Earnings decomposition and the persistence of earnings

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dc.contributor.author Kean, SE
dc.contributor.author Wells, PA
dc.date.accessioned 2009-12-21T02:38:05Z
dc.date.issued 2007-01
dc.identifier.citation Accounting Research Journal, 2007, 20 (2), pp. 112 - 128
dc.identifier.issn 1030-9616
dc.identifier.other C1 en_US
dc.identifier.uri http://hdl.handle.net/10453/5409
dc.description.abstract Forecasting future period profitability is widely identified as an aim of financial statement analysis, and these forecasts are typically relied upon for the estimation of firm value. To facilitate this, the decomposition of earnings into its components or drivers, is typically advocated. This paper investigates the existence of systematic differences in persistence across the components of earnings. If components of earnings experience differences in persistence, this may provide insights into the determinants of aggregate earnings level and persistence. This paper provides evidence of differences in persistence between components of earnings. Differences are found between components formed on the basis of: financial ratios; operating and financing activities; and cash and accruals. Furthermore, there is evidence that earnings components improve the explanatory power of models evaluating aggregate earnings persistence, with this result being strongest for firms with extreme income decreasing accruals. Due to the pivotal role of earnings in firm valuation, the results from this paper have direct implications for valuation.
dc.publisher Royal Melbourne Institute of Technology
dc.relation.isbasedon 10.1108/10309610780000696
dc.title Earnings decomposition and the persistence of earnings
dc.type Journal Article
dc.parent Accounting Research Journal
dc.journal.volume 2
dc.journal.volume 20
dc.journal.number 2 en_US
dc.publocation Melbourne, Australia en_US
dc.identifier.startpage 112 en_US
dc.identifier.endpage 128 en_US
dc.cauo.name BUS.School of Accounting en_US
dc.conference Verified OK en_US
dc.for 150103 Financial Accounting
dc.personcode 920016
dc.personcode 990694
dc.percentage 100 en_US
dc.classification.name Financial Accounting en_US
dc.classification.type FOR-08 en_US
dc.description.keywords Earnings persistence, Financial reporting
pubs.embargo.period Not known
pubs.organisational-group /University of Technology Sydney
pubs.organisational-group /University of Technology Sydney/Faculty of Business
pubs.organisational-group /University of Technology Sydney/Faculty of Business/School of Accounting
utslib.copyright.status Closed Access
utslib.copyright.date 2015-04-15 12:17:09.805752+10
pubs.consider-herdc true
utslib.collection.history Closed (ID: 3)

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