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Richard H Willis - One of the best experts on this subject based on the ideXlab platform.

  • Equity Method investments and sell side analysts information environment
    Accounting review: A quarterly journal of the American Accounting Association, 2013
    Co-Authors: Sam Lee, Shail Pandit, Richard H Willis
    Abstract:

    ABSTRACT: We study the joint effects of intercompany investing and reporting of Equity Method investments on the accuracy and dispersion of analysts' annual earnings-per-share (EPS) forecasts. We compare firm-year observations with and without Equity Method investments. We posit two non-mutually exclusive explanations for how Equity Method investments may affect analyst forecast properties. The Opacity Effect posits that the condensed Equity Method disclosures increase information asymmetry, increasing analysts' forecast errors and forecast dispersion. The Diversification Effect suggests that the diversification of the investor and its investee earnings streams enhances earnings predictability, decreasing analysts' forecast errors and forecast dispersion. Our findings are consistent with both effects operating in the analyst forecasting task. Additional analyses are consistent with the Opacity Effect dominating. This occurrence results, on net, in less accurate and more dispersed forecasts for firm-years ...

  • Equity Method investments and sell side analysts information environment
    Social Science Research Network, 2013
    Co-Authors: Sam Lee, Shail Pandit, Richard H Willis
    Abstract:

    We study the joint effects of intercompany investing and reporting of Equity Method investments on the accuracy and dispersion of analysts’ annual earnings-per-share (EPS) forecasts. We compare firm-year observations with and without Equity Method investments. We posit two non-mutually exclusive explanations for how Equity Method investments may affect analyst forecast properties. The Opacity Effect posits that the condensed Equity Method disclosures increase information asymmetry, increasing analysts’ forecast errors and forecast dispersion. The Diversification Effect suggests that the diversification of the investor and its investee earnings streams enhances earnings predictability, decreasing analysts’ forecast errors and forecast dispersion. Our findings are consistent with both effects operating in the analyst forecasting task. Additional analyses are consistent with the Opacity Effect dominating. This occurrence results, on net, in less accurate and more dispersed forecasts for firm-years with Equity Method investments.

Sam Lee - One of the best experts on this subject based on the ideXlab platform.

  • Equity Method investments and sell side analysts information environment
    Accounting review: A quarterly journal of the American Accounting Association, 2013
    Co-Authors: Sam Lee, Shail Pandit, Richard H Willis
    Abstract:

    ABSTRACT: We study the joint effects of intercompany investing and reporting of Equity Method investments on the accuracy and dispersion of analysts' annual earnings-per-share (EPS) forecasts. We compare firm-year observations with and without Equity Method investments. We posit two non-mutually exclusive explanations for how Equity Method investments may affect analyst forecast properties. The Opacity Effect posits that the condensed Equity Method disclosures increase information asymmetry, increasing analysts' forecast errors and forecast dispersion. The Diversification Effect suggests that the diversification of the investor and its investee earnings streams enhances earnings predictability, decreasing analysts' forecast errors and forecast dispersion. Our findings are consistent with both effects operating in the analyst forecasting task. Additional analyses are consistent with the Opacity Effect dominating. This occurrence results, on net, in less accurate and more dispersed forecasts for firm-years ...

  • Equity Method investments and sell side analysts information environment
    Social Science Research Network, 2013
    Co-Authors: Sam Lee, Shail Pandit, Richard H Willis
    Abstract:

    We study the joint effects of intercompany investing and reporting of Equity Method investments on the accuracy and dispersion of analysts’ annual earnings-per-share (EPS) forecasts. We compare firm-year observations with and without Equity Method investments. We posit two non-mutually exclusive explanations for how Equity Method investments may affect analyst forecast properties. The Opacity Effect posits that the condensed Equity Method disclosures increase information asymmetry, increasing analysts’ forecast errors and forecast dispersion. The Diversification Effect suggests that the diversification of the investor and its investee earnings streams enhances earnings predictability, decreasing analysts’ forecast errors and forecast dispersion. Our findings are consistent with both effects operating in the analyst forecasting task. Additional analyses are consistent with the Opacity Effect dominating. This occurrence results, on net, in less accurate and more dispersed forecasts for firm-years with Equity Method investments.

Xu Zhang - One of the best experts on this subject based on the ideXlab platform.

  • value relevance of proportionate consolidation versus the Equity Method evidence from hong kong
    China journal of accounting research, 2018
    Co-Authors: Kar Shun Wong, Feida Zhang, Xu Zhang
    Abstract:

    Abstract Whether proportionate consolidation (PC) or the Equity Method (EM) provides more informative financial statements is a controversial issue. This study uses data from listed companies in Hong Kong to investigate the value relevance of the EM compared with PC during 2005–2008 when the local word-for-word equivalent HKAS 31 offered the same options. The results of this study provide evidence that PC does not offer higher value relevance than the EM. PC’s horizontal aggregation of a portion of the operations, assets and liabilities of the jointly controlled entities with those of the venturer is less informative to investors than the EM’s vertical aggregation.

