The conservatism principle and the asymmetric timeliness of earnings

• 成果类型: Article
• 署名作者: Basu, S
• 署名单位: City University of New York (CUNY) System; Baruch College (CUNY)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/S0165-4101(97)00014-1
• 发表日期: 1997
• 关键词: SECURITY RETURNS; response coefficients; ACCOUNTING EARNINGS; FUTURE EARNINGS; cash flow; INFORMATION; association; disclosure; accruals; POLICY

摘要

I interpret conservatism as resulting in earnings reflecting 'bad news' more quickly than 'good news'. This interpretation implies systematic differences between bad news and good news periods in the timeliness and persistence of earnings. Using firms' stock returns to measure news, the contemporaneous sensitivity of earnings to negative returns is two to six times that of earnings to positive returns. I also predict and find that negative earnings changes are less persistent than positive earnings changes. Earnings response coefficients (ERCs) are higher for positive earnings changes than for negative earnings changes, consistent with this asymmetric persistence. (C) 1997 Elsevier Science B.V. All rights reserved.