Aggregate Earnings Informativeness and Economic Shocks: International Evidence

Asia-Pacific Journal of Accounting & Economics, Forthcoming

Posted: 14 Oct 2019 Last revised: 22 Jun 2021

See all articles by Yuto Yoshinaga

Yuto Yoshinaga

Tohoku University

Makoto Nakano

Hitotsubashi University

Date Written: June 22, 2021

Abstract

Our study aims to propose the use of aggregate earnings to forecast future GDP growth. Using empirical analyses with global quarterly data, we investigate whether aggregate-level profitability drivers, which are components of aggregate earnings, are relevant for forecasting GDP growth. After confirming that aggregate-level profitability drivers are useful for forecasting future GDP growth worldwide, we show that considering the effects of crises improves the forecast model of GDP growth. In addition, we suggest that predicting GDP growth using aggregate-level profitability drivers is relevant for stock valuation in developed countries, but not in emerging countries.

Keywords: aggregate earnings; macro–accounting; GDP forecast; DuPont analysis; economic shock

JEL Classification: E01, M41

Suggested Citation

Yoshinaga, Yuto and Nakano, Makoto, Aggregate Earnings Informativeness and Economic Shocks: International Evidence (June 22, 2021). Asia-Pacific Journal of Accounting & Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3461082 or http://dx.doi.org/10.2139/ssrn.3461082

Yuto Yoshinaga (Contact Author)

Tohoku University ( email )

Accountng School, Katahira 2-1-1
Aoba-ku, Sendai, Miyagi 980-8577
Japan

Makoto Nakano

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

HOME PAGE: http://sites.google.com/site/makotonakano2/

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