  • value relevance of proportionate consolidation versus the Equity Method evidence from hong kong
    Social Science Research Network, 2012
    Co-Authors: Kar Shun Wong, Feida Zhang, Xu Zhang
    Abstract:

    Whether proportionate consolidation (PC) or the Equity Method (EM) provides more informative financial statements has been controversial. This study uses data from listed companies in Hong Kong to investigate the value relevance of EM compared to PC during 2005-2008 when the local word-for-word equivalent HKAS 31 offered the same options. The results of this study provide evidence that PC does not offer higher value relevance than EM. PC’s horizontal aggregation of a portion of the operations, assets and liabilities of the jointly controlled entities (JCEs) with those of the venturer is less informative to investors than EM’s vertical aggregation.

Shail Pandit - One of the best experts on this subject based on the ideXlab platform.

  • Equity Method investments and sell side analysts information environment
    Accounting review: A quarterly journal of the American Accounting Association, 2013
    Co-Authors: Sam Lee, Shail Pandit, Richard H Willis
    Abstract:

    ABSTRACT: We study the joint effects of intercompany investing and reporting of Equity Method investments on the accuracy and dispersion of analysts' annual earnings-per-share (EPS) forecasts. We compare firm-year observations with and without Equity Method investments. We posit two non-mutually exclusive explanations for how Equity Method investments may affect analyst forecast properties. The Opacity Effect posits that the condensed Equity Method disclosures increase information asymmetry, increasing analysts' forecast errors and forecast dispersion. The Diversification Effect suggests that the diversification of the investor and its investee earnings streams enhances earnings predictability, decreasing analysts' forecast errors and forecast dispersion. Our findings are consistent with both effects operating in the analyst forecasting task. Additional analyses are consistent with the Opacity Effect dominating. This occurrence results, on net, in less accurate and more dispersed forecasts for firm-years ...

  • Equity Method investments and sell side analysts information environment
    Social Science Research Network, 2013
    Co-Authors: Sam Lee, Shail Pandit, Richard H Willis
    Abstract:

    We study the joint effects of intercompany investing and reporting of Equity Method investments on the accuracy and dispersion of analysts’ annual earnings-per-share (EPS) forecasts. We compare firm-year observations with and without Equity Method investments. We posit two non-mutually exclusive explanations for how Equity Method investments may affect analyst forecast properties. The Opacity Effect posits that the condensed Equity Method disclosures increase information asymmetry, increasing analysts’ forecast errors and forecast dispersion. The Diversification Effect suggests that the diversification of the investor and its investee earnings streams enhances earnings predictability, decreasing analysts’ forecast errors and forecast dispersion. Our findings are consistent with both effects operating in the analyst forecasting task. Additional analyses are consistent with the Opacity Effect dominating. This occurrence results, on net, in less accurate and more dispersed forecasts for firm-years with Equity Method investments.

Roger C Graham - One of the best experts on this subject based on the ideXlab platform.

  • the value relevance of Equity Method fair value disclosures
    Social Science Research Network, 2003
    Co-Authors: Roger C Graham, Craig E Lefanowicz, Kathy R Petroni
    Abstract:

    We assess the valuation implications of the fair value disclosures made for publicly traded securities accounted for under the Equity Method. We test the association between investors' stock price metrics and fair value disclosures while controlling for book values on a sample of 172 investor firm-years during 1993-1997. Our results indicate that the information in the fair value disclosures is incremental to the information provided by both an investment's Equity Method book value and Equity Method reported income. This suggests that there is nothing unique about investments in publicly traded common stock that involve significant influence that makes the fair value disclosures irrelevant for firm valuation.

  • the value relevance of Equity Method fair value disclosures
    Journal of Business Finance & Accounting, 2003
    Co-Authors: Roger C Graham, Craig E Lefanowicz, Kathy R Petroni
    Abstract:

    Under the Equity Method of accounting fair value disclosures are required for investments in common stock for which a quoted market price is available. To date, no studies have specifically considered the value relevance of book and fair values for Equity Method investments. 1 In addition, Equity Method investments have been consistently excluded from fair value accounting standards passed by the FASB (Financial Accounting Standards Board) and under consideration by the IASC (International Accounting Standards Committee) without a documented reason. In this study we examine the value relevance of the fair value disclosures made for publicly traded securities accounted for under the Equity Method. 2 Our intention is to provide evidence that will contribute to our understanding of the valuation implications of the fair value disclosures. This

  • decision usefulness of alternative joint venture reporting Methods
    Accounting Horizons, 2003
    Co-Authors: Roger C Graham, Raymond D King, Cameron K J Morrill
    Abstract:

    Depending on the country and circumstances, reporting rules for intercorporate investments may require the cost Method, the Equity Method, proportionate consolidation, or full consolidation, and may yield dramatically different accounting numbers. In the post‐Enron environment there is a particular focus on investments for which liabilities remain off balance sheet. We compare the information content of alternative accounting treatments for a sample of Canadian firms reporting joint ventures under proportionate consolidation. We restate their financial statements using the Equity Method, and we compare the information content of the two accounting Methods in predicting accounting return on common shareholders' Equity. We find evidence consistent with the view that financial statements prepared under proportionate consolidation provide better predictions of future return on shareholders' Equity than do financial statements prepared under the Equity Method. We conclude that, for these firms, proportionate c...