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Article: The market's valuation of fraudulently reported earnings

TitleThe market's valuation of fraudulently reported earnings
Authors
KeywordsMarket valuation
Accounting fraud
Earnings coefficient
Issue Date2014
Citation
Journal of Business Finance and Accounting, 2014, v. 41, n. 5-6, p. 627-651 How to Cite?
AbstractThis study examines the market valuation of accounting earnings during the period before it is publicly revealed that the earnings are fraudulent. Using both cross-sectional and time-series valuation models, we first find that the market accords less weight to earnings when the accounting numbers are fraudulent. We also show that the market better anticipates the presence of fraud when there is information in the public domain indicating a high ex-ante risk of fraud. Our findings suggest that investors are able to accurately assess the probability of fraud and that such assessments affect the market's valuation of earnings even before it is publicly announced that fraud has occurred. © 2014 John Wiley & Sons Ltd.
Persistent Identifierhttp://hdl.handle.net/10722/233736
ISSN
2015 Impact Factor: 0.837
2015 SCImago Journal Rankings: 0.716

 

DC FieldValueLanguage
dc.contributor.authorHui, Kai Wai-
dc.contributor.authorLennox, Clive-
dc.contributor.authorZhang, Guochang-
dc.date.accessioned2016-09-27T07:21:30Z-
dc.date.available2016-09-27T07:21:30Z-
dc.date.issued2014-
dc.identifier.citationJournal of Business Finance and Accounting, 2014, v. 41, n. 5-6, p. 627-651-
dc.identifier.issn0306-686X-
dc.identifier.urihttp://hdl.handle.net/10722/233736-
dc.description.abstractThis study examines the market valuation of accounting earnings during the period before it is publicly revealed that the earnings are fraudulent. Using both cross-sectional and time-series valuation models, we first find that the market accords less weight to earnings when the accounting numbers are fraudulent. We also show that the market better anticipates the presence of fraud when there is information in the public domain indicating a high ex-ante risk of fraud. Our findings suggest that investors are able to accurately assess the probability of fraud and that such assessments affect the market's valuation of earnings even before it is publicly announced that fraud has occurred. © 2014 John Wiley & Sons Ltd.-
dc.languageeng-
dc.relation.ispartofJournal of Business Finance and Accounting-
dc.subjectMarket valuation-
dc.subjectAccounting fraud-
dc.subjectEarnings coefficient-
dc.titleThe market's valuation of fraudulently reported earnings-
dc.typeArticle-
dc.description.natureLink_to_subscribed_fulltext-
dc.identifier.doi10.1111/jbfa.12072-
dc.identifier.scopuseid_2-s2.0-84904268686-
dc.identifier.volume41-
dc.identifier.issue5-6-
dc.identifier.spage627-
dc.identifier.epage651-
dc.identifier.eissn1468-5957-

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