Market rewards to patterns on increasing earnings : do cash flow patterns, accruals manipulation and real activities manipulation matter?
Liu, Su-Ping (Universidad Carlos III de Madrid)
García Lara, Juan Manuel (Universidad Carlos III de Madrid)
Universitat Autònoma de Barcelona. Departament d'Empresa

Imprint:	Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa 2013
Description:	52 p.
Abstract:	This study explores whether firms have differential price-earnings multiples associated with their means of achieving a sequential pattern of increasing positive earnings. Our main findings show that market participants assign higher price-earnings multiples to firms when their pattern of increasing earnings is supported by the same pattern of increasing cash flows. Market participants assign lower price-earnings multiples to firms suspect of having engaged in accrual-based earnings management, sales manipulation, and overproduction to achieve the earnings pattern. We find, however, that market participants do not penalize firms suspect of having achieved the earnings pattern through the opportunistic reduction of discretionary expenses.
Rights:	Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, i la comunicació pública de l'obra, sempre que no sigui amb finalitats comercials, i sempre que es reconegui l'autoria de l'obra original. No es permet la creació d'obres derivades.
Language:	Anglès
Series:	Departament d'Economia de l'Empresa. Documents de treball
Series:	Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa) ; 13/3
Document:	Working paper
Subject:	Empreses ; Beneficis

52 p, 311.8 KB

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Research literature > Working papers > Department of Business. Working papers