IDEAS home Printed from https://ideas.repec.org/p/tky/jseres/2007cj187.html
   My bibliography  Save this paper

"Value Relevance of Earnings Changes and Levels"(in Japanese)

Author

Listed:
  • Takashi Obinata

    (Faculty of Economics, University of Tokyo)

Abstract

The purpose of this paper is to investigate the value relevance of current year earnings with condition of previous year earnings. First, since negative changes in earnings may contain more transitory elements, the capitalization coefficient on earnings decrease is smaller. However, that asymmetry of coefficients is determined not only by the direction of earnings changes, but also by environmental conditions. The asymmetric effects are not observed in some industry sectors and periods. Second, we cannot detect the sufficient evidence supporting the hypothesis that current earnings would contain more transitory elements as the size of changes in earnings becomes larger, i.e. S shaped response hypothesis. On the contrary, the large size increase in earnings is more persistent than the smaller. In some industry sectors and periods, we find the evidence supporting the capitalization coefficient of earnings levels with larger positive changes is larger than the smaller, i.e. J shaped relationship between earnings and firm value. Third, the value relevance of earnings changes and levels differs among the sign of the previous year earnings. This effect of previous year earnings also depends on the environmental conditions of industries and years.

Suggested Citation

  • Takashi Obinata, 2007. ""Value Relevance of Earnings Changes and Levels"(in Japanese)," CIRJE J-Series CIRJE-J-187, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:jseres:2007cj187
    as

    Download full text from publisher

    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2007/2007cj187.pdf
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tky:jseres:2007cj187. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CIRJE administrative office (email available below). General contact details of provider: https://edirc.repec.org/data/ritokjp.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.