting: mplications for Performance and Stock Prices

The monetary unit assumption of financial accounting assumes a stable currency i.e., constant purchasing power over time . Yet, even during periods of low inflation or deflation, nominal financial statements violate this assumption. I posit that, while the effects of inflation are not recognized in nominal statements, such effects may have economic consequences. I find that unrecognized inflati...

Financial System Performance and Inflation in Iran: Some Stylized Facts

The mutual relationship between financial development, as a multilateral concept, and inflation, as a key indicator of macro-economy is crucial. In this paper, inflation regimes are identified using Markov-Switching approach, and then the finance-inflation mutual relationship is investigated in post-revolution cabinets in Iran (1982-2017). Our findings suggest that there are mutual co-movements...

The Relationship Between Non-Transparent Financial Reporting and Risk Stock Futures Fall Due to the Size and Performance

The purpose of this study was to investigate the relationship between stock futures fall risk with non-transparent financial reporting at three levels of size, efficiency and return on equity, in the period 2010 to 2014 was in Tehran Stock Exchange. The population of the study are all companies listed in Tehran Stock Exchange. Data collected and calculated by using Excel software Eviews 7 been ...

Inflation and Financial Market Performance

The Impact of Inflation on ROE, Growth and Stock Prices

Using the constant growth dividend discount model (DDM), it can be shown that the critical factor which determines whether common stocks will be able to be an inflation hedge is the growth rate o f dividends. In turn, the growth of dividends is mainly impacted by the aggregate return on equity (ROE). Using the DuPont formula, it is clear that the main variable that drives the aggregate ROE in a...