Pricing the announcement of unexpected earnings for Australian firms : market quality perceptions as a determinant of variation

Keane, Ashley J. (1993). Pricing the announcement of unexpected earnings for Australian firms : market quality perceptions as a determinant of variation Honours Thesis, School of Business, The University of Queensland.

       
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Author Keane, Ashley J.
Thesis Title Pricing the announcement of unexpected earnings for Australian firms : market quality perceptions as a determinant of variation
School, Centre or Institute School of Business
Institution The University of Queensland
Publication date 1993-01-01
Thesis type Honours Thesis
Total pages 154
Language eng
Subjects 14 Economics
Formatted abstract
This thesis endeavours to further the analysis of cross-sectional differences in the market adjustment to the announcement of unexpected accounting earnings. Previous research has produced evidence indicating that the market adjustment to the information communicated by unexpected accounting earnings is not 100 percent. The question addressed in this thesis is whether the market moderates the extent of its adjustment to the unexpected earnings based upon a dynamic perception regarding the 'quality' of these accounting earnings. It is asserted that the market forms a judgement as to the quality of the earnings based upon expectations concerning the degree of executive opportunism which has been impounded into the accounting figure. Factors modelled as affecting this judgement include executive incentives under their compensation plans and the horizon problem, as well as the effectiveness of monitoring mechanisms. Conservatively interpreted, the results do not support the theoretical propositions, suggesting that the market does not form a judgement as to earnings quality based upon the factors modelled. However, the external validity of these results is expected to be minimal, but nevertheless, the results do contribute preliminary evidence regarding the question addressed.

 
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Created: Wed, 27 Oct 2010, 20:21:06 EST by Ning Jing on behalf of Social Sciences and Humanities Library Service