On the relevance of earnings components in valuation and forecasting

Pre-print also submitted to SSRN Archive. The final publication is available at Springer via http://dx.doi.org/ 10.1007/s11156-013-0347-yThis paper articulates the links between relevance of an earnings component in forecasting (abnormal) earnings and its relevance in valuation in a nonlinear framework. The analysis shows that forecasting relevance does not imply valuation relevance even though valuation irrelevance is implied by forecasting irrelevance. Firstly, I consider an accounting information system where earnings components "add up" to a fully informative earnings number. Secondly, I analyze two accounting systems where a "core" earnings component is the relevant earnings construct for valuation and the second earnings component is irrelevant but may be predictable and relevant in forecasting other accounting items. I find that dividend displacement effect on earnings and the dynamics of individual earnings components are critical in this analysis

Mandatory adoption of IFRS and earnings management in emerging countries: the role of national culture

This study examines whether the characteristics of national culture, as proposed by Hofstede, Hofstede and Minkov (2010), are moderating factors on the potential impact of IFRS mandatory adoption on the quality of accounting information in emerging countries. The quality of information was measured through earnings management by accruals, based on the model of Jones (1991) modified by Dechow, Sloan and Sweeney (1995). Through a sample of 2,458 companies from 13 countries, totaling 18,163 firm-year observations, we identified that the dimensions of individualism, masculinity, aversion to uncertainty, long-term orientation and indulgence moderates the impact of IFRS adoption on earnings management levels in emerging countries. It was not possible to identify evidence that the power distance dimension exerts such influence. Overall, this study adds to the literature on the effect of cultural factors on accounting quality.info:eu-repo/semantics/publishedVersio

Circulating prolactin levels and risk of epithelial ovarian cancer

Purpose: Indirect evidence from experimental and epidemiological studies suggests that prolactin may be involved in ovarian cancer development. However, the relationship between circulating prolactin levels and risk of ovarian cancer is unknown. Methods: We conducted a nested case-control study of 230 cases and 432 individually matched controls within three prospective cohorts to evaluate whether pre-diagnostic circulating prolactin is associated with subsequent risk of ovarian cancer. We also assessed whether lifestyle and reproductive factors are associated with circulating prolactin among controls. Results: Prolactin levels were significantly lower among post- versus pre-menopausal women, parous versus nulliparous women, and past versus never users of oral contraceptives in our cross-sectional analysis of controls. In our nested case-control study, we observed a non-significant positive association between circulating prolactin and ovarian cancer risk (ORQ4vsQ1 1.56, 95 % CI 0.94, 2.63, p trend 0.15). Our findings were similar in multivariate-adjusted models and in the subgroup of women who donated blood 655 years prior to diagnosis. We observed a significant positive association between prolactin and risk for the subgroup of women with BMI 6525 kg/m2 (ORQ4vsQ1 3.10, 95 % CI 1.39, 6.90), but not for women with BMI <25 kg/m2 (OR Q4vsQ1 0.81, 95 % CI 0.40, 1.64). Conclusions: Our findings suggest that prolactin may be associated with increased risk of ovarian cancer, particularly in overweight/obese women. Factors associated with reduced risk of ovarian cancer, such as parity and use of oral contraceptives, were associated with lower prolactin levels, which suggests that modulation of prolactin may be a mechanism underlying their association with risk

Soil methane sink capacity response to a long-term wildfire chronosequence in Northern Sweden

Boreal forests occupy nearly one fifth of the terrestrial land surface and are recognised as globally important regulators of carbon (C) cycling and greenhouse gas emissions. Carbon sequestration processes in these forests include assimilation of CO2 into biomass and subsequently into soil organic matter, and soil microbial oxidation of methane (CH4). In this study we explored how ecosystem retrogression, which drives vegetation change, regulates the important process of soil CH4 oxidation in boreal forests. We measured soil CH4 oxidation processes on a group of 30 forested islands in northern Sweden differing greatly in fire history, and collectively representing a retrogressive chronosequence, spanning 5000 years. Across these islands the build-up of soil organic matter was observed to increase with time since fire disturbance, with a significant correlation between greater humus depth and increased net soil CH4 oxidation rates. We suggest that this increase in net CH4 oxidation rates, in the absence of disturbance, results as deeper humus stores accumulate and provide niches for methanotrophs to thrive. By using this gradient we have discovered important regulatory controls on the stability of soil CH4 oxidation processes that could not have not been explored through shorter-term experiments. Our findings indicate that in the absence of human interventions such as fire suppression, and with increased wildfire frequency, the globally important boreal CH4 sink could be diminished

ReveaLLAGN 0: First Look at JWST MIRI data of Sombrero and NGC 1052

We present the first results from the Revealing Low-Luminosity Active Galactic Nuclei (ReveaLLAGN) survey, a JWST survey of seven nearby LLAGN. We focus on two observations with the Mid-Infrared Instrument's (MIRI) Medium Resolution Spectrograph (MRS) of the nuclei of NGC 1052 and Sombrero (NGC 4594 / M104). We also compare these data to public JWST data of a higher-luminosity AGN, NGC 7319. JWST clearly resolves the AGN component even in Sombrero, the faintest target in our survey; the AGN components have very red spectra. We find that the emission-line widths in both NGC 1052 and Sombrero increase with increasing ionization potential, with FWHM > 1000 km/s for lines with ionization potential > 50 eV. These lines are also significantly blue-shifted in both LLAGN. The high ionization potential lines in NGC 7319 show neither broad widths or significant blue shifts. Many of the lower ionization potential emission lines in Sombrero show significant blue wings extending > 1000 km/s. These features and the emission-line maps in both galaxies are consistent with outflows along the jet direction. Sombrero has the lowest luminosity high-ionization potential lines ([Ne V] and [O IV]) ever measured in the mid-IR, but the relative strengths of these lines are consistent with higher luminosity AGN. On the other hand, the [Ne V] emission is much weaker relative to the [Ne III}] and [Ne II] lines of higher-luminosity AGN. These initial results show the great promise that JWST holds for identifying and studying the physical nature of LLAGN.Comment: Submitted to Ap

Terminal valuations, growth rates and the implied cost of capital

This article is published with open access at Springerlink.comWe develop a model based on the notion that prices lead earnings, allowing for a simultaneous estimation of the implied growth rate and the cost of equity capital for US industrial sectors. The major difference between our approach and that in prior literature is that ours avoids the necessity to make assumptions about terminal values and consequently about future growth rates. In fact, growth rates are an endogenous variable, which is estimated simultaneously with the implied cost of equity capital. Since we require only 1-year-ahead forecasts of earnings and no assumptions about dividend payouts, our methodology allows us to estimate ex ante aggregate growth and risk premia over a larger sample of firms than has previously been possible. Our estimate of the risk premium being between 3.1 and 3.9 % is at the lower end of recent estimates, reflecting the inclusion of these short-lived companies. Our estimate of the long run growth is from 4.2 to 4.7 %