Do price-earnings multiples for firms with patterns of increasing earnings vary with the quality of the earnings pattern?

References

• Abad, D., Cutillas-Gomariz, M. F., Sánchez-Ballesta, J. P., & Yagüe, J. (2018). Real earnings management and information asymmetry in the equity market. European Accounting Review, 27(2), 209–235. https://doi.org/10.1080/09638180.2016.1261720
   Web of Science ®Google Scholar
• Aledo Martínez, J., García Lara, J. M., González Pérez, M. T., & Grambovas, C. A. (2020). An empirical assessment of proposed solutions for resolving scale problems in value relevance accounting research. Accounting and Finance, 60(4), 3905–3933. https://doi.org/10.1111/acfi.12510
   Web of Science ®Google Scholar
• Athanasakou, V., Strong, N. C., & Walker, M. (2011). The market reward for achieving analyst earnings expectations: Does managing expectations or earnings matter? Journal of Business Finance and Accounting, 38(1–2), 58–94. https://doi.org/10.1111/j.1468-5957.2010.02219.x
   Web of Science ®Google Scholar
• Baber, W. R., Chen, S., & Kang, S. H. (2006). Stock price reaction to evidence of earnings management: Implications for supplementary financial disclosure. Review of Accounting Studies, 11(1), 5–19. https://doi.org/10.1007/s11142-006-6393-0
   Web of Science ®Google Scholar
• Barth, M. E., & Clinch, G. (2009). Scale effects in capital markets-based accounting research. Journal of Business Finance and Accounting, 36(3–4), 253–288. https://doi.org/10.1111/j.1468-5957.2009.02133.x
   Web of Science ®Google Scholar
• Barth, M. E., Elliott, J. A., & Finn, M. W. (1999). Market rewards associated with patterns of increasing earnings. Journal of Accounting Research, 37(2), 387–414. https://doi.org/10.2307/2491414
   Web of Science ®Google Scholar
• Barton, J. (2001). Does the use of financial derivatives affect earnings management decisions? Accounting Review, 76(1), 1–26. http://www.jstor.org/stable/3068842
   Web of Science ®Google Scholar
• Bartov, E., & Cohen, D. A. (2009). The “numbers game” in the pre- and post-Sarbanes-Oxley eras. Journal of Accounting, Auditing and Finance, 24(4), 505–534. https://doi.org/10.1177/0148558X0902400401
   Google Scholar
• Bartov, E., Givoly, D., & Hayn, C. (2002). The rewards to meeting or beating earnings expectations. Journal of Accounting and Economics, 33(2), 173–204. https://doi.org/10.1016/S0165-4101(02)00045-9
   Web of Science ®Google Scholar
• Bhojraj, S., Hribar, P., Picconi, M., & McInnis, J. (2009). Making sense of cents: An examination of firms that marginally miss or beat analyst forecasts. Journal of Finance, 64(5), 2361–2388. https://doi.org/10.1111/j.1540-6261.2009.01503.x
   Web of Science ®Google Scholar
• Bilinski, P. (2014). Do analysts disclose cash flow forecasts with earnings estimates when earnings quality is low? Journal of Business Finance and Accounting, 41(3–4), 401–434. https://doi.org/10.1111/jbfa.12056
   Web of Science ®Google Scholar
• Bird, A., Karolyi, S. A., & Ruchti, T. G. (2019). Understanding the “numbers game.” Journal of Accounting and Economics, 68(2–3), 101242. https://doi.org/10.1016/j.jacceco.2019.101242
   Web of Science ®Google Scholar
• Brown, L. D., & Caylor, M. L. (2005). A temporal analysis of quarterly earnings thresholds: Propensities and valuation consequences. Accounting Review, 80(2), 423–440. https://doi.org/10.2308/accr.2005.80.2.423
   Web of Science ®Google Scholar
• Brown, K., Chen, V. Y. S., & Kim, M. (2015). Earnings management through real activities choices of firms near the investment-speculative grade borderline. Journal of Accounting and Public Policy, 34(1), 74–94. https://doi.org/10.1016/j.jaccpubpol.2014.09.002
