مقاله انگلیسی رایگان در مورد تعیین کننده های اقتصادی اطلاعاتی درباره درآمد آینده – الزویر 2018

This study investigates whether and how the value-creation process affects the extent to which current stock prices incorporate value-relevant information about future earnings. Prior studies document that stock prices lead accounting income in reflecting the change of firm value (e.g., Beaver et al., 1980; Kothari and Sloan, 1992; Warfield and Wild, 1992). A series of subsequent studies explore firm characteristics that explain the price informativeness about future earnings.1 They document that current stock returns incorporate more information about future earnings when firms provide higher quality disclosures (e.g., Lundholm and Myers, 2002; Gelb and Zarowin, 2002; Ettredge et al., 2005; Choi et al., 2011; Park, 2011) and they have better information environments (e.g., Jiambalvo et al., 2002; Ayers and Freeman, 2003; Piotroski and Roulstone, 2004). In contrast to the previous studies focusing on the value-reporting process, this study examines product market power and long-term investment in the value-creation process as economic determinants of the price informativeness about future earnings.2 This study is motivated by several influential academic studies. First, the informativeness of current returns about future earnings explains a significant portion of the return-earnings association. For instance, Collins et al. (1994) show that the inclusion of future earnings into the regression of current returns on contemporaneous earnings increases the explanatory power of the regression model by three to six times. In addition, the price informativeness about future earnings increases over time and becomes more important in understanding equity price formation (Ryan and Zarowin, 2003; Lev and Zarowin, 1999). Second, the price informativeness about future earnings captures the time lag between stock prices and accounting income in reflecting information about future cash flows. The recognition principle enhances the reliability of financial reporting by requiring the compliance of formal recognition conditions but inadvertently lengthens the time lag of accounting earnings in mirroring the change of equity value (Warfield and Wild, 1992; Collins et al., 1994). Thus, investors are likely to use forward-looking information about future cash flows after weighing the trade-off between timeliness and reliability of the information, and the price informativeness about future earnings reveals the trade-off. Third, prior studies have documented little about firm-level economic fundamentals that may influence the time lag between stock prices and accounting income and, in turn, the investors’ capitalization of anticipated future earnings into equity prices. Firm fundamentals that determine the uncertainty about the realization of expected future cash flows can account for a significant portion of the association between current returns and future earnings even before managers exercise discretion over financial reporting and voluntary disclosures. This study, therefore, focuses on product market power and long-term investment in the value-creation process as two fundamental economic determinants in explaining the informativeness of stock prices about future earnings.