415,467 research outputs found
The growth companies puzzle: can growth opportunities measures predict firm growth?
While numerous empirical studies include proxies for growth opportunities in their analyses, there is limited evidence as to the validity of the various growth proxies used. Based on a sample of 1942 firm-years for listed UK companies over the 1990-2004 period, we assess the performance of eight growth opportunities measures. Our results show that while all the growth measures show some ability to predict growth in company sales, total assets, or equity, there are substantial differences between the various models. In particular, Tobin's Q performs poorly while dividend-based measures generally perform best. However, none of the measures has any success in predicting earnings per share growth, even when controlling for mean reversion and other time-series patterns in earnings. We term this the 'growth companies puzzle'. Growth companies do grow, but they do not grow in the key dimension (earnings) theory predicts. Whether the failure of 'growth companies' to deliver superior earnings growth is attributable to increased competition, poor investments, or behavioural biases, it is still a puzzle why growth companies on average fail to deliver superior earnings growth
Playing on profits cycle?
In the article it is shown that year-to-year change of the S&P 500 does not depend on profits cycle. On the other hand, year-to-year change of earnings multiple P/E tends to anticorrelate with profits cycle. It shows sluggishness of market response in relation to profits cycle. It is shown that there is one important condition for development of new long-term bull trend. It is presence of phase of earnings accumulation. Such accumulation is possible only during periods of significant outstripping of earnings growth over the market growth. Now there is no phase of earnings accumulation, because market returned to 8% long-term growth rate, which outstrips the 5.5% long-term earnings growth rate. Such conditions can support only sideways market at best.Profits cycle, earnings, growth rate, P/E ratio, earnings accumulation, Fed's model, CRB Spot Index, 10-Y Treasury bond yield
Business strategy and earnings quality
ABSTRACT: Using the Miles and Snow (1978) strategy typology, this study investigates whether business strategy is associated with the quality of reported earnings. In a sample of U.S. listed firms, we predict and find that defender strategy firms are associated with higher levels of earnings management and prospector-strategy firms are associated with higher levels of accounting conservatism. However, this relation between business strategy and earnings quality is altered during high and low economic growth periods. In high-growth periods, while prospector firms exhibit lesser accounting conservatism, defender firms exhibit lesser earning management. In low-growth periods, the prospector firms become more conservative in reporting while the defender firms engage in more aggressive earnings management. Our findings provide direct evidence of the link between business strategy and earnings quality
Public and Private Sector Earnings in Alaska
We compare earnings in the Alaska public and private sector labor markets from 2001 -2016.
Public sector laborers are older and more likely to be female, suggesting that taking these
differences into consideration will be important in our comparisons. We also focus on the
public-private sector earnings gaps for men and women separately, as the magnitude and even
direction of the gap depends on this distinction. We go about this in three ways: unconditional
comparisons, conditional earnings gaps, and comparing the earnings and growth
of individuals who remain with the same employer. Below are the main findings:
• The unconditional average public-private earnings gaps for men and women are of
opposing signs (see Table 1).
– Men in the public sector earn about 498 more in quarterly wages than women
in the private sector, on average.
• On average, across all occupations, men and women have higher initial earnings in the
private sector at the beginning of a job spell.
– For men, the difference is 760 in quarterly earnings.
• Among workers who remain with the same employer, earnings growth is 1% and 2%
higher in the public sector for men and women, respectively.
• For men, despite the faster growth, they don’t catch up to the earnings of private
sector employees within 10 years of tenure in most occupations (See Tables 9 and 11,
and Figure 12).
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• Women in the public sector earn more than their private sector counterparts within a
few years of tenure, on average.
