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Article
Lack of Timeliness, Noise and Transitory Components in Earnings as Explanations for the Apparent Decline in the Value Relevance of Earnings
Journal of Business & Economics Research
  • L. Dwight Sneathen, Georgia Southern University
Document Type
Article
Publication Date
12-1-2013
DOI
10.19030/jber.v11i12.8262
Disciplines
Abstract

Prior studies identify three factors that contribute to the low contemporaneous association between returns (prices) and earnings: lack of timeliness of earnings capturing value relevant information, noise in earnings, and transitory elements in earnings. This study seeks to identify whether these factors contribute to the observed inter-temporal decline in the contemporaneous association between returns (prices) and earnings documented in recent literature. Prior studies do not explicitly examine the affect of these factors on the inter-temporal decline, and the extant evidence is mixed. Empirical evidence presented here indicates that lack of timeliness of earnings and value-irrelevant noise in earnings have increased over time, both contributing to the documented inter-temporal decline in the contemporaneous association between returns (prices) and earnings.

Comments

CC-BY 3.0 US Article obtained from the Journal of Business & Economics Research.

Citation Information
L. Dwight Sneathen. "Lack of Timeliness, Noise and Transitory Components in Earnings as Explanations for the Apparent Decline in the Value Relevance of Earnings" Journal of Business & Economics Research Vol. 11 Iss. 12 (2013) p. 543 - 554
Available at: http://works.bepress.com/l-sneathen/3/