Predicting Restatements in Macroeconomic Indicators Using Accounting Information

68 Pages Posted: 1 Jun 2014 Last revised: 23 Oct 2015

See all articles by Suresh Nallareddy

Suresh Nallareddy

Duke University - Fuqua School of Business

Maria Ogneva

University of Southern California - Marshall School of Business

Date Written: August 2015

Abstract

Earnings growth dispersion contains information about trends in labor reallocation, unemployment change, and, ultimately, aggregate output. We find that initial macroeconomic estimates released by government statistical agencies do not fully incorporate this information. As a consequence, earnings growth dispersion predicts future restatements in nominal and real GDP growth (and unemployment change) both in the in-sample and out-of-sample tests. The documented predictable restatements are not fully anticipated by the investors. Further, when we adjust GDP estimates using the out-of-sample restatement predictions, we find statistically and economically significant effects for the monetary policy prescriptions (Taylor rule) and banking regulation (Basel III).

Keywords: Macroeconomy, Aggregate earnings, Earnings Dispersion

JEL Classification: M41, E37, E44, C82

Suggested Citation

Nallareddy, Suresh and Ogneva, Maria, Predicting Restatements in Macroeconomic Indicators Using Accounting Information (August 2015). Available at SSRN: https://ssrn.com/abstract=2444014 or http://dx.doi.org/10.2139/ssrn.2444014

Suresh Nallareddy (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

Maria Ogneva

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
366
Abstract Views
1,499
rank
80,631
PlumX Metrics