• The Journal of Asian Finance, Economics and Business
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• v.7 no.3
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• pp.73-85
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• 2020

The study aims to provide better understanding of sustainable earnings by a comprehensive analysis of earnings persistence of business firms in Vietnam as an example of developing economies in South-East Asia. Dataset of 1,278 publicly listed firms (excluding banking and financial services firms) on Vietnam Stock Exchange for the period from 2008 to 2017 was collected. By applying fixed effect regression model, the empirical results provided the basis to measure the persistence index (Pers index) and find low level of their earnings persistence. The literature of earnings quality analysis in developed countries suggests earnings persistence as a noteworthy determinant of future earnings forecast and stock valuation. However, research of sustainable earnings in developing countries is still highly underdeveloped. For Vietnamese listed firms, the average Pers index was estimated for the period from 2008 to 2010, indicating low level of earnings persistence. We also incorporated earnings persistence level into future earnings forecast by running the quintile regression model divided the data into four equal levels and conducted each section independently to see the difference in each percentile, thence assessed the factors' influence on the specific model. The findings provide important information on the expected returns of firms, especially helping investors make sound decisions.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.8
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• pp.647-658
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• 2021

Analysts' forecasts are important for providing useful guidance to investors, especially individual or small investors, and therefore it becomes critical to identify the elements which can potentially increase errors in analysts' forecasts. This study investigates potential factors which can lead to errors in forecasting by analysts, specifically in terms of the level and attributes of corporate earnings. Utilizing a sample of firms listed on the Korean stock markets, this study provides evidence that firms with more volatile and unpredictable earnings feature less accurate analyst forecasts. This study fills a void in the literature by conducting empirical tests for earnings attributes in terms of volatility and unpredictability that could potentially undermine the forecast accuracy. The negative association between the quality of earnings and forecast accuracy is more pronounced for firms with negative net income values. Additional analysis demonstrates that forecast accuracy is significantly lower for the fourth quarter than for other fiscal quarters and that fourth quarter earnings tend to be more volatile and unpredictable. This study contributes to the literature by providing new empirical evidence regarding the comprehensive effects of earnings quality and level on analysts' forecasting accuracy and further suggests potential factors contributing to the fourth quarter anomaly in analyst forecasts in terms of earnings attributes.

• Asia-Pacific Journal of Business
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• v.13 no.3
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• pp.93-118
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• 2022

Purpose - Export marketers may have incentives to attempt real earnings management to avoid low reported earnings. Therefore, we attempted to verify the relationship between cost stickiness and real earnings management in the context of export marketing. Design/methodology/approach - Data were collected from exporters that settle-accounts in December excluding financial businesses listed on the stock market from 2015 to 2019. Multiple regression analysis were employed to analyze the data. Findings - The results showed that there is a negative relationship between cost stickiness and real earnings management. In addition, the results showed that export marketers little attempt to offset the cost inefficiency caused by the increase in expense because of cost stickiness with opportunistic management activities through real earnings management. Rather, as the level of real earnings management appears lower, exporters showing cost stickiness are expected to report management performance based on actual marketing. Furthermore, exporters with a high level of managerial centrality or high managerial overconfidence little attempt to offset cost inefficiency caused by cost stickiness with real earnings management activities. Research implications or Originality - Our study is the first to investigate the quality of earnings information of exporters with cost stickiness. Based on the results, we suggested efficient marketing strategies for exporters.

• Korean Business Review
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• v.20 no.2
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• pp.1-13
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• 2007

The purpose of this study is to investigate a simple present value model Involving earnings (i.e., the earnings discount model) that presumes a relationship between stock prices and earnings. The model suggests a simple linear equilibrium relationship between stock prices and earnings. The tests for cointegration render strong support for the cointegration hypothesis between stock prices (Pt) and earnings (Xt) even at the one-percent significance level. The tests are based on residuals from a cointegrating regression of Pt on Pt+l + Xt. This suggests that there is a stable long-nu equilibrium relationship between stock prices and earnings. The results of the tests lead to the acceptance of the present value model of stock prices involving earnings.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.11
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• pp.33-43
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• 2020

This study aims to investigate the importance of earnings quality as a determinant of companies' performance. It provides some empirical evidences from an emerging market, specifically from the Jordanian market. This study developed an econometric model for the effect of earnings quality on the companies' performance using empirical evidence. The study employs a panel data analysis method by using a sample of all Jordanian industrial public shareholding companies listed on Amman Stock Exchange (ASE) during 2010-2018. The results reveal that Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS) as proxies of company's performance are affected by the earnings quality. This provides the importance of positive earnings quality that eventually influences the companies' performance. The results of this study suggest that the higher control level on the managers' behavior and its outcome will have an effect on earnings quality, and thus the company's performance increases. As well as, high relevance of accounting information will improve earnings quality, and thus earnings quality with the interaction factors of the company's environment work on improving performance. As a conclusion, this study can work as a reference to assist standard setters, security analysts, regulators and other accounting-information users in appraising relation between the earnings quality and companies' performance.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.4
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• pp.21-28
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• 2020