   Web of Science ®Google Scholar
• Burgstahler, D., & Dichev, I. (1997). Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics, 24(1), 99–126. https://doi.org/10.1016/S0165-4101(97)00017-7
   Web of Science ®Google Scholar
• Burgstahler, D., & Eames, M. J. (2003). Earnings management to avoid losses and earnings decreases: Are analysts fooled? Contemporary Accounting Research, 20(2), 253–294. https://doi.org/10.1506/BXXP-RGTD-H0PM-9XAL
   Web of Science ®Google Scholar
• Byzalov, D., & Basu, S. (2019). Modeling the determinants of meet-or-just-beat behavior in distribution discontinuity tests. Journal of Accounting and Economics, 68(2–3), 101266. https://doi.org/10.1016/j.jacceco.2019.101266
   Web of Science ®Google Scholar
• Call, A., Chen, S., & Tong, Y. (2009). Are analysts’ earnings forecasts more accurate when accompanied by cash flow forecasts? Review of Accounting Studies, 14(2–3), 358–391. https://doi.org/10.1007/s11142-009-9086-7
   Web of Science ®Google Scholar
• Cheng, Q., Lee, J., & Shevlin, T. (2016). Internal governance and real earnings management. Accounting Review, 91(4), 1051–1085. http://www.jstor.org/stable/43867309
   Web of Science ®Google Scholar
• Christie, A. A. (1987). On cross-sectional analysis in accounting research. Journal of Accounting and Economics, 9(3), 231–258. https://doi.org/10.1016/0165-4101(87)90007-3
   Web of Science ®Google Scholar
• Chu, J., Dechow, P. M., Hui, K. W., & Wang, A. Y. (2019). Maintaining a reputation for consistently beating earnings expectations and the slippery slope to earnings manipulation. Contemporary Accounting Research, 36(4), 1966–1998. https://doi.org/10.1111/1911-3846.12492
   Web of Science ®Google Scholar
• Cohen, D. A., Dey, A., & Lys, T. Z. (2008). Real and accrual-based earnings management in the pre- and post-Sarbanes-Oxley periods. Accounting Review, 83(3), 757–787. https://www.jstor.org/stable/30244500
   Web of Science ®Google Scholar
• Cohen, D. A., & Zarowin, P. (2010). Accrual-based and real earnings management activities around seasoned equity offerings. Journal of Accounting and Economics, 50(1), 2–19. https://doi.org/10.1016/j.jacceco.2010.01.002
   Web of Science ®Google Scholar
• Coulton, J. J., Saune, N., Taylor, S. L., & Cahan, S. (2015). Overvalued equity, benchmark beating and unexpected accruals. Accounting and Finance, 55(4), 989–1014. https://doi.org/10.1111/acfi.12077
   Web of Science ®Google Scholar
• Coulton, J., Taylor, S., & Taylor, S. (2005). Is “benchmark beating” by Australian firms evidence of earnings management? Accounting and Finance, 45(4), 553–576. https://doi.org/10.1111/j.1467-629X.2005.00145.x
   Google Scholar
• Daniel, K., Hirshleifer, D., & Teoh, S. H. (2002). Investor psychology in capital markets: Evidence and policy implications. Journal of Monetary Economics, 49(1), 139–209. https://doi.org/10.1016/S0304-3932(01)00091-5
   Web of Science ®Google Scholar
• Darrough, M., & Ye, J. (2007). Valuation of loss firms in a knowledge-based economy. Review of Accounting Studies, 12(1), 61–93. https://doi.org/10.1007/s11142-006-9022-z
   Web of Science ®Google Scholar
• Das, S., Shroff, P. K., & Zhang, H. (2009). Quarterly earnings patterns and earnings management. Contemporary Accounting Research, 26(3), 797–831. https://doi.org/10.1506/car.26.3.7
   Web of Science ®Google Scholar
• Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. Accounting Review, 77 (s–1), 35–59. (SUPPL https://doi.org/10.2308/accr.2002.77.s-1.61.
