FRS3 and analysts' use of earnings

Article Abstract:

A behavioural methodology can be used to identify evidence to support the findings of market-based research with regard to the market's efficient response to earnings news, the enhanced explanatory power in share price models of permanent, rather than transient, earnings and the market expectations role of analysts' earnings predictions. It was established that analysts regard the announcement of earnings as significant and that they use the elements of the reporting standard FRS3 in identifying a measure of normalized earnings. The Accounting Standards Board clearly plays a significant role in determining the information set on which the market depends.

Influence, United Kingdom. Accounting Standards Committee

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Post-earnings-announcement drift: some preliminary evidence for the UK

Article Abstract:

Research on post-earnings-announcement drift (PAD) using data from the London Stock Exchange has found evidence of drift among smaller companies, but not larger firms. There is a need for further research on smaller companies and this research is constrained by data limitations. PAD does not appear to be significant for the biggest one third of firms in the UK. This is in contrast to research on US companies and a comparison betwen large firms in the US and the UK would be useful.

Securities and Commodity Exchanges, Security and commodity exchanges, Securities Exchanges, United Kingdom, Stock-exchange, Stock exchanges, Exchanges, Small business, Corporations, Securities

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FRS3 earnings, headline earnings, and accounting-based valuation models

Article Abstract:

Research into measures of book values of shares and earnings per share for UK companies is presented, with focus on the explanatory value of using methods derived from Financial Reporting Standard No. 3, and headline earnings.

Research, Measurement, Valuation, Earnings per share

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