Non‐operating earnings and firm risk

Surendranath Jory, Thanh Ngo and Hongxia Wang

Review of Financial Economics, 2021, vol. 39, issue 1, 95-123

Abstract: We find that non‐operating earnings reduce total earnings volatility, stock price volatility, idiosyncratic risk, and crash risk. The risk‐reducing effects of non‐operating earnings are higher than those of operating earnings for risk measures based on stock market data. Non‐operating earnings serve to mitigate risks among firms with operating losses, high financial leverage, high growth uncertainty, and low‐ability managers.

Date: 2021
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https://doi.org/10.1002/rfe.1111

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Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:39:y:2021:i:1:p:95-123

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