This study discovers the relation between corporate governance factors and earnings quality and finds that increases in dividends and foreign ownership deter earnings management. The author shows that dividend increases and foreign ownership enhance earnings quality, but they appear to be...

We study the behavior of a firm that consistently maximizes a misspecified profit function. We provide an equilibrium concept where the misspecification error remains undetected. We examine the uniqueness and stability of the equilibria. The model of the price-taking firm belongs to this class....

In this paper we present estimates of the world profit rate using country-level data from the Extended Penn World Table 7.0 and industry-level data from the World Input Output Database. The country-aggregated world profit rate series spans the period from 1960 to 2019, and the...

This paper examined the association between various measures of earnings quality and stock return volatility of Johannesburg Stock Exchange (JSE)-listed companies for 10 years from 2009 to 2018. The measures of earnings quality considered were accrual quality, conservatism, earnings persistence,...

The paper’s prime objective is to understand the impact of Shareholder activism on firm performance. This study is conducted in a unique setup where traditional activist investors such as pension funds and hedge funds are not present. However, the activism cases are increasing yearly in an...

This paper studies nonparametric identification and counterfactual bounds for heterogeneous firms that can be ranked in terms of productivity. Our approach works when quantities and prices are latent, rendering standard approaches inapplicable. Instead, we require observation of profits or other...

The COVID-19 pandemic has affected most companies' profits negatively, but other companies did exceptionally well, recording excess profits during the pandemic. In this paper we estimate the scale of these excess profits, their determinants, and the revenue potential of excess profits tax. To...

Can cost-reducing, technical change lead to a fall in the long run rate of profit if class struggle manages to keep the rate of exploitation constant? In this paper we demonstrate, in a general circulating capital model, that if (a) the technical change is capital-using labor-saving (CU-LS), (b)...

Managers are often employed many alternatives for earnings management following their objectives or the financial reporting objectives; the commonly used are the accrual-based and cash-based earnings management. The literature reveals that managers adopt the two strategies in different ways,...

We exploit a recent Swedish tax reform, implying higher marginal tax rates for the top 5% of the earnings distribution, to learn about earnings responses in an economy where taxes already are high. Using a simple and graphical cross sectional method, we estimate earnings elasticities in the...

We contribute to the study of the conceptualization and measurement of the rate of profit of the financial and nonfinancial sectors. We assemble a new data set for the US economy to construct measures of the profit rate for each sector: the return on equity, the return on assets, and the...

This paper analyses the stochastic behaviour of Private Equity returns (a measure of profitability) applying fractional integration methods to an extensive dataset including quarterly data spanning the last four decades for various geographical areas (US, Europe, Asia/Pacific, the Rest of the...

We selectively review recent advancements in research on predictive models of earnings and returns. We discuss why applying statistical, econometric, and machine learning advancements to forecasting earnings and returns presents difficult challenges. In the context of these challenges, we...

Management earnings forecasts (MEFs) may reduce information risk by corroborating the inferences that lenders draw from their private communication with borrowers. Consistent with this idea, we find that among firms with a general policy of issuing MEFs, those providing MEFs in the six months...

This study used descriptive statistics, budgetary analysis, and stochastic profit function to analyze data collected from 120 catfish fingerlings producers in Edo State, Nigeria to examine the profitability and profit efficiency of their production. Results from the study show that catfish...

The main objective of this paper is to study empirically the performance indicators of Tunisian banks during the period from 1999 to 2020. We use Net Interest Margin (NIM) and the Return on Assets (ROA) as profitability measures to determine the effect of bank-specific characteristics,...

We document the prevalence of public companies with negative net earnings since the 1970s. The fraction of firms with negative net income has increased sharply from 18% in 1970 to 54% in 2019. Such an increase is mainly driven by the right shifts in the mean, i.e., the increasing popularity of...

This study generates out-of-sample predictions from training data to construct investment portfolios that are mean-variance optimized and rebalanced daily to assess gains from incorporating signals based on post-earnings announcement drift (PEAD), the earnings announcement premium (EAP), and...

Designated market makers (DMMs) are contractually obligated to increase liquidity provision when trading volume breaches a floor. Using this feature in a regression discontinuity design, we show that increased DMM participation facilitates price informativeness with respect to earnings news....

Purpose – The purpose of this study is to investigate whether the earnings surprise influences decision to make earnings announcements during or after the trading hours is influenced by the earnings surprise resulting from the difference between consensus earnings estimates and the actual...

We find that CEOs issue significantly more favorable management earnings forecasts (MEFs), relative to the prevailing analyst consensus, to boost stock prices when approaching performance evaluation end dates. The effect is more pronounced for firms with lower past stock returns and when award...

