Firm-Level Information Ambiguity and the Earnings Announcement Premium

2018 ◽  
Author(s):  
Mengxi (Maggie) Liu ◽  
Kam Fong Chan ◽  
Robert W. Faff
Keyword(s):  
Firm Level ◽  
Earnings Announcement ◽  
Level Information ◽  
Information Ambiguity

Wage-setting practices in the metalworking sector in Greece

2020 ◽  
Vol 42 (6) ◽  
pp. 1441-1463
Author(s):  
Daphne Nicolitsas
Keyword(s):  
Market Competition ◽  
Industrial Relations ◽  
Product Market ◽  
Structural Features ◽  
Collective Agreement ◽  
Wage Setting ◽  
Firm Level ◽  
Content Type ◽  
Level Information ◽  
And Performance

PurposeThe paper aims to link product market features in the Greek metal processing sector to the wage-setting practices followed therein.Design/methodology/approachAggregate business structural statistics are used to document the product market structure features while information from a rich sectoral collective agreement database, covering a number of sectors of the Greek economy, is used for the wage-setting practices. The approach is, in general, descriptive and discursive with the use of some regression analysis.FindingsThe main findings of the paper include: first, the metal sector as a whole is heterogeneous in terms of its structural/productive features; second, the type of collective agreements followed in the subsectors of the metal sector appear related to the structural features of the subsectors; third, negotiated wages appear binding for subsectors facing less product market competition; and finally, the ability to opt out of the sectoral agreement and sign firm-level agreements during the recent crisis in Greece was used mainly by firms suffering accounting losses.Research limitations/implicationsThe research results are limited by the absence of detailed firm-level information both on the actual wages paid and on the exact industrial relations practices in the workplace.Originality/valueIn view of the changes taking place in industrial relations in general and collective bargaining in particular, the issue of the homogeneity – in terms of structure and performance – of individual sectors, sets the question of whether one size (agreement) fits all and consequently whether extensions of agreements to whole sectors are advisable. This is the spirit in which the paper is written. The originality is linked both to the issue addressed but also to the use of the detailed collective labour agreements information and its association with product market features.

Investors' Misweighting of Firm‐Level Information and the Market's Expectations of Earnings

2020 ◽  
Vol 37 (3) ◽  
pp. 1828-1853 ◽  
Author(s):  
Sami Keskek ◽  
James N. Myers ◽  
Linda A. Myers
Keyword(s):  
Firm Level ◽  
Level Information

The Relevance of Information Technology Expenditures

2010 ◽  
Vol 24 (2) ◽  
pp. 39-77 ◽  
Author(s):  
B. Charlene Henderson ◽  
Kevin Kobelsky ◽  
Vernon J. Richardson ◽  
Rodney E. Smith
Keyword(s):  
Information Technology ◽  
Stock Price ◽  
Abnormal Returns ◽  
Firm Level ◽  
Policy Makers ◽  
Market Participants ◽  
Future Performance ◽  
Long Run ◽  
Level Information ◽  
Information Technology Expenditures

ABSTRACT: Although information technology (hereafter, IT) expenditures represent an increasingly large investment for most corporations, firms are not required to disclose them separately in their financial statements. We hypothesize and find evidence that information about a firm’s IT expenditures helps explain its future performance as reflected in both accounting measures (residual income, earnings volatility) and market measures (stock price and long-run abnormal returns). In particular, we provide evidence of market mispricing and suggest the lack of firm-level annual IT expenditure disclosure as one potential reason for such mispricing. Altogether, the evidence presents a persuasive case that information about a firm’s IT expenditures is useful to stock market participants. The evidence we report is useful to managers and accounting policy makers contemplating the public disclosure of firm-level information about IT investments.

scholarly journals The Ecological Rationality of Historical Costs and Conservatism

2019 ◽  
Vol 9 (1) ◽  
Author(s):  
Eduard Braun
Keyword(s):  
Private Information ◽  
Field Experiments ◽  
Balance Sheet ◽  
Financial Accounting ◽  
Ecological Rationality ◽  
Market Process ◽  
Firm Level ◽  
New Information ◽  
Distinct Event ◽  
Level Information

Abstract The principles characterizing the traditional revenue-expense approach to accounting cannot be traced back to a distinct event. I argue that they are ecologically rational. Their functionality is the result of cultural evolution, not of unitary human design. This is the reason why the efforts to defend them against the balance-sheet approach endorsed by standard-setters have encountered severe difficulties. Only the latter is clearly based on a coherent model of the economy, namely neoclassical economics. I further argue that a solid basis for explaining the rationale of the culturally evolved accounting principles can be found in behavioral economics. These principles are in line with human behavior as found in numerous laboratory and field experiments. It is especially with respect to Prospect Theory that a close parallel can be identified. I combine this observation with a market process view of the economy. Financial accounting according to the balance-sheet approach does not add new information to the market process; it only summarizes on the firm level information provided by the market. In contrast, the revenue-expense approach provides private information to the market à la Hayek (1945). The revenue-expense approach thus turns out to be congenial to the organization of the market economy.

