Persistence, Value Relevance, and Accruals Quality in Extreme Earnings and Cash Flow Situation Outros Idiomas

ID:
45956
Resumo:
Purpose: To analyze the impact of extreme earnings and cash flows on the persistence, value relevance, and accruals quality of Brazilian public firms. Originality/gap/relevance/implications: The present study contributes to the literature by analyzing extreme earnings and cash flows. Because they change the results of the period in which they occur in an unusual manner, this study suggests that studying their behaviors and impacts on the quality of the information disclosed by companies tends to contribute to optimal decision making in the capital market. Key methodological aspects: The analyzed sample comprised non-financial public companies traded on the BM&FBovespa stock exchange from 2005 to 2014, with estimates made using quantile regression. Summary of key results: The main results indicate that cash flows are more persistent than earnings because the accruals component of the latter makes them less persistent. Extreme values of both earnings and cash flows affect the persistence of these variables, with a strong and negative effect on cash flows. Finally, extreme values of accruals negatively affect accruals quality because, compared to moderate quantiles, they significantly alter the standard deviation of extreme quantiles. Key considerations/conclusions: The presence of extreme values in this study’s focus variables negatively influenced market information quality, reducing its predictive power and, consequently, its relevance. Furthermore, controlling for extreme values, it was possible to observe the incremental information content of these two metrics.
Citação ABNT:
LEAL, L. T. Y.; GIRÃO, L. F. A. P.; LUCENA, W. G. L.; MARTINS, V. G. Persistence, Value Relevance, and Accruals Quality in Extreme Earnings and Cash Flow Situation. Revista de Administração Mackenzie, v. 18, n. 3, p. 203-231, 2017.
Citação APA:
Leal, L. T. Y., Girão, L. F. A. P., Lucena, W. G. L., & Martins, V. G. (2017). Persistence, Value Relevance, and Accruals Quality in Extreme Earnings and Cash Flow Situation. Revista de Administração Mackenzie, 18(3), 203-231.
DOI:
http://dx.doi.org/10.1590/1678-69712017/administracao.v18n3p203-231
Link Permanente:
http://www.spell.org.br/documentos/ver/45956/persistence--value-relevance--and-accruals-quality-in-extreme-earnings-and-cash-flow-situation/i/pt-br
Tipo de documento:
Artigo
Idioma:
Inglês
Referências:
Arkadani, S. S.; Arkadani, M. D.; Heyrani, F. (2013). The Impact of High Earnings on the Informational Content of Cash Flows in the Listed Companies on Tehran Stock Exchange. Internacional Journal of Academic Research in Accounting, Finance and Management Sciences. 3(4), 215-223. DOI: 10.6007/ IJARAFMS/v3-i4/393.

Beyer, A.; Cohen, D. A.; Lys, T. Z.; Walther, B. R. (2010). The financial reporting environment: Review of the recent literature. Journal of Accounting and Economics, 50, 296-343. DOI: 10.1016/j.jacceco.2010.10.003.

Chan, K.; Chan, L. K. C.; Jegadeesh, N.; Lakonishok, J. (2001). Earnings quality and stock returns: The evidence from accruals. Social Science Research Network.

Cheng, C. S. A.; Yang, S. S. M. The incremental information content of earnings and cash flows operations affected by their extremity. (2003). Journal of Business Finance and Accounting. 30(1/2), 73-116. DOI: 10.1111/14685957.00484.

Clubb, C. Discussion of the incremental information content of earnings and cash flows from operations affected by their extremity. (2003). Journal of Business Finance & Accounting, 30(1/2), 117-124. DOI: 10.1111/14685957.00001.

Coad, A.; Rao, R. (2008). Innovation and firm growth in high-tech sectors: A quantile regression approach. Research policy, 37(4), 633-648. DOI: 10.1016/j.respol.2008.01.003.

Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: the role of accounting accruals. Journal of Accounting and Economics. 18(1-2), 3-42. DOI: 10.1016/0165-4101(94)90016-7.

Dechow, P. M.; Dichev, I. D. (2002). The quality of accruals and earnings: the role of accrual estimation errors. The Accounting Review. 77(4), 35-59. DOI: 10.2308/accr.2002.77.s-1.35.