The objectives of this study are threefold: 1) to identify the concepts of earnings, stock return and liquidity risks on public shareholding industrial companies listed in the Amman Stock Exchange, 2) to investigate the relationship between earnings, stock return, strength and direction of this relationship, and 3) to find out the effect of liquidity risks at stock return and the effect of liquidity risks on the relationship between earnings and stock return on Jordanian public shareholding industrial companies. To achieve the objectives, an analytical descriptive approach was used. As the data on the public shareholding industrial companies listed in the Amman Stock Exchange were accredited by 52 companies for the period between 2014-2019, data validation tests and their suitability for analysis were considered. A linear regression test was used to test the study hypotheses on the statistical analysis program. The results show that there is a positive and significant correlation at significance level between the earnings and stock return. The results of the study also showed that there is a statistically significant negative effect at significance level of liquidity risk on stock return. In addition, it was demonstrated that liquidity risks have significant negative effects on the relationship between earnings and stock returns.

• The Journal of Industrial Distribution & Business
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• v.6 no.4
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• pp.23-26
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• 2015

Purpose - To mislead shareholders about a firm's actual economic performance, managers frequently manage dividends. Earnings management also affects performance reviews. Managers attempt to manage reported earnings caused by current economic events to accurately reflect their current performance. Research design, data, and methodology - The sample consisted of 312 company-years from companies in the pharmaceutical distribution industry listed on the Tehran Stock Exchange. A study period from 2004 to 2014 was selected. In this study, a model for measuring the performance of the net profits to total assets of a division of Jones was used to measure earnings management. Results - This study found a negative correlation between corporate performance and earnings management. Conclusions - The results for the earnings management company indicated a significant inverse relationship. Therefore, the company's performance weakened as its earnings management activity increased. In other words, the results showed that the company's performance-based accruals earnings management, the actual management of profits, and the general level of earnings management had significant inverse relationships. Thus, as the company's profits declined, earnings management activity increased.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.4
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• pp.39-52
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• 2022

This study examines whether accounting conservatism can support real earnings management by reducing accrual earnings management techniques. The net impact of conservative reporting on earnings management is also analyzed. It is assumed that moderating the role of conservative financial reporting during uncertainty can mitigate earnings management practices. For our analysis, 5354 firm-year observations for the period 2007-2020 of nonfinancial companies listed on the Pakistan Stock Exchange are applied. To measure conservatism in the non-financial sector of Pakistan, Khan and Watts' (2009) model is used to provide evidence that conservatism is a way to restrict earnings management during uncertainty. "Prospector" and "Defender" Business strategy is applied for measuring firm-level uncertainty. To measure accrual earnings management Modified Jones (1995) model and Dechow and Dichev (2002) approach and Kasznik (1999) model are applied, and for real earnings management Roychowdhury model is applied which follows three approaches to measure real earnings management i.e. cash flow manipulation, Overproduction, and discretionary expenses. The estimations support our hypothesis by providing statistically significant proof that conservative financial reporting in a developing economy like Pakistan may be used to overcome the net impact of earnings management during uncertainty. Our results provide critical and practical implications for investors, researchers, and standard setters.

• Journal of Digital Convergence
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• v.19 no.2
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• pp.51-60
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• 2021

In this study, Based on the analysis of the correlation between internal control quality and earnings management, this article discusses the correlation between internal control quality and real activity earnings management and accrued earnings management. For this study, by introducing the concept, classification, measurement method and model of internal control and earnings management, the research hypothesis of this article was proposed. In this analysis, Use the relevant measurement model to calculate the actual activity earnings management level and accrued earnings management level of the enterprise, as the explained variable, establish a model for regression and were analyzed. Also, this study could find the final results draws a conclusion through empirical research: there is a significant negative correlation between the internal control quality of listed companies, real activity earnings management, and accrued earnings management. On the basis of this conclusion, the analysis of possible causes provides a basis for the development of internal control theory and the supervision and control of earnings management behavior in the future.

• Journal of Distribution Science
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• v.17 no.9
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• pp.103-115
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• 2019

Purpose - We attempted to verify the level of ethics of firms achieving sustainable management from the aspect of reliability of accounting information. Specifically, we evaluated the effects of sustainable management on accruals-based earning management (AEM) and real earning management (REM). Research design, data, and methodology - We employed the issuance of sustainability reports in addition to the indices of social responsibility and environmental-management evaluation of the Korea Corporate Governance Service in order to measure sustainability management. AEM was measured using discretionary accruals and calculated using the operant Jones model. Specifically, REM was measured using the methodology suggested by prior studies. The sample of our study consisted of 1,418 years of public listed firms in the Korea Stock Exchange from 2015 to 2017. Results - First, the level of AEM in firms achieving sustainable management was lower than the other. Second, the level of REM in these firms was lower than the other. Nonetheless, another analysis showed that the level of governance control affects the level of earning management and that the levels of AEM and REM were generally lower in firms achieving sustainable management than the others. Conclusions - We expected that firms achieving external ethics tend to have a higher level of internal ethics than others.