Stochastic estimation of the raw materials cost and the determination of the mean-expected total product cost : analysis and application

The present paper offers an alternative way of estimating the mean expected cost of raw materials so as to improve the estimation of the expected total productcost without expanding beyond the framework of measuring and controlling the efficiency of the business. Apart from the estimation methodology proposed, the paper also focuses on the implications of the variance between expected and actual raw materials cost. In this respect, the paper is potentially interesting for managers because it offers new information that can help their decision making process in three different ways: first, it may help managers to redefine the targets of their business; second, it offers managers the insights that could help them take the required corrective actions; and third, it helps managers to better analyze the raw-materials variances in a way that the prevailing estimated cost is both realistic and effective.peer-reviewe

The Premium/Discount Of Closed-End Funds As A Measure Of Investor Sentiment: Evidence From Greece

We examine the proposition that the premium/discount (PD) of Greek closed-end funds (CEFs) is an accurate proxy for the small-investor sentiment risk. We find that the average PD explains the returns of portfolios of large capitalization and low book-to-market ratio stocks. In this context, we are unable to confirm a link between the perceived PD anomaly and the small size effect. Moreover, we show that the explanatory power of the PD for portfolio returns depends on the form of the asset pricing model used in the regression analysis. Finally, in terms of predictive ability, we find evidence that the PD predicts the size and the book-to-market premiums but little evidence that the PD predicts individual portfolio returns

Detecting ‘window dressing’ behavior among firms that go public in the Athens stock exchange

This paper uses income-smoothing methodology in order to examine whether the existence of window dressing behavior affects the operating and market performance of firms that go public in the Athens Stock Exchange (ASE). The results depict that the window dressing behavior is unpopular among Greek IPO firms. The after-market performance of IPO firms in Greece reveals that issuers use underpricing as a means to signal their quality to the market. In addition, the findings posit that investors do not overreact to past earnings growth and that the window dressing assumption is unable to explain the post-issue performance of IPO firms in Greece. Finally, the results indicate that the market exhibits the ability to anticipate intentional income-smoothing behavior and classifies smoothing firms to higher risk classes.peer-reviewe

The value relevance of earnings and income smoothing : Greek evidence on causality effects

The present paper examines the existence of causality between income smoothing and value relevance of earnings for a sample of firms listed in the Athens Stock Exchange. Using a switching regression model we find evidence suggesting that the low information content of earnings may be a motive for managers to engage in actions that signal the existence of income smoothing. A potential explanation for our results is that management uses income smoothing in order to maximize its utility rather than to affect investors expectations about the future prospects of the firm in the market.peer-reviewe

Value relevance of accounting information in the pre- and post-IFRS accounting periods

This paper examines the value relevance of accounting information in the pre- and post-periods of International Financial Reporting Standards implementation using the models of Easton and Harris (1991) and Feltham and Ohlson (1995) for a sample of Greek companies. The results of the paper indicate that the effects of the IFRS reduced the incremental information content of book values of equity for stock prices. However, earnings’ incremental information content increased for the post-IFRS period. The results can be explained by the introduction of the fair value principle under the IFRS that brought major changes in book value but not in earnings.peer-reviewe

Detecting ‘Window Dressing’ Behavior Among Firms That Go Public in the Athens Stock Exchange

This paper uses income-smoothing methodology in order to examine whether the existence of window dressing behavior affects the operating and market performance of firms that go public in the Athens Stock Exchange (ASE). The results depict that the window dressing behavior is unpopular among Greek IPO firms. The after-market performance of IPO firms in Greece reveals that issuers use underpricing as a means to signal their quality to the market. In addition, the findings posit that investors do not overreact to past earnings growth and that the window dressing assumption is unable to explain the post-issue performance of IPO firms in Greece. Finally, the results indicate that the market exhibits the ability to anticipate intentional income-smoothing behavior and classifies smoothing firms to higher risk classes.IPOs, under-performance, income smoothing,over-reaction to past earnings growth.

Value Relevance of Accounting Information in the Pre- and Post-IFRS Accounting Periods

This paper examines the value relevance of accounting information in the preand post-periods of International Financial Reporting Standards implementation using the models of Easton and Harris (1991) and Feltham and Ohlson (1995) for a sample of Greek companies. The results of the paper indicate that the effects of the IFRS reduced the incremental information content of book values of equity for stock prices. However, earnings’ incremental information content increased for the post-IFRS period. The results can be explained by the introduction of the fair value principle under the IFRS that brought major changes in book value but not in earnings.

Value relevance of conservative and non-conservative accounting information

The present paper examines effects of reporting conservatism on the value relevance of accounting earnings of a sample of Greek firms over the period from 1989 to 2003. The results of the paper indicate that conservatism is a salient feature of the Greek Accounting System. Moreover, the results depict that the level of conservatism has increased after the market crisis of 1999, potentially as a result of the additional regulation, imposed by the market authorities during the post-crisis period. Finally, the results show that there is a non-linear association between conservative reporting and value relevance of earnings. In particular, value relevance increases when moving from low-conservative firms to medium-conservative firms and decreases when moving further to high-conservative firms. Overall, the results of the paper lend empirical support to the theoretical underpinnings of Watts (2003a) who, on the one hand, report a number of arguments in favor of conservatism but, on the other hand, questions the practice of excessive conservative reporting as being a potential cause of the distortion of the earnings-returns relation.Conditional conservatism Value relevance of accounting earnings Cross-sectional dependence