Advanced Search
MyIDEAS: Login

Delayed price response to the announcements of earnings and its components in Finland

Contents:

Author Info

  • G. Geoffrey Booth
  • Juha-Pekka Kallunki
  • Teppo Martikainen
Registered author(s):

    Abstract

    Several studies report that even after accounting earnings are announced, estimated cumulative unexpected returns continue to drift up for firms that report unexpectedly good earnings and down for firms that report unexpectedly bad earnings. This paper shows that because Finnish companies tend to pay more attention to tax considerations than so-called economic reality when preparing their financial reports, this drift does not exist for reported earnings, i.e. net profit based on Finnish accounting regulations. It appears, however, that several other income levels assessed by financial statement analysis are important in this respect. The results imply that firms that make extensive adjustments for tax purposes have high unexpected returns. This is explained by the fact that those firms have enough income to extensively exploit the depreciation and other earnings management possibilities.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.tandfonline.com/doi/abs/10.1080/713764729
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal European Accounting Review.

    Volume (Year): 6 (1998)
    Issue (Month): 3 ()
    Pages: 377-392

    as in new window
    Handle: RePEc:taf:euract:v:6:y:1998:i:3:p:377-392

    Contact details of provider:
    Web page: http://www.tandfonline.com/REAR20

    Order Information:
    Web: http://www.tandfonline.com/pricing/journal/REAR20

    Related research

    Keywords:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Koutmos, Gregory & Booth, G Geoffrey, 1995. "Asymmetric volatility transmission in international stock markets," Journal of International Money and Finance, Elsevier, vol. 14(6), pages 747-762, December.
    2. Ou, Jane A. & Penman, Stephen H., 1989. "Financial statement analysis and the prediction of stock returns," Journal of Accounting and Economics, Elsevier, vol. 11(4), pages 295-329, November.
    3. Bernard, Victor L. & Thomas, Jacob K., 1990. "Evidence that stock prices do not fully reflect the implications of current earnings for future earnings," Journal of Accounting and Economics, Elsevier, vol. 13(4), pages 305-340, December.
    4. Collins, Daniel W. & Kothari, S. P., 1989. "An analysis of intertemporal and cross-sectional determinants of earnings response coefficients," Journal of Accounting and Economics, Elsevier, vol. 11(2-3), pages 143-181, July.
    5. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    6. Berglund, Tom & Liljeblom, Eva & Loflund, Anders, 1989. "Estimating betas on daily data for a small stock market," Journal of Banking & Finance, Elsevier, vol. 13(1), pages 41-64, March.
    7. Maynes, Elizabeth & Rumsey, John, 1993. "Conducting event studies with thinly traded stocks," Journal of Banking & Finance, Elsevier, vol. 17(1), pages 145-157, February.
    8. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    9. Teppo Martikainen & Juha-Pekka Kallunki & Jukka Perttunen, 1997. "Finnish earnings response coefficients: the information content of losses," European Accounting Review, Taylor & Francis Journals, vol. 6(1), pages 69-81.
    10. Boehmer, Ekkehart & Masumeci, Jim & Poulsen, Annette B., 1991. "Event-study methodology under conditions of event-induced variance," Journal of Financial Economics, Elsevier, vol. 30(2), pages 253-272, December.
    11. Ball, Ray, 1992. "The earnings-price anomaly," Journal of Accounting and Economics, Elsevier, vol. 15(2-3), pages 319-345, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:taf:euract:v:6:y:1998:i:3:p:377-392. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.