Following Basu (1997), the difference between the sensitivity of accounting earnings to negative equity return (a proxy for bad news) and its sensitivity to positive equity return (a proxy for good news) has been interpreted as an indicator of conditional accounting conservatism. However, some...

Following Basu (1997), the excess of the sensitivity of accounting earnings to contemporaneous negative share return over its sensitivity to contemporaneous positive share return (the earnings-sensitivity difference (ESD)) has been widely interpreted as an indicator of...

The paper extends previous research on earnings persistence by (i) studying earnings persistence and market responses pertaining to earnings inclusive and exclusive of extraordinary items (EI), and (ii) establishing the dominating influence exerted by the existence of EI. Using data related to...

Prior research using the residual income valuation model and linear information models has generally found that estimates of firm value are negatively biased. We argue that this could result from the way in which accounting conservatism effects are reflected in such models. We build on the...

It has been suggested that dirty surplus accounting (violation of the clean surplus relationship (CSR)) may result in mismeasurement of performance and value, and that cross-country variation in dirty surplus accounting may cause particular problems for international comparisons. Using...

Following Basu (1997), the difference between the sensitivity of accounting earnings to negative equity return (proxy for bad news) and its sensitivity to positive equity return (proxy for good news) is interpreted as an indicator of conditional accounting conservatism. However, there is concern...