Industry Effects in Firm and Segment Profitability Forecasting

• 成果类型: Article
• 署名作者: Schroeder, David; Yim, Andrew
• 署名单位: University of London; Birkbeck University London; City St Georges, University of London
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12361
• 发表日期: 2018
• 页码: 2106-2130
• 关键词: sfas no. 131; INFORMATION; return

摘要

Academics and practitioners have long recognized the importance of a firm's industry membership in explaining its financial performance. Yet, contrary to conventional wisdom, recent research shows that industry-specific profitability forecasting models are not better than economy-wide models. The objective of this paper is to further explore this result and to provide insights into when and why industry-specific profitability forecasting models are useful. We show that industry-specific forecasts are significantly more accurate in predicting profitability for single-segment firms and, to some extent, for business segments. For multiple-segment firms, the aggregation of segment-level data for external reporting of firm-level financials obliterates the industry effects of their segments.