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The Incremental Information Content Of Sales In Explaining Stock Returns: A Crossindustry Study

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  • Taewoo Park

Abstract

In this paper we examine the industry specific determinants of the information content of sales incremental to earnings in explaining stock returns. We find that across industries the information content of sales beyond earnings in explaining contemporaneous return is significantly associated with the timeliness of earnings and sales information to the market. We find evidence of income smoothing which can arise from firms’ accounting and operating decisions. The increase in 2 R due to sales in explaining returns varies widely across industries and is with and due to adding sales in addition to earnings with mean 57% after controlling for the effects of the timeliness of sales and earnings

Suggested Citation

  • Taewoo Park, 2017. "The Incremental Information Content Of Sales In Explaining Stock Returns: A Crossindustry Study," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 11(1), pages 49-63.
    • Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:49-63
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    More about this item

    Keywords

    Information Content; Stock Returns; Sales; Earnings;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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