Just-in-time inventory systems innovation and the predictability of earnings |
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Authors: | Thomas A Jefferson P Timothy B Katherine J |
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Institution: | a University of Arkansas, Department of Accounting, Sam M. Walton College of Business, Fayetteville, AR 72701 1201, USA;b Auburn University, Auburn, AL, USA;c University of North Carolina, Greensboro, NC, USA;d Lander University, Greenwood, SC, USA |
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Abstract: | Firms that adopt just-in-time (JIT) inventory practices do so in order to realize cost savings and improve product quality, but an unexpected benefit to such firms could be a more predictable earnings stream. We examine the relationship between implementation of just-in-time inventory practices and the predictability of future quarterly earnings for a matched-pair sample of 82 firms, half of which have publicly announced that they have adopted JIT inventory practices. We find that one- and four-step-ahead forecasts of quarterly earnings, using either a Brown–Rozeff Journal of Accounting Research (1979) 179–189] ARIMA or a seasonal random walk expectation model, are more accurate for the firms that have adopted JIT. |
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Keywords: | Author Keywords: Just-in-time Inventory utilization Quarterly earnings forecasts |
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