Information Content of Interim Earnings Components Evidence from Finland

18 Pages Posted: 2 Feb 2011

See all articles by Hannu J. Schadewitz

Hannu J. Schadewitz

Turku School of Economics at the University of Turku - Department of Accounting & Finance

Date Written: June 28, 2008

Abstract

This study examines the information content of the interim earnings of listed Finnish firms. The degree of association between returns and interim earnings is studied. The assumption is that, compared to transitory changes, permanent changes in earnings have a greater association with returns. Unexpected returns are regressed over unexpected permanent earnings and unexpected transitory earnings. Three return measurement periods are used to examine any potential asynchrony between prices and earnings. To reduce the errors-in-variables problem expected in single-security-level studies, observations are grouped into portfolios. When the data are divided into portfolios, the results give evidence of the association as hypothesized.

Keywords: interim earnings, association study, permanent earnings, transitory earnings, earnings response coefficients

Suggested Citation

Schadewitz, Hannu J., Information Content of Interim Earnings Components Evidence from Finland (June 28, 2008). Journal of Business Finance & Accounting, Vol. 23, Issue 9-10, pp. 1397-1414, 2008, Available at SSRN: https://ssrn.com/abstract=1753451 or http://dx.doi.org/10.1111/1468-5957.00086

Hannu J. Schadewitz (Contact Author)

Turku School of Economics at the University of Turku - Department of Accounting & Finance ( email )

Rehtorinpellonkatu 3
FIN-20500 Turku
Finland
+358 2 333 9321 (Phone)
+358 2 333 9350 (Fax)

HOME PAGE: http://www.utu.fi/en/people/hannu-schadewitz

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