   Web of Science ®Google Scholar
• Dechow, P., Ge, W., & Schrand, C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2–3), 344–401. https://doi.org/10.1016/j.jacceco.2010.09.001
   Web of Science ®Google Scholar
• Dechow, P. M., Kothari, S. P., & Watts, R. L. (1998). The relation between earnings and cash flows. Journal of Accounting and Economics, 25(2), 133–168. https://doi.org/10.1016/S0165-4101(98)00020-2
   Web of Science ®Google Scholar
• Dechow, P. M., Richardson, S. A., & Tuna, I. (2003). Why are earnings kinky? An examination of the earnings management explanation. Review of Accounting Studies, 8(2/3), 355–384. https://doi.org/10.1023/A:1024481916719
   Web of Science ®Google Scholar
• Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. The Accounting Review, 70(2), 193–225. http://www.jstor.org/stable/248303
   Web of Science ®Google Scholar
• DeFond, M., & Hung, M. (2003). An empirical analysis of analysts’ cash flow forecasts. Journal of Accounting and Economics, 35(1), 73–100. https://doi.org/10.1016/S0165-4101(02)00098-8
   Web of Science ®Google Scholar
• DeFond, M. L., & Park, C. W. (2001). The reversal of abnormal accruals and the market valuation of earnings surprises. Accounting Review, 76(3), 375–404. http://www.jstor.org/stable/3068941
   Web of Science ®Google Scholar
• Degeorge, F., Patel, J., & Zeckhauser, R. (1999). Earnings management to exceed thresholds. Journal of Business, 72(1), 1–33. https://doi.org/10.1086/209601
   Web of Science ®Google Scholar
• Demirakos, E. G., Strong, N. C., & Walker, M. (2004). What valuation models do analysts use? Accounting Horizons, 18(4), 221–240. https://doi.org/10.2308/acch.2004.18.4.221
   Google Scholar
• Di Meo, F., García Lara, J. M., & Surroca, J. A. (2017). Managerial entrenchment and earnings management. Journal of Accounting and Public Policy, 36(5), 399–414. https://doi.org/10.1016/j.jaccpubpol.2017.07.003
   Web of Science ®Google Scholar
• Dichev, I. D., Graham, J. R., Harvey, C. R., & Rajgopal, S. (2013). Earnings quality: Evidence from the field. Journal of Accounting and Economics, 56(2–3), 1–33. https://doi.org/10.1016/j.jacceco.2013.05.004
   Web of Science ®Google Scholar
• Dickinson, V. (2011). Cash flow patterns as a proxy for firm life cycle. Accounting Review, 86(6), 1969–1994. http://www.jstor.org/stable/41408043
   Web of Science ®Google Scholar
• Doukakis, L. C. (2014). The effect of mandatory IFRS adoption on real and accrual-based earnings management activities. Journal of Accounting and Public Policy, 33(6), 551–572. https://doi.org/10.1016/j.jaccpubpol.2014.08.006
   Web of Science ®Google Scholar
• Ewert, R., & Wagenhofer, A. (2005). Economic effects of tightening accounting standards to restrict earnings management. Accounting Review, 80(4), 1101–1124. http://www.jstor.org/stable/4093118
   Web of Science ®Google Scholar
• Francis, B., Hasan, I., & Li, L. (2016). A cross-country study of legal-system strength and real earnings management. Journal of Accounting and Public Policy, 35(5), 477–512. https://doi.org/10.1016/j.jaccpubpol.2016.06.004
   Web of Science ®Google Scholar
• Francis, J., LaFond, R., Olsson, P., & Schipper, K. (2003). Earnings quality and the pricing effects of earnings patterns. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.414142
   Google Scholar
• Garcia Osma, B., Scarlat, E., & Shields, K. (2020). Insider trading restrictions and earnings management. Accounting and Business Research, 50(3), 205–237. https://doi.org/10.1080/00014788.2020.1712650
   Web of Science ®Google Scholar
• Ghosh, A., Gu, Z., & Jain, P. C. (2005). Sustained earnings and revenue growth, earnings quality, and earnings response coefficients. Review of Accounting Studies, 10(1), 33–57. https://doi.org/10.1007/s11142-004-6339-3
   Web of Science ®Google Scholar
• Gleason, C. A., & Mills, L. F. (2008). Evidence of differing market responses to beating analysts’ targets through tax expense decreases. Review of Accounting Studies, 13(2–3), 295–318. https://doi.org/10.1007/s11142-007-9066-8
   Web of Science ®Google Scholar
• Godsell, D., Welker, M., & Zhang, N. (2017). Earnings management during antidumping investigations in Europe: Sample-wide and cross-sectional evidence. Journal of Accounting Research, 55(2), 407–457. https://doi.org/10.1111/1475-679X.12166
   Web of Science ®Google Scholar
