Study suggests disaggregate earnings better predict stock prices than aggregate earnings
As a stockholder when you receive the company’s annual report, do you typically look beyond the earnings per share?
Most people don’t, but they may want to start examining these financial statements in more detail according to a recent study published in the Review of Accounting and Finance.
“The risk in looking only at aggregate earnings for the banking industry is that we ignore all other information that provides the total earnings per share, such as loan loss provision, loan write-offs and gains or losses on cash flow hedges,” says Dr. Pervaiz Alam, Kent State University professor of accounting.
In his study, Alam and a colleague found that disaggregated bank earnings are better predictors of next period earnings and stock prices than aggregated earnings, which suggests that disaggregated information may be more useful for investment, credit and financing decisions.
Alam can be reached at 330-672-1121 or palam@kent.edu.
Media Contact
More Information:
http://www.kent.eduAll latest news from the category: Business and Finance
This area provides up-to-date and interesting developments from the world of business, economics and finance.
A wealth of information is available on topics ranging from stock markets, consumer climate, labor market policies, bond markets, foreign trade and interest rate trends to stock exchange news and economic forecasts.
Newest articles
Unique nanodisk pushing photonic research forward
Researchers at Chalmers University of Technology, in Sweden, have for the first time succeeded in combining two major research fields in photonics by creating a nanoobject with unique optical qualities….
Mass production of metal nanowires possible by breakthrough technique
A group from Nagoya University in Japan has created a new technique for growing the tiny metal nanowires (NWs) that are expected to be used in next-generation electronics. Their results…
Unprecedented spin properties revealed in new artificial materials
In conjunction with research staff from the Charles University of Prague and the CFM (CSIC-UPV/EHU) center in San Sebastian, CIC nanoGUNE’s Nanodevices group has designed a new complex material with…
