Discussion of “Using accounting information for consumption planning and equity valuation”

Peter Ove Christensen ()
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Peter Ove Christensen: University of Aarhus

Review of Accounting Studies, 2007, vol. 12, issue 2, No 5, 257-269

Abstract: Abstract This paper discusses Yee (2007), who investigates the role of accounting information for consumption planning and equity valuation. Higher earnings quality increases investor welfare and ex ante stock prices as well as the weight on earnings in valuation equations based on both cash flows and earnings. The former is due to improved consumption smoothing through more informed production choices, while the latter is due to the impact on the relative information content of current cash flows versus earnings about future cash flows.

Keywords: Capital market equilibria; Earnings quality; Equity valuation; Production economies; D51; G11; G12; M41 (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1007/s11142-007-9034-3

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