Dechow, P. M.; Ge, W. (2005). The persistence of earnings and cash flows and the role of special items: implications for the accrual anomaly. Review of Accounting studies, 11, 253-296. DOI: 10.2308/accr.2002.77.s-1.35.

Dechow, P. M.; Ge, W.; Schrand, C. (2010). Understanding earnings quality: a review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50, 344-401. DOI: 10.1016/j.jacceco.2010.09.001.

Dechow, P. M.; Kothari, S. P.; Watts, R. L. (1998). The relation between earnings and cash flows. Journal of Accounting and Economics, 25, 133-168. DOI: 10.1016/S0165-4101(98)00020-2.

Dechow, P. M.; Richardson, S. A.; Sloan, R. G. (2008). The persistence and pricing of the cash component of earnings. Journal of Accounting Research, 46, 537-566. DOI: 10.1111/j.1475-679X.2008.00283.x.

Dechow, P. M.; Schrand, C. M. (2004). Earnings quality. Charlottesville (Virginia): CFA Institute.

Dechow, P. M.; Sloan, R. G.; Zha, J. (2014). Stock prices and Earnings: A history of research. The annual review of financial economics, 6, 343-363. DOI: 10.1146/annurev-financial-110613-034522.

Ewert, R.; Wagenhofer, A. (2011). Earnings quality metrics and what they measure. Social Science Research Network. DOI: 10.2139/ssrn.1697042.

Francis, J.; Lafond, R.; Olsson, P. M.; Schipper, K. (2004). Costs of equity and earnings attributes. The Accounting Review, 79(4), 967-1010. DOI: 10.2308/accr.2004.79.4.967.

Hirshleifer, D.; Hou, K.; Teoh, S. H. (2009). Accruals, cash flows, and aggregate stock returns. Journal of Financial Economics, 91, 389-406. DOI: 10.1016/j.jfineco.2007.11.009.

Holthausen, R. W.; Watts, R. L. (2001). The relevance of the value-relevance literature for financial accounting standard setting. Journal of Accounting and Economics, 31, 3-75. DOI: 10.1016/S0165-4101(01)00029-5.

Houqe, M. N.; Kerr, R.; Monem, R. (2015). Business strategy, economic growth, and earnings quality. Social Science Research Network. Koenker, R.; Bassett, G. (1978). Regression Quantiles. Econometrica, 46, 33-50. DOI: 10.2307/1913643.

Koenker, R.; Bassett, G. (1978). Regression Quantiles. Econometrica, 46, 33-50. DOI: 10.2307/1913643

Kormendi, R.; Lipe, R. (1987). Earnings innovations, earnings persistence, and stock returns. Journal of Business, 60(3), 323-345.

Lambert, R. A. (2004). Discussion of analysts’ of non-recurring items in street earnings and loss function assumptions in rational expectations tests on financial analysts’ earnings forecasts. Journal of Accounting and Economics, 38, 205-222. DOI: 10.1016/j.jacceco.2004.11.001.

Martinez, A. L. (2008). Detectando Earnings management no Brasil: estimando os accruals discricionários. Revista de Contabilidade & Finanças, 19(46), 7-17.

Mostafa, W.; Dixon, R. (2013). The impact of earnings extremity on information content of cash flow. Review of Accounting and Finance, 12(1), 81-104. DOI: 10.1108/14757701311295845.

Nissim, D.; Penman, S. H.(2001). Ratio analysis and equity valuation: from research to practice. Review of Accounting Studies, 6, 109-154. DOI: 10.1023/A:1011338221623.

Ohlson, J. A.; Kim, S. (2015). Linear valuation without OLS: the Theil-Sen estimation approach. Review Accounting Studies, 20, 395-435. DOI: 10.1007/s11142-014-9300-0.

Paulo, E. (2007). Manipulação das informações contábeis: uma análise teórica e empírica sobre os modelos operacionais de detecção de gerenciamento de resultados. Tese de Doutorado, Universidade de São Paulo (USP), São Paulo, SP.

Wu, Y.; Liu, Y. (2009). Variable selection in quantile regression. Statistica Sinica, 19, 801-817.