The first half-century of empirical capital markets research in accounting in pictures

S. P. Kothari (), Bryce Schonberger (), Charles Wasley () and Jason J. Xiao ()
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S. P. Kothari: MIT Sloan School of Management
Bryce Schonberger: University of Colorado at Boulder
Charles Wasley: University of Rochester
Jason J. Xiao: Binghamton University, SUNY

Review of Accounting Studies, 2025, vol. 30, issue 4, No 1, 3176 pages

Abstract: Abstract Seminal papers by Ball and Brown (1968) and Beaver (1968) spawned a vast literature on the role of accounting numbers in capital markets. This literature, often referred to as capital markets research in accounting (CMRA), is now more than a half-century old. In light of numerous changes to the economic and financial reporting environments over this time, we estimate CMRA’s major relations using a comprehensive sample period. We illustrate each relation using plots, allowing us to efficiently present CMRA’s first half-century consistent with the adage “a picture is worth a thousand words.” The aims of our study are to document the extent of time-series variation in CMRA’s major relations and to provide evidence on market-level determinants of that variation. In doing so, our study provides a natural starting point for future research designed to develop and test additional causal explanations for time-series variation in the properties of CMRA’s major relations.

Keywords: Capital markets; Earnings-return relation; Earnings announcements; Earnings response coefficients; Earnings forecasts; Value relevance (search for similar items in EconPapers)
JEL-codes: E32 M41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-025-09887-3

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