Standard equity valuation approaches (i.e., DDM, RIM, and DCF) are derivedunder the assumption of ideal conditions, such as infinite payoffs and cleansurplus accounting. Since these conditions are hardly ever met, we provideextensions of the standard approaches based on the fundamental principle...

We interpret cost stickiness, i.e., the manager’s decision to bear the costs of unutilized resources whensales decline, as a risky project and examine its impact on conditional conservatism. We find that coststickiness increases the asymmetric timeliness of earnings by weakening the timeliness...

We provide evidence that conditional conservatism could be better captured in linearinformation models (LIMs), which largely rely on analysts’ forecasts, if analysts wouldadjust their optimistic forecast for the asymmetric timeliness of earnings. Sinceadjusting the forecast requires...

Recent research concerned with enhancing conservatism corrections of linearinformation models (LIMs) reports a decrease in bias as compared to the Ohlson (1995)model. However, inaccuracy is not significantly reduced. These findings raise twoquestions: First, are LIMs able to capture...