On Transitory Earnings

Posted: 8 Nov 1999

See all articles by James A. Ohlson

James A. Ohlson

Hong Kong Polytechnic University - School of Accounting and Finance


The paper develops a concept of transitory earnings and contrasts this source of earnings to "core" (or recurring) earnings. It is shown that any two of the following three attributes of transitory earnings imply the third: (i) forecasting irrelevance with respect to next-period aggregate earnings, (ii) value irrelevance, and (iii) unpredictability. The paper makes the case that the current "dirty surplus" items make sense, especially if one expands the valuation perspective to also allow for agency considerations.

JEL Classification: M41, M44

Suggested Citation

Ohlson, James A., On Transitory Earnings. Review of Accounting Studies, Vol 4, Issue 3 & 3. Available at SSRN: https://ssrn.com/abstract=182219

James A. Ohlson (Contact Author)

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon

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