Proposals for changes in the earnings test continue to be made. An important element in a decision to change the test is who receives the increased benefits resulting from the change. This article estimates and analyzes the distribution of increased benefits resulting from: (a) The liberalization in the test contained in the 1977 social security amendments, (b) possible future liberalizations o...

Yes. We find that dividend changes predict future unexpected earnings changes in each of the next four quarters. These earnings impacts are persistent, leading to higher than expected earnings levels for at least three years after the dividend change. These results are robust to various measures of expected earnings, including analyst forecasts and a flexible function of past earnings and retur...

Social preference models were originally constructed to explain two things: why people spend money to affect the earnings of others and why the income of others influences reported happiness. We test these models in a novel experimental situation where participants face a risky decision that affects only their own earnings. In the social (individual) treatment participants do (not) observe the ...

This paper examines how commonly used earnings quality measures fulfill a key objective of financial reporting, i.e., improving decision usefulness for investors. We propose a stock-price-based measure for assessing the quality of earnings quality measures. We predict that firms with higher earnings quality will be less mispriced than other firms. Mispricing is measured by the difference of the...

Security analysts generally provide forecasts of earnings for the current period as well as oneyear ahead earnings at fiscal year end. In this study, we derive an estimation procedure, which infers forecast bias from equivalent price expressions that utilize different horizon earnings forecasts. It is well documented that analyst long-horizon earnings forecasts tend to be more optimistic (ex po...

Theoretically, accounting earnings could be used to estimate the intrinsic value of equity. If predicted accurately, then, so equity, thereby, creating much less risk in equity investment. However, surprises are common, and therefore is To quantify investment implied from earnings, I propose use financial statements construct abnormal sales growth rates (ABG) changes profit margins (ABPM) measu...

Investors and other contributors to stock exchange need a variety of tools, measures, and information in order to make decisions. One of the most common tools and criteria of decision makers is price-to earnings per share ratio. As a result, investors are in pursuit of ways to have a better assessment and forecast of price and dividends and get the highest returns on their investment. Previous ...

Whereas the relations derived for price-earnings (P/E) ratios predict a positive relation with future earnings growth and negative relations with interest rates and risk, prior empirical investigations of the determinants of P/E ratios find these links to be weak. One reason commonly offered for this apparent inconsistency is the presence of transitory earnings components in the denominator. We...

Abstract We investigate the pattern of earnings disparity across Canadian-born ethnic groups in Canada over three census years, 1996, 2001, and 2006. This extends “Colour My World” by 10 years (Pendakur and Pendakur 2002). We find that the earnings gaps faced by Canadian-born visible minorities have not eroded since the 1990s. This is somewhat surprising given that the size of this population h...