• There is substantial heterogeneity in the earnings gap across occupations (See Tables
10 and 12, and Figure 13).Alaska Department of Administratio
Post-Baccalaureate Wage Growth within Four Years of Graduation: The Effects of College Quality and College Major
This paper examines the impact of college quality and academic major on the earnings of a nationally representative sample of baccalaureate recipients. We extend previous work in this area by analyzing the magnitude of change in the influence of these factors at two points in the early career of these graduates. Our results demonstrate that, despite significant variation, graduates from higher quality colleges enjoy a greater rate of growth in earnings during their early career. We also show that growth in earnings varies significantly by the graduates’ major field of study. Wage growth for women and racial minorities is also examined
Earnings Dynamics and Inequality among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records
Several recent studies have found that earnings inequality in Canada has grown considerably since the late 1970's. Using an extraordinary data base drawn from longitudinal income tax records, we decompose this growth in earnings inequality into its persistent and transitory components. We find that the growth in earnings inequality reflects both an increase in long-run inequality and an increase in earnings instability. Our large sample size enables us to estimate and test richer models than could be supported by the relatively small panel surveys used in most previous research on earnings dynamics. For example, we are able to incorporate both heterogeneous earnings growth and a random-walk process in the same model, and we find that both are empirically significant.
Do Analyst Earnings Beta Explain Growth Anomaly?
Using a measure of cashflow risk derived from analyst forecasts, I find that cashflow risk offers a partial explanation for the value-growth anomaly. In particular, the lowest asset growth portfolio has a higher earnings beta than the highest asset growth portfolio. Approximately cashflow risk measured by earnings beta carries a significant positive risk premium of 1.24% with a t-value of 3.51
Earnings and Employment Dynamics for Africans in Post-apartheid South Africa: A Panel Study of KwaZulu-Natal
[Excerpt] The labour market is central in determining individual and household well-being in South Africa. Therefore, an understanding of earnings and employment dynamics is a key policy issue. However, the absence of panel data has constrained empirical work addressing these issues. This paper makes use of a regional panel data set for KwaZulu-Natal to begin the study of earnings and employment dynamics. The authors find that, on average, working-aged Africans in KwaZulu-Natal experienced large gains in earnings during the period 1993–8. These gains were progressive in nature, with the highest quintile of 1993 earners and those originally employed in the formal sector actually experiencing zero or negative growth in their average earnings. The average gain in earnings varied substantially depending on the employment transitions experienced by labour force participants. Obtaining formal sector employment is found to be an important pathway to growth in earnings, yet not exclusively so. The majority of those who get ahead do so by retaining employment in a given sector or moving into the informal sector. The dynamism of the informal sector over this period is shown to be an important contributor to the progressive growth in earnings. Government policies that seek to increase employment and earnings in the informal as well as formal sectors are recommended. Understanding the constraints preventing the vast number of unemployed from engaging in informal employment is shown to be a key issue for future work
Immigrant Economic Assimilation: Evidence from UK Longitudinal Data between 1978 and 2006
We exploit a large and long longitudinal dataset to estimate the immigrant-native earnings gap at entry and over time for the UK between 1978 and 2006. That is, we attempt to separately estimate cohort and assimilation effects. We also estimate the associated immigrant earnings growth rate and immigrant-native earnings convergence rate. Our estimates suggest that immigrants from more recent cohorts fare better than earlier ones at entry. Furthermore, the earnings of immigrants from more recent cohorts catch up faster with natives' earnings. While the convergence took over 30 years for those entering in the post-war, it only took half as long for those entering in the early 2000s. This earnings growth is fastest in the first 10 years, and it considerably slows down after 30 years.Immigration; assimilation; wages; earnings; earnings-gap; UK.
Skills, Computerization, and Earnings in the Postwar U.S. Economy
Using both time-series and pooled cross-section, time-series data for 44 industries over the period 1947-1997 in the United States, no evidence is found to support the idea that the growth of skills or educational attainment had any statistically significant effect on growth of earnings. On the other hand, earnings growth is found to be positively related to overall productivity growth and equipment investment, while computerization and international trade both had a retardant effect on earnings.
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