دانلود رایگان مقاله انگلیسی تعیین کننده های اقتصادی اطلاعاتی درباره درآمد آینده - الزویر 2018

ABSTRACT

This study investigates how the value-creation process affects the extent to which stock prices incorporate value-relevant information about future earnings. In contrast to previous studies focusing on the value-reporting process, this paper shows that strong product market power accelerates the incorporation of future earnings into current equity prices due to less uncertainty about future cash flows and that intensive long-term investment deters such incorporation because of greater uncertainty regarding future cash flows. The results suggest that firm fundamentals shaped by product market competition and long-term investment explain the price informativeness about future earnings beyond the impact of management’s reporting discretion.

7. Conclusion

This study identifies firm fundamentals that determine the uncertainty about future cash flows and thus explains the crosssectional and time-series variations in the extent to which future earnings information is capitalized into stock prices. Product market power and long-term investment in the value-creation process are hypothesized to explain the price informativeness about future earnings (measured by the FERC). Cross-sectional analyses show that firms with strong product market power have more informative stock prices about future earnings and that firms investing heavily in long-term assets, especially R&D-related intangibles, have less informative stock prices about future earnings. Further analyses reveal that firms that experience industry-level deregulation show a significant decrease in price informativeness and firms that substantially increase long-term investment exhibit a significant decline in price informativeness. The results are robust to employing alternative measures of product market power and long-term investment and controlling for various omitted variables that prior studies document as potential explanatory variables of the price informativeness about future earnings.

Overall, this study provides a comprehensive analysis of the relation between current returns and future earnings, and gives several important insights into the stock market’s incorporation of earnings information. First, the empirical results suggest that product market power and long-term investment are significantly associated with the price informativeness about future earnings even after controlling for financial reporting attributes and information environments, which have been the focus of prior research. This evidence is consistent with the view that firm fundamentals shaping the value-creating process determine the extent to which investors anticipate future earnings, beyond the effect of forward-looking information provided by management and information intermediaries. Second, the results indicate that the trade-off between timeliness and uncertainty of forward-looking information explains how investors use earnings information in different horizons. The significant uncertainty over future benefits from long-term investment diminishes the market’s weight on ex-ante information about future anticipated earnings and enhances its weight on expost information from current realized earnings.