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Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings. / Choi, Jong-Hag ; Choi, Sun Hwa; Myers, Linda A. et al.
In: Contemporary Accounting Research, Vol. 36, No. 1, 07.03.2019, p. 389-417.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Choi, J-H, Choi, SH, Myers, LA & Ziebart, D 2019, 'Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings', Contemporary Accounting Research, vol. 36, no. 1, pp. 389-417. https://doi.org/10.1111/1911-3846.12442

APA

Choi, J-H., Choi, S. H., Myers, L. A., & Ziebart, D. (2019). Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings. Contemporary Accounting Research, 36(1), 389-417. https://doi.org/10.1111/1911-3846.12442

Vancouver

Choi J-H, Choi SH, Myers LA, Ziebart D. Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings. Contemporary Accounting Research. 2019 Mar 7;36(1):389-417. Epub 2019 Jan 11. doi: 10.1111/1911-3846.12442

Author

Choi, Jong-Hag ; Choi, Sun Hwa ; Myers, Linda A. et al. / Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings. In: Contemporary Accounting Research. 2019 ; Vol. 36, No. 1. pp. 389-417.

Bibtex

@article{97f5c5fb128a47e59a675b7f085855b2,
title = "Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings",
abstract = "We find that financial statement comparability enhances the ability of current period returns to reflect future earnings, as measured by the future earnings response coefficient (FERC). This suggests that comparability improves the informativeness of stock prices and allows investors to better anticipate future firm performance. In addition, using both the FERC and stock price synchronicity tests, we find that comparability increases the amount of firm‐specific information (rather than market/industry‐level information) reflected in stock prices. Analysts play an important role in improving stock price informativeness by producing more firm‐specific information when comparability is high. These findings suggest that comparability lowers the costs of gathering and processing firm‐specific information. ",
keywords = "comparability, future earnings response coefficient (FERC) , firm‐specific information, stock price synchronicity",
author = "Jong-Hag Choi and Choi, {Sun Hwa} and Myers, {Linda A.} and David Ziebart",
note = "This is the peer reviewed version of the following article: Choi, J. , Choi, S. , Myers, L. A. and Ziebart, D. (2019), Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings. Contemp Account Res, 36: 389-417. doi: 10.1111/1911-3846.12442 which has been published in final form at https://onlinelibrary.wiley.com/doi/full/10.1111/1911-3846.12442 This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.",
year = "2019",
month = mar,
day = "7",
doi = "10.1111/1911-3846.12442",
language = "English",
volume = "36",
pages = "389--417",
journal = "Contemporary Accounting Research",
issn = "0823-9150",
publisher = "Wiley-Blackwell",
number = "1",

}

RIS

TY - JOUR

T1 - Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings

AU - Choi, Jong-Hag

AU - Choi, Sun Hwa

AU - Myers, Linda A.

AU - Ziebart, David

N1 - This is the peer reviewed version of the following article: Choi, J. , Choi, S. , Myers, L. A. and Ziebart, D. (2019), Financial Statement Comparability and the Informativeness of Stock Prices About Future Earnings. Contemp Account Res, 36: 389-417. doi: 10.1111/1911-3846.12442 which has been published in final form at https://onlinelibrary.wiley.com/doi/full/10.1111/1911-3846.12442 This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

PY - 2019/3/7

Y1 - 2019/3/7

N2 - We find that financial statement comparability enhances the ability of current period returns to reflect future earnings, as measured by the future earnings response coefficient (FERC). This suggests that comparability improves the informativeness of stock prices and allows investors to better anticipate future firm performance. In addition, using both the FERC and stock price synchronicity tests, we find that comparability increases the amount of firm‐specific information (rather than market/industry‐level information) reflected in stock prices. Analysts play an important role in improving stock price informativeness by producing more firm‐specific information when comparability is high. These findings suggest that comparability lowers the costs of gathering and processing firm‐specific information.

AB - We find that financial statement comparability enhances the ability of current period returns to reflect future earnings, as measured by the future earnings response coefficient (FERC). This suggests that comparability improves the informativeness of stock prices and allows investors to better anticipate future firm performance. In addition, using both the FERC and stock price synchronicity tests, we find that comparability increases the amount of firm‐specific information (rather than market/industry‐level information) reflected in stock prices. Analysts play an important role in improving stock price informativeness by producing more firm‐specific information when comparability is high. These findings suggest that comparability lowers the costs of gathering and processing firm‐specific information.

KW - comparability

KW - future earnings response coefficient (FERC)

KW - firm‐specific information

KW - stock price synchronicity

U2 - 10.1111/1911-3846.12442

DO - 10.1111/1911-3846.12442

M3 - Journal article

VL - 36

SP - 389

EP - 417

JO - Contemporary Accounting Research

JF - Contemporary Accounting Research

SN - 0823-9150

IS - 1

ER -