• Govendir, B., & Wells, P. (2014). The influence of the accruals generating process on earnings persistence. Australian Journal of Management, 39(4), 593–614. https://doi.org/10.1177/0312896213512319
   Web of Science ®Google Scholar
• Gow, I. D., Ormazabal, G., & Taylor, D. J. (2010). Correcting for cross-sectional and time-series dependence in accounting research. Accounting Review, 85(2), 483–512. http://www.jstor.org/stable/20744139
   Web of Science ®Google Scholar
• Graham, J. R., Harvey, C. R., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1–3), 3–73. https://doi.org/10.1016/j.jacceco.2005.01.002
   Web of Science ®Google Scholar
• Gunny, K. A. (2010). The relation between earnings management using real activities manipulation and future performance: Evidence from meeting earnings benchmarks. Contemporary Accounting Research, 27(3), 855–888. https://doi.org/10.1111/j.1911-3846.2010.01029.x
   Web of Science ®Google Scholar
• Gunny, K., & Zhang, T. C. (2014). Do managers use meeting analyst forecasts to signal private information? Evidence from patent citations. Journal of Business Finance and Accounting, 41(7–8), 950–973. https://doi.org/10.1111/jbfa.12082
   Web of Science ®Google Scholar
• Haga, J., Höglund, H., & Sundvik, D. (2018). Stock market listing status and real earnings management. Journal of Accounting and Public Policy, 37(5), 420–435. https://doi.org/10.1016/j.jaccpubpol.2018.09.002
   Web of Science ®Google Scholar
• Hayn, C. (1995). The information content of losses. Journal of Accounting and Economics, 20(2), 125–153. https://doi.org/10.1016/0165-4101(95)00397-2
   Web of Science ®Google Scholar
• Hirshleifer, D., & Teoh, S. H. (2003). Limited attention, information disclosure, and financial reporting. Journal of Accounting and Economics, 36(1–3), 337–386. https://doi.org/10.1016/j.jacceco.2003.10.002
   Web of Science ®Google Scholar
• Houmes, R. E., & Skantz, T. R. (2010). Highly valued equity and discretionary accruals. Journal of Business Finance and Accounting, 37(1–2), 60–92. https://doi.org/10.1111/j.1468-5957.2009.02179.x
   Web of Science ®Google Scholar
• Jayaraman, S. (2008). Earnings volatility, cash flow volatility, and informed trading. Journal of Accounting Research, 46(4), 809–851. https://doi.org/10.1111/j.1475-679X.2008.00293.x
   Web of Science ®Google Scholar
• Jensen, M. C. (2005). Agency costs of overvalued equity. Financial Management, 34(1), 5–19. https://doi.org/10.1111/j.1755-053X.2005.tb00090.x
   Web of Science ®Google Scholar
• Jones, J. J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 29(2), 193–228. https://doi.org/10.2307/2491047
   Web of Science ®Google Scholar
• Kama, I., & Melumad, N. (2020). Camouflaged indicators of earnings management. European Accounting Review, 29(2), 361–382. https://doi.org/10.1080/09638180.2019.1595693
   Web of Science ®Google Scholar
• Keung, E., Lin, Z. X., & Shih, M. (2010). Does the stock market see a zero or small positive earnings Surprise as a red flag? Journal of Accounting Research, 48(1), 105–136. http://www.jstor.org/stable/40389243
   Web of Science ®Google Scholar
• Kim, J., Kim, Y., & Zhou, J. (2017). Languages and earnings management. Journal of Accounting and Economics, 63(2–3), 288–306. https://doi.org/10.1016/j.jacceco.2017.04.001
   Web of Science ®Google Scholar
• Kim, J. B., & Sohn, B. C. (2013). Real earnings management and cost of capital. Journal of Accounting and Public Policy, 32(6), 518–543. https://doi.org/10.1016/j.jaccpubpol.2013.08.002
   Web of Science ®Google Scholar
• Kinney, W., Burgstahler, D., & Martin, R. (2002). Earnings Surprise “ Materiality ” as measured by stock returns. Journal of Accounting Research, 40(5), 1297–1329. https://doi.org/10.1111/1475-679X.t01-1-00055
   Web of Science ®Google Scholar
• Koonce, L., & Lipe, M. G. (2010). Earnings trend and performance relative to benchmarks: How consistency influences their joint use. Journal of Accounting Research, 48(4), 859–884. https://doi.org/10.1111/j.1475-679X.2010.00377.x
   Web of Science ®Google Scholar
• Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of Accounting and Economics, 39(1), 163–197. https://doi.org/10.1016/j.jacceco.2004.11.002
   Web of Science ®Google Scholar
• Liu, J., Nissim, D., & Thomas, J. (2002). Equity valuation using multiples. Journal of Accounting Research, 40(1), 135–172. https://doi.org/10.2469/dig.v32.n4.1163
   Web of Science ®Google Scholar
