Since 2014
LACK OF TIMELINESS AS AN EXPLANATION OF THE LOW CONTEMPORANEOUS RETURNS-EARNINGS ASSOCIATION
Journal of Business and Finance
View Archive Info| Field | Value | |
| Title |
LACK OF TIMELINESS AS AN EXPLANATION OF THE LOW CONTEMPORANEOUS RETURNS-EARNINGS ASSOCIATION
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| Creator |
Trabelsi, Jaouida E.
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| Subject |
Value-relevance, Accounting earnings, Lack of timeliness
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| Description |
This paper empirically tests whether the low contemporaneous returns-earnings association set by previous empirical researches may be explained by lack of timeliness of accounting numbers. It hypothesises that if the criteria for accounting recognition yield a multi-period lag in earnings recognitions of economic events and if these events affect an informed market immediately when they occur, then future periods’ earnings would have explanatory for current returns as well as current earnings. To assess the significance of future earnings as an explanatory variable for stock returns we regress at first step annual returns on current earnings and at second step, annual returns on current earnings and successively next period and next two periods’ earnings. Results show that future earnings continue to explain current returns. The evidence is characteristic of a substantial recognition lag in earnings that extends to the immediate next period. However, over one year, earnings do not seem reflecting any relevant economic event impounded in security prices at previous period. The earnings recognition lag seems to decrease after one year.
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| Publisher |
Journal of Business and Finance
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| Contributor |
—
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| Date |
2013-12-25
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion — |
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| Format |
application/pdf
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| Identifier |
http://www.escijournals.net/index.php/JBF/article/view/323
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| Source |
Journal of Business and Finance; Vol 1, No 3 (2013): J. Bus. Financ.; 94-104
2305-1825 2308-7714 |
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| Language |
eng
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| Relation |
http://www.escijournals.net/index.php/JBF/article/view/323/232
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| Rights |
Copyright (c) 2014 Journal of Business and Finance
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