The effect of earnings-based analysis 'change over financial analysts' investment decisions in Egypt

Khaled Dahawy and Tamer A. El Nashar

International Journal of Economics and Accounting, 2012, vol. 3, issue 3/4, 245-263

Abstract: This paper uses a cross-sectional approach to examine whether earnings-based analysis change ΔEBA affects financial analysts investment decisions in EGYPT. We measure ΔEBA's effect by the positive correlation of firm's earnings quality change represented by change in total accruals, total current accruals and cash flow from operations, and by firm's earnings persistence change ΔEP, earnings power change ΔEP, and earnings valuation represented by changes in price/earnings and price/book ratios, with its change in stock prices. We find that change in stock prices which is used as an indication for financial analysts' investment decisions is affected by earnings quality change represented by changes in total and current accruals and cash flows from operations, as well as by earnings valuation represented by price earnings ratio change.

Keywords: earnings-based analysis change; earnings quality change; earnings persistence change; earnings power change; earnings valuation; financial analysts; investment decisions; Egyptian capital markets; Egypt; accruals; cash flow; price earnings ratio change. (search for similar items in EconPapers)
Date: 2012
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