Downloaded from 2. If the stochastic process is assumed to be AR(1) instead of random walk, then a weighted where p is the first-order serial correlation, would be the appropri- =&A,,, =&At,,-,

No abstract

No abstract

Accounting performance measures such as earnings and cash flows are useful for both valuation and performance evaluation purposes. However, little evidence exists on whether there is any association between these two roles. In this study, we provide large sample empirical evidence that the value relevance of earnings explains a significant amount of the cross‐sectional variation in the pay‐sensitivity of earnings and the incremental value relevance of cash flows explains variation in the marginal pay‐sensitivity of cash flows. We document that while both value relevance and compensation weight on earnings decline from the subperiod of 1993 to 1997 to the subperiod of 1998 to 2003, both value relevance and compensation weight on cash flows increase from the earlier subperiod to the later subperiod. Overall, our results provide additional evidence that value relevance of a performance measure plays a significant role in its use for performance evaluation.

In this study, refuse excavated from a typical refuse landfill in Shanghai after 8-10 years of placement was characterized in terms of particle size, total nitrogen, total phosphorus, and biodegradable matter. The refuse contained a large and diverse population of micro-organisms with a high capacity for decomposing refractory organic matter present in some wastewaters, including leachate. It was found that the aged refuse was quite stable after about a decade of decomposition in the warm, humid climate of southern China. The fine fractions resembled and had the properties of black soil, a medium that is suitable for green construction, organic fertilizer, or as bioreactor media for biological treatment of organic wastewaters. Excavation of the aged refuse would make about 50% of the space available for fresh refuse. The plastics, glass, textiles, and cans can be readily mechanically separated and recycled after cleaning. It is estimated that at least 200 millions tonnes of such aged refuse are available in China alone, and at least 10 times that much is buried worldwide. Hence, the evaluation of mined landfill waste and consideration of its potential uses is of great significance.

We examine the information role of accounting disclosures on warranties, utilizing a database that became available due to the requirements of FIN 45. First, because firms use warranty policies as a business strategy to promote their products, a warranty reserve can serve two roles: an information signal regarding product quality, as well as a contingent liability. Consistent with this view, we find that the stock market recognizes that: (1) the warranty reserve contains information about firms’ future performance, and (2) the reserve is a liability. Second, because warranty accruals require estimation of future claims, they can be used as a tool of earnings management. Our evidence indicates that managers use warranty accruals to manage earnings opportunistically to meet earnings targets. Finally, we find that the stock market recognizes the understatement of warranty liabilities of firms that managed earnings.

No abstract

No abstract