Title: Determinants of the Time Series of Earnings and Implications for Earnings Quality
Abstract: This paper explores whether the earnings time series is influenced by differences in accrual methods across categories of balance sheet accounts. We also explore whether firms offset this influence using communications other than earnings. We assume the earnings time series to be subject to two primary influences: prior earnings and changes in the intrinsic value of the net assets of the firm. We hypothesize that the influenceof prior earnings is increased by the use of accrual methods such as depreciation associated with long-term operating assets. On the other hand, the influence of intrinsic value changes is enhanced by market-value-oriented accounting methods associated with financial assets and liabilities.
Publication Year: 2001
Publication Date: 2001-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 4
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