Publication Type
Conference Paper
Publication Date
1-2017
Abstract
We exploit differences in institutional and macroeconomic environments to shed light on what drives variation in the aggregate earnings-returns relation over time within the U.S. and across countries. We find that both intertemporal and cross-country variation in the aggregate earnings-returns association are driven primarily by two factors, namely, the monetary policy news conveyed in aggregate earnings and the market reaction to that news, which suggest that the strength of the discount rate news channel plays an important role in explaining the aggregate earnings-returns relation both within and outside of the U.S. We further find that institutional characteristics have a significant effect on the information content of aggregate earnings and hence on the aggregate earnings-returns association—aggregate earnings are more informative about policy changes in countries with stronger investor protection and greater accounting transparency. Overall, our study provides new evidence on what drives the aggregate earnings-returns relation across the globe.
Discipline
Accounting
Research Areas
Corporate Reporting and Disclosure
Publication
2018 Financial Accounting and Reporting Section Midyear Meeting, Austin, TX, US, 2017 January 26-27
Identifier
10.2139/ssrn.3179037
Publisher
Taylor & Francis (Routledge): SSH Titles
City or Country
Austin, TX
Citation
GALLO, Lindsey; HANN, Rebecca; LI, Congcong; and ZOTOVA, Viktoriya.
Is the US unique? International evidence on the aggregate earnings-returns association. (2017). 2018 Financial Accounting and Reporting Section Midyear Meeting, Austin, TX, US, 2017 January 26-27.
Available at: https://ink.library.smu.edu.sg/soa_research/1764
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.3179037