Does Income Statement Placement Matter to Investors? The Case of Gains/Losses from Early Debt Extinguishment

• 成果类型: Article
• 署名作者: Bartov, Eli; Mohanram, Partha S.
• 署名单位: New York University; University of Toronto
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50839
• 发表日期: 2014
• 页码: 2021-2055
• 关键词: VALUE-RELEVANCE; information-content; earnings; RECOGNITION; disclosure; CLASSIFICATION; performance; valuation

摘要

Does the placement of a line item in the income statement matter to investors? The passage of Statement of Financial Accounting Standards (SFAS) No. 145 (Financial Accounting Standards Board [FASB] 2002) affords a quasi-experimental setting to answer this question, because pre-SFAS No. 145, gains/losses from early debt extinguishments were reported below the line, while post-SFAS No. 145, they were reported above the line. After controlling for other identified changes that occur during our sample period, we find that, pre-SFAS No. 145, the market does not respond to these gains/losses, whereas post-SFAS No. 145, it does. This suggests that the market response to gains/losses is associated with their placement in the income statement. Our findings contribute to the literature on the importance of income statement presentation by demonstrating that a line-item position in the income statement has important valuation implications.