A number of studies have examined the association between accounting income numbers and security returns. Various individuals have argued that the informational content of the financial statements cannot be captured by analyzing only net income. They argue that the information is jointly reflected by a number of accounting variables. This study provides evidence as to whether the information content of a firm's earnings number is affected by knowledge of other financial statement information. / The theory of fundamental analysis makes it plausible that a firm's capital structure, as reflected by its debt/equity (D/E) ratio, may affect the association between accounting earnings numbers and security returns. In addition, the results of other studies suggest that the relevant risk of a security is not completely reflected by the market model's systematic risk measure ((beta)). This study investigated the effect of capital structure on the association between unanticipated changes in accounting earnings and abnormal security returns. Abnormal return behaviors for firms experiencng unexpected earnings changes were examined. These results were assessed after various degrees of financial leverage were considered. In this way, the impact, if any, of financial leverage on the security price adjustment process could be seen. / Two approaches to measuring abnormal return behavior were utilized. The return-residual technique was employed as well as the iso-systematic risk methodology. For the sample of firms selected, daily abnormal return behavior for the period surrounding their quarterly earnings announcements was examined during the 1972-1975 period. / The results of this study supported the findings of previous research in that there was a positive association between unexpected changes in accounting earnings and abnormal security returns. Although there appeared to be a noticeable difference in the level of abnormal returns among the low, medium and highy levered firms' securities, the difference would generally not be deemed statistically significant (p value (TURN) .20). / Source: Dissertation Abstracts International, Volume: 43-02, Section: A, page: 0496. / Thesis (D.B.A.)--The Florida State University, 1982.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_74730 |
| Contributors | BATHKE, ALLEN WILLIAM, JR., Florida State University |
| Source Sets | Florida State University |
| Detected Language | English |
| Type | Text |
| Format | 350 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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