• Matsunaga, S. R., & Park, C. W. (2001). The effect of missing a quarterly earnings benchmark on the CEO’s annual bonus. Accounting Review, 76(3), 313–332. http://www.jstor.org/stable/3068938
   Web of Science ®Google Scholar
• McNichols, M. F. (2002). The quality of accruals and earnings: The role of accrual estimation errors: Discussion. The Accounting Review, 77(Supplement), 61–69. https://doi.org/10.2308/accr.2002.77.s-1.61
   Web of Science ®Google Scholar
• Mellado-Cid, C., Jory, S. R., & Ngo, T. N. (2019). Options trades, short sales and real earnings management. Accounting and Business Research, 49(4), 400–427. https://doi.org/10.1080/00014788.2019.1573655
   Web of Science ®Google Scholar
• Myers, J. N., Myers, L. A., & Skinner, D. J. (2007). Earnings momentum and earnings management. Journal of Accounting, Auditing and Finance, 22(2), 249–284. https://doi.org/10.1177/0148558X0702200211
   Google Scholar
• Ohlson, J. (1995). Earnings, book-values, and dividends in equity valuation. Contemporary Accounting Research, 11(2), 661–687. https://doi.org/10.1111/j.1911-3846.1995.tb00461.x
   Google Scholar
• Ohlson, J. (2015). Accounting research and common sense. Abacus, 51(4), 525–535. https://doi.org/10.1111/abac.12059
   Web of Science ®Google Scholar
• Owens, E. L., Wu, J. S., & Zimmerman, J. (2017). Idiosyncratic shocks to firm underlying economics and abnormal accruals. Accounting Review, 92(2), 183–219 https://doi.org/10.2308/accr-51523.
   Web of Science ®Google Scholar
• Pappas, K., Walsh, E., & Xu, A. L. (2019). Real earnings management and loan contract terms. British Accounting Review, 51(4), 373–401. https://doi.org/10.1016/j.bar.2019.03.002
   Web of Science ®Google Scholar
• Peasnell, K. V., Pope, P. F., & Young, S. (2000). Accrual management to meet earnings targets: UK evidence pre- and post-Cadbury. British Accounting Review, 32(4), 415–445. https://doi.org/10.1006/bare.2000.0134
   Google Scholar
• Petersen, M. A. (2009). Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies, 22(1), 435–480. https://doi.org/10.1093/rfs/hhn053
   Web of Science ®Google Scholar
• Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of Accounting and Economics, 42(3), 335–370. https://doi.org/10.1016/j.jacceco.2006.01.002
   Web of Science ®Google Scholar
• Shi, G., Sun, J., & Zhang, L. (2018). Product market competition and earnings management: A firm-level analysis. Journal of Business Finance and Accounting, 45(5–6), 604–624. https://doi.org/10.1111/jbfa.12300
   Web of Science ®Google Scholar
• Skinner, D. J., & Sloan, R. G. (2002). Earnings surprises, growth expectations, and stock returns or don’t let an earnings torpedo sink your portfolio. Review of Accounting Studies, 7(2–3), 289–312. https://doi.org/10.1023/A:1020294523516
   Google Scholar
• Sohn, B. C. (2016). The effect of accounting comparability on the accrual-based and real earnings management. Journal of Accounting and Public Policy, 35(5), 513–539. https://doi.org/10.1016/j.jaccpubpol.2016.06.003
   Web of Science ®Google Scholar
• Stein, J. C. (1989). Efficient capital markets, inefficient firms: A model of myopic corporate behavior. The Quarterly Journal of Economics, 104(4), 655–669. https://doi.org/10.2307/2937861
   Web of Science ®Google Scholar
• Walker, M. (2013). How far can we trust earnings numbers? What research tells us about earnings management. Accounting and Business Research, 43(4), 445–481. https://doi.org/10.1080/00014788.2013.785823
   Web of Science ®Google Scholar
• White, H. (1980). A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica, 48(4), 817–838. https://doi.org/10.2307/1912934
   Web of Science ®Google Scholar
• Zang, A. Y. (2012). Evidence on the trade-off between real activities manipulation and accrual-based earnings management. Accounting Review, 87(2), 675–703. http://www.jstor.org/stable/23245619
   Web of Science ®Google Scholar
• Zhang, G. (2000). Accounting information, capital investment decisions, and equity valuation: Theory and empirical implications. Journal of Accounting Research, 38(2), 271–295. https://doi.org/10.2307/2672934
   Web of Science ®Google Scholar
• Zhao, Y., Chen, K. H., Zhang, Y., & Davis, M. (2012). Takeover protection and managerial myopia: Evidence from real earnings management. Journal of Accounting and Public Policy, 31(1), 109–135. https://doi.org/10.1016/j.jaccpubpol.2011.08.004
   Web of Science ®Google Scholar