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Earnings Volatility and Earnings Predictability


Ilia D. Dichev


Emory University - Goizueta Business School

Vicki Wei Tang


Georgetown University - Robert Emmett McDonough School of Business

Spetember 19, 2008

Journal of Accounting and Economics, Forthcoming

Abstract:     
Survey evidence indicates widely held managerial beliefs that earnings volatility is negatively related to earnings predictability. In addition, existing research suggests that earnings volatility is determined by economic and accounting factors, and both of these factors reduce earnings predictability. We find that the consideration of earnings volatility brings substantial improvements in the prediction of both short and long-term earnings. Conditioning on volatility information also allows one to identify systematic errors in analyst forecasts, which implies that analysts do not fully understand the implications of earnings volatility for earnings predictability.

Number of Pages in PDF File: 57

Keywords: earnings volatility, earnings predictability

JEL Classification: M41

working papers series


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Date posted: August 30, 2006 ; Last revised: February 22, 2012

Suggested Citation

Dichev, Ilia D. and Tang, Vicki Wei, Earnings Volatility and Earnings Predictability (Spetember 19, 2008). Journal of Accounting and Economics, Forthcoming. Available at SSRN: http://ssrn.com/abstract=927305 or http://dx.doi.org/10.2139/ssrn.927305

Contact Information

Ilia D. Dichev (Contact Author)
Emory University - Goizueta Business School ( email )
1300 Clifton Road
Atlanta, GA 30322-2722
United States
Vicki Wei Tang
Georgetown University - Robert Emmett McDonough School of Business ( email )
3700 O Street, NW
Washington, DC 20057
United States

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