This study quantifies firm-specific operating exposure to cumulative unexpected weather variations and examines how it affects earnings predictability and analysts’ forecasts. Two competing hypotheses are tested. The reduction in earnings seasonality hypothesis posits that operating weather...

By tracking the cumulative inventory position of all passive liquidity providers in the US equity market and matching each position with its offsetting trade, we construct a measure of profits to liquidity provision (realized profitability) and assess how profitability varies with the average...

This study examines whether sentiment indices predict individual firms’ stock returns and evaluates the performances of sentiment-based trading strategies. Both the sentiment indices constructed using the principal component analysis (PCA) and overnight stock returns positively predict stock...

We selectively review recent advancements in research on predictive models of earnings and returns. We discuss why applying statistical, econometric, and machine learning advancements to forecasting earnings and returns presents difficult challenges. In the context of these challenges, we...

The study investigates the determinants of state banks’ in comparison with joint stock commercial private banks’ profitability in Uzbekistan during the period 2010-2016; to the study selected 3 state, 11 joint stock and 7 private banks in Uzbekistan as a case study. The purpose was to determine...

We investigate the relationship between profitability and financial leverage for US listed non-financial corporations by taking into account the degree of product similarity among competing firms, which can drive intense pricing rivalry thus undermining the sustainability of high price-cost...

One of the earnings managements is classification shifting. Besides extraordinary and exclusive items, the companies can discontinue their operations as the classification shifting form. This research intends to prove and analyze the influence of discontinued operations and institutional...

We study the design of online platforms that aggregate information and facilitate transactions. Two different designs can be observed in the market: revealing platforms that disclose the identity of transaction partners (e.g. Booking) and anonymous platforms that do not (e.g. Hotwire). To...

This article outlines the traditional justifications for a residual profits business tax base and evaluates its role in the OECD/G20 Pillar One proposal to allocate income to market countries. The article concludes that basing the allocation of profits to market countries on multinationals’...

This paper examines the real effects of weather on firm performance, using temperature as our proxy for weather. The relation between temperature and performance depends on season, industry, geographic location, and is often firm-specific. Therefore, to test this relation we adapt a measure of...

We find that a firm is more likely to engage in acquisitions when its private information, measured by changes in purchase obligations, predicts that future profitability will fall and thus that its shares are overvalued in the current stock market. Overvalued acquirers are as likely to pay with...

Prior to investing in a firm, fund managers must evaluate it. This tilts funds’ future portfolio positions toward former portfolio investments, as the past awareness of the firm decreases the cost of evaluating it in the future. We find that firms with many former investors experience...

This study examines the relation between penalties for non-financial regulatory violations and earnings restatements. Financial and non-financial corporate misconduct have been shown to be associated with one another through channels such as shared internal controls and corporate culture. Using...

Motivated by the structural shift in the relation between inflation and the output gap, we investigate whether the information content of aggregate earnings for inflation and economic growth changes over time. We find that during 1970–2001, aggregate earnings are positively associated with...

We study the implications of incarceration for the earnings and employment of different groups, characterized by their race, gender, and education. Our hidden Markov model distinguishes between first-time and repeat incarceration, along with other persistent and transitory nonemployment and...

Diversified farming systems have been promoted as a pathway to more sustainable agricultural production. Yet widescale adoption is slow partly due to doubts about the viability of farmer livelihoods on diversified farms and entrenched perceptions that monocultures are key to making farming...

The cointegrated-based pair trading crucially depends on two key parameters: the length of the formation period and the divergence signal (or opening trigger), which are generally arbitrarily or statistically determined in the literature. In this article, we perform a sensitivity analysis of the...

Using a unique data-set on earnings-related Twitter activity from 2015 to 2019, for the S&P 500 firms, I analyze firms’ choices on providing information content via tweets, more specifically quantitative versus qualitative information. I find that firms are less likely to disclose quantitative...

Globally the banking sector is considered one of the most important and sensitive sectors of the economy. The banking sector makes a direct impact on an economy which can be seen reflected in the volume and quality of economic activities. On the contrary, the kind of financial services provided...

This paper uses a direct measure of efficiency to examine the relationship between market structure and the performance of brokerage houses in Turkey. This methodology involves two stages: First, a stochastic translog cost frontier is specified to obtain a direct measure of efficiency. Second,...

Have Euro Area banks restored viability in the post-crisis era? We investigate profitability convergence for Euro Area banks over the period 2009-2020 using the concepts of beta and sigma convergence and a club clustering algorithm. Our evidence is consistent with a slow catch up of the weaker...

We examine whether analysts’ engagement in earnings conference calls curbs real activities earnings management. We find that analysts are more likely to ask questions on discretionary expenses at conference calls of firms that are suspects of lowering discretionary expenses to meet or narrowly...