The relationship between economic characteristics and alternative annual earnings persistence measures

Article Abstract:

The literature on accounting research has not adequately examined the empirical relationship between economic characteristics and time-series earnings persistence measures. Most studies typically rely on simple, lower-order, time-series models to generate proxies for earnings persistence that are not relevant to the economic environment characteristics of the firm that can affect earnings persistence. To address this shortcoming, an analysis focused on the link between economic characteristics and alternative annual earnings persistence measures using data on a sample of 162 calendar year-end firms listed on the New York Stock Exchange. The results verify the associations between different firm-specific, economic characteristics and earnings persistence measures obtained from lower-order and higher-order Autoregressive, Integrated, Moving-Average models.

Economic indicators, Earnings per share, Time-series analysis, Time series analysis

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Time-series properties and predictive ability of funds flow variables

Article Abstract:

Prediction of cash flow and working capital is modeled using a time-series or univariate approach. The performance of univariate models against that of traditional multivariate cross-sectional models of funds flow variables is analyzed. The results show that an Autoregressive Integrated Moving Average (ARIMA) model more accurately describes cash flow movements than previous multivariate models used in documenting quarterly earnings data. Similarly, working capital from operations may best be modeled using an ARIMA specification not unlike those that account for net income. The techniques developed in forecasting such funds flow variables have important applications in managerial decision making.

Decision-making, Decision making, Management, Forecasts and trends, Statistics, Financial statements, Cash flow, Working capital

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Firm size and the predictive ability of quarterly earnings data

Article Abstract:

Small, medium and large firms were analyzed for their inter-firm differences in the predictive ability of quarterly earnings data. Nonseasonal, volatile growth and inconsistent strata membership companies were not included in the sample of 109 New York Stock Exchange companies. Medium-sized and large-sized firms produced more accurate one-step-ahead forecasts than did small firms. The same results were found for separate research on the nonseasonal growth, volatile growth and inconsistent strata membership companies.

Analysis, Finance, Accounting, Management research, Corporations, Corporate finance, Business forecasting

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