12+ Real Earnings Management And Subsequent Stock Returns PNG. Real earnings management and subsequent stock returns and quality stock investing relation between return predictive power and earnings management q abnormal accruals predict subsequent stock returns, whereas normal accruals do not. Xie (tar 2001) abnormal accruals predict subsequent stock returns.
Accounting standards, earnings management, and earnings quality.
Each subsequent regression (regressions 3 to 6) breaks up the information in rae into these results are not expected since stock returns at earnings announcements are positively related to unexpected earnings. Specifically, stocks of firms with abnormally low (high) levels of operating cash flows underperform (outperform) in the subsequent year, whereas stocks of firms with abnormally low (high). We conclude that the inferior return to growth stocks is attributable to overoptimistic expectational errors that are corrected through subsequent after controlling for the asymmetric response of growth stocks to negative earnings surprises, we show that there is no remaining evidence of a stock. >> it's called real earnings management because it involves some kind of real outlay of cash.
