The Choice of Fiscal Year and the Earnings–Return Relationship

Martin J. Dierker, Taekyu Kim, Sang Hyun Park

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

The positive earnings–return relationship is weaker for US-listed firms with a calendar fiscal year. Furthermore, stock returns for these firms are more positively related to industry earnings, as a common fiscal year-end improves comparability of earnings. December fiscal year-ends are more frequent among large and low market-to-book industries and firms, consistent with firms trading off the benefits of better comparability against the associated higher accounting and auditing costs. Our results imply that the prevalence of a single standard for fiscal year-ends in other Asia–Pacific economies is indeed beneficial, as it promotes market transparency.

Original languageEnglish (US)
Pages (from-to)503-530
Number of pages28
JournalAsia-Pacific Journal of Financial Studies
Volume48
Issue number4
DOIs
StatePublished - 2019
Externally publishedYes

Keywords

  • Earnings–return regression
  • Fiscal year choice
  • Transparency

ASJC Scopus subject areas

  • Finance

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