Publications

Educators

July 2007
Article

Earnings Announcement Premia and Limits to Arbitrage

By: Daniel Cohen, Aiyesha Dey, Thomas Lys and Shyam Sunder

We examine the factors underlying the presence of earnings announcement premia. We find that the premia persist beyond the sample period examined in prior studies (ending in 1988), although they decline in magnitude after 1988. Further, premia are lower on the expected... View Details

Keywords: Business Earnings; Announcements; Corporate Disclosure

16 Sep 2013
Research & Ideas

Earnings Calls That Get Lost in Translation

The CEO's key to a successful earnings call with investors? Crystal clear communication. Earnings calls are typically held after the release of quarterly earnings, allowing company executives a chance to... View Details

Keywords: by Dina Gerdeman

October 2002 (Revised March 2004)
Case

Management Earnings Disclosure and Pro Forma Reporting

Introduces a discussion of management earnings disclosure and the growing use of pro forma reporting by corporations. Highlights the background of pro forma reporting, how it has been used in the past couple of years, and what the regulators at the capital markets... View Details

Keywords: Business Earnings; Corporate Disclosure; Financial Reporting; Management Teams

Educators

2008
Working Paper

An Investigation of Earnings Management through Marketing Actions

By: Craig James Chapman and Thomas J. Steenburgh

Prior research hypothesizes managers use "real actions," including the reduction of discretionary expenditures, to manage earnings to meet or beat key benchmarks. This paper examines this hypothesis by testing how different types of marketing expenditures are used... View Details

Keywords: Performance Expectations; Earnings Management; Marketing Strategy; Financial Reporting; Brands and Branding; Food and Beverage Industry

SSRN

Read Now

February 2011
Teaching Note

Google and Earnings Guidance (TN)

By: Francois Brochet

Teaching Note for 111026. View Details

Keywords: Communication Strategy; Policy; Web Services Industry; Information Technology Industry; United States

February 1999
Article

1998 10-K's: Earnings Quality Alert

By: David F. Hawkins

Keywords: Business Earnings; Quality; Reports

Article

Forgoing Earned Incentives to Signal Pure Motives

By: Erika L. Kirgios, Edward H. Chang, Emma E. Levine, Katherine L. Milkman and Judd B. Kessler

Policy makers, employers, and insurers often provide financial incentives to encourage citizens, employees, and customers to take actions that are good for them or for society (e.g., energy conservation, healthy living, safe driving). Although financial incentives are... View Details

Keywords: Incentives; Motivation Laundering; Self-signaling; Motivation and Incentives; Behavior; Perception

Read Now

March 2011
Article

What Do Dividends Tell Us About Earnings Quality

By: Douglas Skinner and Eugene F. Soltes

Over the past 30 years, there have been significant changes in the distribution of earnings (cross-sectional variation has increased, with increasing left skewness) as well as in corporate payout policy, with many fewer firms paying dividends and the emergence of stock... View Details

Keywords: Distribution; Business Earnings; Change; Policy; Stocks; Investment Return; Performance Consistency; Quality

Read Now

02 Dec 2013
Research & Ideas

Companies Choreograph Earnings Calls to Hide Bad News

The quarterly earnings conference call is a traditional way for public companies to disclose information regarding performance and strategy from the prior quarter. Wall Street analysts and other company watchers dial in, identify... View Details

Keywords: by Julia Hanna; Financial Services

January 2010
Article

Does Public Ownership of Equity Improve Earnings Quality?

We compare the quality of accounting numbers produced by two types of public firms-those with publicly traded equity and those with privately held equity that are nonetheless considered public by virtue of having publicly traded debt. We develop and test two... View Details

Keywords: Private Equity; Business Earnings; Public Equity

January 1999 (Revised October 2010)
Background Note

Accumulated Earnings Tax and Personal Holding Company Tax

By: Henry B. Reiling and Mark Pollard

Identifies Congress's concerns and objectives in adopting the Accumulated Earnings Tax and the Personal Holding Company Tax. Also describes the provisions' mechanics and some of their practical implications. View Details

Keywords: Business Earnings; Taxation; Business and Government Relations; Business and Shareholder Relations; Public Administration Industry; United States

June 2006
Article

CEO Incentives and Earnings Management

Keywords: Management; Motivation and Incentives; Profit

SSRN

2024
Working Paper

Scaling Core Earnings Measurement with Large Language Models

By: Matthew Shaffer and Charles CY Wang

We study the application of large language models (LLMs) to the estimation of core earnings, i.e., a firm's persistent profitability from its core business activities. This construct is central to investors' assessments of economic performance and valuations. However,... View Details

Keywords: Large Language Models; AI and Machine Learning; Accounting; Profit; Corporate Disclosure; Analytics and Data Science; Measurement and Metrics

SSRN

April 1982 (Revised June 1985)
Case

Westinghouse Electric Corp.: Quality of Earnings Analysis

Westinghouse had just issued its annual report to shareholders for the year ending December 31, 1973. The report indicates that sales have increased to a record $5.7 billion but that net income is down almost 20% from its record level of $199 million in the previous... View Details

Keywords: Business Earnings; Financial Reporting; Corporate Finance; Electronics Industry

Educators

13 Mar 2008
Working Paper Summaries

An Investigation of Earnings Management through Marketing Actions

Keywords: by Craig J. Chapman & Thomas J. Steenburgh

06 Feb 2006
What Do You Think?

Should CEOs of Public Companies Offer Earnings Guidance?

Summing Up Based on some of the most thoughtful comments to any of these columns, one might conclude that acceptable earnings guidance by CEOs should take on new forms. Let's first consider the pros and cons, then some research, then some... View Details

Keywords: by James Heskett; Financial Services

January 2017
Article

Being Surprised by the Unsurprising: Earnings Seasonality and Stock Returns

By: Tom Y. Chang, Samuel M. Hartzmark, David H. Solomon and Eugene F. Soltes

We present evidence consistent with markets failing to properly price information in seasonal earnings patterns. Firms with historically larger earnings in one quarter of the year (“positive seasonality quarters”) have higher returns when those earnings are usually... View Details

Keywords: Business Earnings; Investment