Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings

In this paper, we examine the effect of accounting conservatism on earnings persistence and pricing multiple on earnings. One of the most obvious factors, among those that cause accounting earnings to reverse over time, is accounting conservatism. By making more conservative accounting choices, a co...

Descripción completa

Guardado en:

Detalles Bibliográficos
Autores principales:	Mohammad Hossein Ghaemi, Mohammad Hossein Vadiee, Meysam Hajipour
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2012
Materias:	accounting conservatism earnings persistence pricing multiples on earnings (p/e) Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/f0235a55214244709dea29237719b9a3
Etiquetas:	Agregar Etiqueta Sin Etiquetas, Sea el primero en etiquetar este registro!

id	oai:doaj.org-article:f0235a55214244709dea29237719b9a3
record_format	dspace
spelling	oai:doaj.org-article:f0235a55214244709dea29237719b9a32021-11-04T19:40:22ZAccounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings2008-89142476-292X10.22103/jak.2012.47https://doaj.org/article/f0235a55214244709dea29237719b9a32012-06-01T00:00:00Zhttps://jak.uk.ac.ir/article_47_264659cfc677803198794512b95eb60e.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XIn this paper, we examine the effect of accounting conservatism on earnings persistence and pricing multiple on earnings. One of the most obvious factors, among those that cause accounting earnings to reverse over time, is accounting conservatism. By making more conservative accounting choices, a company faces mismatching between current-period revenues and future period expenses so that earnings have more temporary components and become less persistent. This implies that earnings are less persistent under more conservative accounting choices than under less conservative accounting choices. We hypothesize that more conservative earnings are less persistent than less conservative earnings. Moreover, according to Ohlson (1995) model, where price is expressed as a linear combination of equity book value and earnings, the more (less) persistent earnings obtain larger (smaller) pricing multiples. Thus, we hypothesize that the pricing multiple on more conservative earnings is smaller than that on less conservative earnings. Base on sample from 88 listed companies in Tehran stock exchange during the period of 1998-2007, our findings suggest more conservative earnings are less persistent than less conservative earnings and the pricing multiple on more conservative earnings is smaller than that on less conservative earnings.Mohammad Hossein GhaemiMohammad Hossein VadieeMeysam HajipourShahid Bahonar University of Kermanarticleaccounting conservatismearnings persistencepricing multiples on earnings (p/e)Accounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 1, Iss 2, Pp 55-37 (2012)
institution	DOAJ
collection	DOAJ
language	FA
topic	accounting conservatism earnings persistence pricing multiples on earnings (p/e) Accounting. Bookkeeping HF5601-5689
spellingShingle	accounting conservatism earnings persistence pricing multiples on earnings (p/e) Accounting. Bookkeeping HF5601-5689 Mohammad Hossein Ghaemi Mohammad Hossein Vadiee Meysam Hajipour Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings
description	In this paper, we examine the effect of accounting conservatism on earnings persistence and pricing multiple on earnings. One of the most obvious factors, among those that cause accounting earnings to reverse over time, is accounting conservatism. By making more conservative accounting choices, a company faces mismatching between current-period revenues and future period expenses so that earnings have more temporary components and become less persistent. This implies that earnings are less persistent under more conservative accounting choices than under less conservative accounting choices. We hypothesize that more conservative earnings are less persistent than less conservative earnings. Moreover, according to Ohlson (1995) model, where price is expressed as a linear combination of equity book value and earnings, the more (less) persistent earnings obtain larger (smaller) pricing multiples. Thus, we hypothesize that the pricing multiple on more conservative earnings is smaller than that on less conservative earnings. Base on sample from 88 listed companies in Tehran stock exchange during the period of 1998-2007, our findings suggest more conservative earnings are less persistent than less conservative earnings and the pricing multiple on more conservative earnings is smaller than that on less conservative earnings.
format	article
author	Mohammad Hossein Ghaemi Mohammad Hossein Vadiee Meysam Hajipour
author_facet	Mohammad Hossein Ghaemi Mohammad Hossein Vadiee Meysam Hajipour
author_sort	Mohammad Hossein Ghaemi
title	Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings
title_short	Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings
title_full	Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings
title_fullStr	Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings
title_full_unstemmed	Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings
title_sort	accounting conservatism, earnings persistence and pricing multiples on earnings
publisher	Shahid Bahonar University of Kerman
publishDate	2012
url	https://doaj.org/article/f0235a55214244709dea29237719b9a3
work_keys_str_mv	AT mohammadhosseinghaemi accountingconservatismearningspersistenceandpricingmultiplesonearnings AT mohammadhosseinvadiee accountingconservatismearningspersistenceandpricingmultiplesonearnings AT meysamhajipour accountingconservatismearningspersistenceandpricingmultiplesonearnings
_version_	1718444686030405632

Accounting Conservatism, Earnings Persistence and Pricing Multiples on Earnings

Ejemplares similares