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A comparison of earnings persistence in high-tech and non-high-tech firms

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  • Sung Kwon
  • Jennifer Yin

Abstract

This paper examines systematic differences in earnings persistence between high-tech (HT) and non-high-tech (NHT) firms in the presence of economic- and accounting-driven factors. We document that (1) HT firms, relative to NHT firms, show lower levels of earnings persistence, even after economic and accounting factors identified in prior research are controlled; (2) the type of HT products (durables) increases earnings persistence; and (3) the association between earnings persistence and discretionary accruals is higher in HT firms, possibly because HT mangers use discretionary accruals to convey private information about future cash flows. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Sung Kwon & Jennifer Yin, 2015. "A comparison of earnings persistence in high-tech and non-high-tech firms," Review of Quantitative Finance and Accounting, Springer, vol. 44(4), pages 645-668, May.
    • Handle: RePEc:kap:rqfnac:v:44:y:2015:i:4:p:645-668
    DOI: 10.1007/s11156-013-0421-5
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    Cited by:

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    2. Khalifa, Mariem & Trabelsi, Samir & Matoussi, Hamadi, 2022. "Leverage, R&D expenditures, and accounting conservatism: Evidence from technology firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 285-304.
    3. Ahmed, Mohamed S. & Alhadab, Mohammad, 2020. "Momentum, asymmetric volatility and idiosyncratic risk-momentum relation: Does technology-sector matter?," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 355-371.
    4. Jan Alexander Fischer & Philipp Pohl & Dietmar Ratz, 2020. "A machine learning approach to univariate time series forecasting of quarterly earnings," Review of Quantitative Finance and Accounting, Springer, vol. 55(4), pages 1163-1179, November.
    5. Jiangming Ma & Di Gao, 2023. "The Impact of Sustainable Supply-Chain Partnership on Bank Loans: Evidence from Chinese-Listed Firms," Sustainability, MDPI, vol. 15(6), pages 1-25, March.
    6. Laura Arenas & Ana Maria Gil-Lafuente, 2021. "Regime Switching in High-Tech ETFs: Idiosyncratic Volatility and Return," Mathematics, MDPI, vol. 9(7), pages 1-25, March.

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    More about this item

    Keywords

    Earnings persistence; Earnings management; Conservatism; High-tech firms; M41; L70; G10;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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