Economic costs of firm‐level information infrastructure failures

2007 ◽  
Vol 18 (3) ◽  
pp. 420-442 ◽  
Author(s):  
Scott Dynes ◽  
M. Eric Johnson ◽  
Eva Andrijcic ◽  
Barry Horowitz
Keyword(s):  
Information Infrastructure ◽  
Economic Costs ◽  
Firm Level ◽  
Level Information

scholarly journals Cyclical Fluctuations, Financial Shocks, and the Entry of Fast-Growing Entrepreneurial Startups

2020 ◽  
Author(s):  
Christoph Albert ◽  
Andrea Caggese
Keyword(s):  
Financial Crises ◽  
Employment Growth ◽  
High Growth ◽  
Growth Potential ◽  
Financial Shocks ◽  
Firm Level ◽  
Cyclical Fluctuations ◽  
Ex Post ◽  
Level Information ◽  
High Growth Potential

Abstract We analyze a multiyear, multicountry entrepreneurship survey with more than one million observations to identify startups with low and high growth potential. We confirm the validity of these ex ante measures with ex post firm-level information on employment growth. We find that negative aggregate financial shocks reduce all startup types, but their effect is significantly stronger for startups with high growth potential, especially when GDP growth is low. Our results uncover a new composition of entry channel that significantly reduces employment growth and is potentially important for explaining slow recoveries after financial crises.

scholarly journals Markups, Market Imperfections, and Trade Openness: Evidence from Ghana

2019 ◽  
Author(s):  
Kaku Attah Damoah
Keyword(s):  
World Trade ◽  
Trade Openness ◽  
Manufacturing Firms ◽  
Market Imperfections ◽  
Real Wages ◽  
Firm Level ◽  
Wto Accession ◽  
Level Information ◽  
Monopsony Power ◽  
The Impact

AbstractThis article investigates the impact of Ghana’s World Trade Organization (WTO) accession on firm-level product and labor market imperfections. The article exploits a rich dataset of firm-level information to estimate markups and the degree of monopsony power enjoyed by manufacturing firms. The results indicate that price-cost margins declined while the degree of monopsony power increased in the wake of WTO accession. These diverging dynamics suggest that firms compress real wages to offset loss of market power in the product market due to increased international competition. This gives rise to an increase in the market imperfection gap, which gradually erodes the pro-competitive gains from trade. The article contributes to the literature by identifying channels through which allocative inefficiencies and misallocation can persist even after trade liberalization.

scholarly journals Climbing the Rungs of the Quality Ladder: FDI and Domestic Exporters in Romania

2020 ◽  
Vol 130 (628) ◽  
pp. 937-955
Author(s):  
Matej Bajgar ◽  
Beata Javorcik
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Multinational Enterprises ◽  
Positive Relationship ◽  
Host Countries ◽  
Firm Level ◽  
Level Information ◽  
Quality Ladder ◽  
Quality Of Products

Abstract This article argues that inflows of foreign direct investment can facilitate export upgrading in host countries. Using customs data merged with firm-level information for 2005–11, it shows a positive relationship between the quality of products exported by Romanian firms and the presence of multinational enterprises (MNEs) in the upstream (input-supplying) industries. Export quality is also positively related to MNE presence in the downstream (input-sourcing) industries and the same industry, but these relationships are less robust. These conclusions hold both when the product quality is proxied with unit values and when it is estimated following the approach of Khandelwal et al. (2013).

Privacy-preserving Information Sharing within an Audit Firm

2020 ◽  
Author(s):  
Alexander Kogan ◽  
Cheng Yin
Keyword(s):  
Privacy Preserving ◽  
Prediction Errors ◽  
Firm Level ◽  
Privacy Concerns ◽  
Audit Firm ◽  
Categorical Information ◽  
Accounting Numbers ◽  
Level Information ◽  
The Cost ◽  
Multiple Clients

This paper explores the possibility of sharing contemporaneous firm-level information within an audit firm in a privacy-preserving manner and demonstrates the benefits of doing this under the assumption that the same audit firm serves multiple clients competing in the same industry. We develop a number of sharing schemes for utilizing contemporaneous accounting information from peer companies without violating clients’ confidentiality. To satisfy different levels of privacy protection, we propose different sharing schemes by utilizing auditors’ self-generated expectations, and the results show that the benefits to auditors from only sharing self-generated estimation residuals (errors) are comparable to that from sharing predicted or actual accounting numbers. To satisfy stricter privacy concerns, we also propose a series of schemes based on sharing categorical information derived from prediction errors. Finally, we use Borda counts to analyze how the choice of the best model changes depending on the cost of errors.

Heterogeneous Investment Opportunities in Multiple-Segment Firms and the Incremental Value Relevance of Segment Accounting Data

2003 ◽  
Vol 78 (2) ◽  
pp. 397-428 ◽  
Author(s):  
Peter F. Chen ◽  
Guochang Zhang
Keyword(s):  
Value Creation ◽  
Value Relevance ◽  
Growth Potential ◽  
Capital Investments ◽  
Firm Level ◽  
Accounting Data ◽  
Incremental Value ◽  
Investment Opportunities ◽  
Level Information ◽  
Segment Data

Applying a real-options-based valuation approach, we develop and test a model that addresses the incremental value relevance of segment data beyond firmlevel accounting data. Prior studies (e.g., Zhang 2000; Biddle et al. 2001) show that equity valuation requires accounting data (in part) because accounting provides signals that guide capital investments underlying value creation. In this study, we establish that the usefulness of segment data beyond aggregate data relates to heterogeneity of investment opportunities across segments, caused by divergences of segment profitability and growth potential. Empirical results are consistent with the model's predictions. We also assess the magnitude of the valuation impact of segment information relative to that of firm-level information.

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