Main Rev-Exp Results
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1 Main Rev-Exp Results • In one of their main results DT (2008) find: Rev t = 0 + 1 Exp t-1 + 2 Exp t + 3 Exp t+1 DT 1967-1985 0.007 1.031 -0.020 1986-2003 0.101 0.882 0.055 US – Replicating DT 1967-1985 0.002 1.032 -0.030 1986-2003 0.088 0.900 0.020 US – No Special Items 1967-1985 -0.003 1.042 -0.036 1986-2003 0.009 1.045 -0.045
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1
Main Rev-Exp Results
• In one of their main results DT (2008) find:Revt = 0 + 1Expt-1 + 2 Expt + 3 Expt+1
DT1967-1985 0.007 1.031 -0.020 1986-2003 0.101 0.882 0.055 US – Replicating DT1967-1985 0.002 1.032 -0.030 1986-2003 0.088 0.900 0.020 US – No Special Items1967-1985 -0.003 1.042 -0.036 1986-2003 0.009 1.045 -0.045
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Frequency of Special Items Over Time
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
SAB 67
SFAS 121
SFAS 142 & 144
SFAS 145&146
EITF 94-3
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Economic Pressure Variables• 10 proxies for economic pressure
– General Competitive Pressure• Four firm concentration ratio• Abnormal analyst following • Abnormal return reaction at earnings announcements
– Firm Performance• Leverage• Probability of bankruptcy• Incidence of operating losses • Negative revenue growth
– Operating choices• Incidence of Merger and Acquisition Activity • Incidence of Discontinued Operations• Negative employee growth
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Frequency of Special Items for E_Score Groups
Low E_Score
MiddleE_Score
HighE_Score Diff
1975-1984 4.0 9.0 17.4 13.4
1985-1996 11.4 22.2 34.3 22.9
1997-2006 16.9 31.6 48.0 31.2
Total 10.4 20.6 33.0 22.6
Back
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Frequency of Special Items for E_Score Groups
0
0.1
0.2
0.3
0.4
0.5
0.6
0.719
75
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
Low
Medium
High
