A discussion of “Inter-industry network structure and the cross-predictability of earnings and stock returns”

Rebecca N. Hann ()
Additional contact information
Rebecca N. Hann: University of Maryland

Review of Accounting Studies, 2014, vol. 19, issue 3, No 9, 1225-1233

Abstract: Abstract Aobdia et al. (Rev Account Stud, 2014) view the economy as a network of customers and suppliers. Using the 1997 input–output trade flow data from the Bureau of Economic Analysis to model the inter-industry network, they examine whether an industry’s position in the network, in particular, its “network centrality,” affects the transmission of information and economic shocks. They find that, compared to the accounting performance and stock returns of noncentral industries, those of central industries are explained by aggregate risks to a greater extent and are more highly associated with the contemporaneous and future performance of their linked industries. These findings suggest that network centrality matters—it plays an important role in how economic shocks are transmitted within the economy. The question of why network centrality matters, however, remains unanswered. A fruitful avenue for future research is to explore the origin of shocks to shed light on the fundamental question of whether sectoral shocks can aggregate into macro shocks.

Keywords: Industry network; Network centrality; Economic shocks; Aggregate fluctuations; Earnings predictability (search for similar items in EconPapers)
JEL-codes: E32 L16 M41 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11142-014-9289-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:reaccs:v:19:y:2014:i:3:d:10.1007_s11142-014-9289-4

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1007/s11142-014-9289-4

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().