I examine whether sales news and cash flow news are more informative in valuation when they are consistent with earnings news. Prior studies show that earnings response coefficient (ERC) is larger when the earnings surprise is consistent in sign with the sales surprise or the cash flow surprise because the consistency suggests higher earnings persistence. I provide new evidence that indicator consistency increases sales response coefficient and cash flow response coefficient as well as ERC. This consistency effect for sales and cash flow cannot be explained by the standard persistence argument from prior studies. I propose a new argument that can explain the consistency effects for all three indicators. I posit that investors perceive consistent indicators to each be more precise and thus rely more on each indicator. Under this precision argument, I predict and show that indicator consistency is particularly useful when there is high uncertainty about indicator precision. / Business Administration/Accounting
| Identifer | oai:union.ndltd.org:TEMPLE/oai:scholarshare.temple.edu:20.500.12613/7738 |
| Date | January 2022 |
| Creators | Lee, Eunju (Ivy) |
| Contributors | Basu, Sudipta, 1965-, Byzalov, Dmitri, Krishnan, Jayanthi, Grace, Martin Francis, 1958- |
| Publisher | Temple University. Libraries |
| Source Sets | Temple University |
| Language | English |
| Detected Language | English |
| Type | Thesis/Dissertation, Text |
| Format | 110 pages |
| Rights | IN COPYRIGHT- This Rights Statement can be used for an Item that is in copyright. Using this statement implies that the organization making this Item available has determined that the Item is in copyright and either is the rights-holder, has obtained permission from the rights-holder(s) to make their Work(s) available, or makes the Item available under an exception or limitation to copyright (including Fair Use) that entitles it to make the Item available., http://rightsstatements.org/vocab/InC/1.0/ |
| Relation | http://dx.doi.org/10.34944/dspace/7710, Theses and Dissertations |
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