The role of disaggregation of earnings in stock valuation and earnings forecasting created by Pengguo Wang

By:

Wang, Pengguo [author]

Material type: Text

TextSeries: Accounting and Business Research ; Volume 43, number 5Abingdon: Routledge, 2013Content type:

text

Media type:

unmediated

Carrier type:

volume

ISSN:

00014788

Subject(s):

LOC classification:

HD30.4 ACC

Online resources:

Click here to access online

Abstract: This paper compares and contrasts two accounting information systems, the aggregate earnings system and the disaggregated cash flow/accrual system, examining their relative performance in stock valuation and in forecasting of earnings. It finds, in general, that the forecasts of earnings and predicted market values from the cash flow and accrual system have smaller forecasting errors than those from the aggregate earnings system. The adjusted R-squareds from the disaggregated system are in the main higher than those from the aggregated system when considering the explanatory power of the model-predicted values. The results also show that the cash flow and accrual system forecasts dominate the aggregate earnings system forecasts in a large majority of industries.

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Holdings
Item type	Current library	Call number	Vol info	Copy number	Status	Notes	Date due	Barcode
Journal Article	Main Library - Special Collections	HD30.4 ACC (Browse shelf(Opens below))	Vol. 43, no. 5 (pages 530-557)	SP17768	Not for loan	For in house use

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This paper compares and contrasts two accounting information systems, the aggregate earnings system and the disaggregated cash flow/accrual system, examining their relative performance in stock valuation and in forecasting of earnings. It finds, in general, that the forecasts of earnings and predicted market values from the cash flow and accrual system have smaller forecasting errors than those from the aggregate earnings system. The adjusted R-squareds from the disaggregated system are in the main higher than those from the aggregated system when considering the explanatory power of the model-predicted values. The results also show that the cash flow and accrual system forecasts dominate the aggregate earnings system forecasts in a large majority of industries.

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