The relationship between persistence of abnormal earnings and usefulness of accounting information in hotel companies |
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| Authors: | Sungil Jeon Inwon Kang Sangjae Lee |
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| Institution: | a School of Business Administration, Sung Kyun Kwan University, Seoul 110-745, South Korea;b School of Business Administration, Sejong University, 98 Kunja-dong, Kwangjin-gu, Seoul 143-747, South Korea |
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| Abstract: | This study examines whether persistence of abnormal earnings affects book value of equity and earnings. According to Ohlson (Contemporary Accounting Res. (1995) 661–687) theoretical framework, a company's market value is a function of its book value of equity, earnings and other information. The persistence of abnormal earnings has a systematic relation with book value of equity and earnings. The persistence is measured using the first auto-correlation coefficient of abnormal earnings for two consecutive periods. This study intends to measure the persistence of abnormal earnings during 1993–2000 period for hotels and manufacturing companies. The results indicate that the persistence of abnormal earnings is higher for hotels than manufacturing companies and for hotels of first class than of other classes. |
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| Keywords: | Persistence parameter of abnormal earnings Model of abnormal earnings The quality of accounting profit |
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