Negative Special Items and Future Earnings: Expense Transfer or Real Improvements?

• 成果类型: Article
• 署名作者: Cready, William M.; Lopez, Thomas J.; Sisneros, Craig A.
• 署名单位: University of Texas System; University of Texas Dallas; University of Alabama System; University of Alabama Tuscaloosa; University of Colorado System; University of Colorado Denver; Children's Hospital Colorado; University of Colorado Anschutz Medical Campus
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50152
• 发表日期: 2012
• 页码: 1165-1195
• 关键词: prices fully reflect; stock-prices; restructuring charges; Cash flows; management; persistence; INFORMATION

摘要

Burgstahler et al. (2002) investigate the implications of special items for future earnings and report that firms use negative special items to accelerate the recognition of future expenses into the current period. That is, negative special items serve as an inter-period transfer device. We extend their analysis and find that earnings increase in post-special item quarters beyond the four quarters considered in Burgstahler et al. (2002). In particular, we find that future earnings increase over the subsequent 16 quarters by more than 130 percent of the reported negative special item. The earnings increases are greater for restructuring charges than for asset write-downs or goodwill impairment charges. Such patterns suggest that negative special items also signal real future performance improvements (i.e., performance improvement hypothesis) in addition to inter-period expense transfer (i.e., inter-period transfer hypothesis). Moreover, the real improvement effect appears to be driven by restructuring charges, the most prevalent type of special item.