Accounting Conservatism, the Quality of Earnings, and Stock Returns

By Stephen H. Penman, Xiao-Jun Zhang. 2002

1,145 citations recorded by the source corpus.

View Paper: https://www.semanticscholar.org/paper/7f4b16d7c0a11fd7577013b41a19152c875ff4e6

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Citations in the corpus

Valuation of loss firms in a knowledge-based economy (2007, neutral): “The second hypothesis focuses on the GAAP requirement of RD Lev, Nissim, & Thomas, 2007; Penman & Zhang, 2002 ).”
Understanding Earnings Quality: A Review of the Proxies, Their Determinants and Their Consequences (2010, background): “For example, characteristics of the BOD will affect investment decisions, and investment can affect earnings persistence and sustainability (Penman and Zhang, 2002).”
The Role of Accounting Conservatism in Mitigating Bondholder-Shareholder Conflicts over Dividend Policy and in Reducing Debt Costs (2002, background): “Penman and Zhang (2002) conclude that conservative accounting can cause current period income to increase in periods of declining operations, due to the liquidation of hidden reserves (e.”
The Economic Implications of Corporate Financial Reporting (2005, positive): “Penman and Zhang (2002) find that cutting investments can boost reported earnings, in the presence of conservative accounting. Roychowdhury (2003) argues that firms overproduce and give sales discounts to meet earnings targets.”
Accounting conservatism and corporate governance (2009, background): “According to Pope and Walker (2003) and Beaver and Ryan (2005), firms with a greater understatement of assets are likely to have a less pronounced asymmetric timeliness of earnings, as they are anticipating bad news.”
What Determines Residual Income (2001, methodology): “As in Penman and Zhang (2002), advertising assets are amortized using an accelerated method (i.e., sum-of-year digits over two years).”
Internal Controls and Conditional Conservatism (2011, methodology): “19 We also use another measure of unconditional conservatism devised by Penman and Zhang (2002), which is the amount of a firm’s “hidden” reserves estimated using the sum of the value of the LIFO reserve, the research 23 coefficients on D∆NIt-1*∆NIt-1*LEV, DCFO*CFO*LEV, and DR*R*LEV are also…”
Making Sense of Cents: An Examination of Firms That Marginally Miss or Beat Analyst Forecasts (2009, methodology): “First, we use Penman and Zhang’s (2002) Q-score methodology, which incorporates information on both the levels and changes in R&D and advertising for the prior three years in their expectation model.”
Explaining the Short- and Long-Term IPO Anomalies in the US by R&D (2006, positive): “undervalued by investors—is supported by numerous studies that examine the association between R&D investment and subsequent stock returns in the US (Lev and Sougiannis, 1996; Chan et al., 2001; Penman and Zhang, 2002; Eberhart et al., 2004).”
Is the decline in the value relevance of accounting driven by increased conservatism? (2011, methodology): “Prior literature has measured conservatism as the downward bias in book values relative to market values (Beaver and Ryan 2000) or downward bias because of specific accounting practices (Penman and Zhang 2002).”
The Profitability and Pricing of Major Customers (2004, methodology): “In contrast, RD Penman and Zhang, 2002 ).”
Innovative Efficiency and Stock Returns (2013, background): “17 On the capital investment effect, see, e.g., Lyandres, Sun, and Zhang (2008) and Polk and Sapienza (2009).”
The Quality of Financial Statements: Perspectives from the Recent Stock Market Bubble (2002, background): “See Ou and Penman (1989), Lev and Thiagarajan (1993), Abarbanell and Bushee (1997), Lipe (1986), Sloan (1996), Fairfield and Yohn (2001), Fairfield, Whisenant and Yohn (2001), Chan, Chan, Jagadeesh and Lakonishok (2001), Thomas and Zhang (2002), and Penman and Zhang (2002a, 2002b), for example.”
The Impact of Earnings Quality on Firm Value: The Case of Vietnam (2020, background): “Penman and Zhang (2002) defined EQ as the ability to forecast future income of a firm.”