Abstract
The purpose of this paper is to investigate whether there is some significant -degree of association between the earnings of an individual finn, the earnings of other firms in its industry, and the earnings of all firms in the economy. A strong association has been found between the returns to a firm's stockholders, returns to stockholders of firms in the same industry, and returns to stockholders in toto. For example, Benjamin King's study of 63 firms over the period of June, 1927 to December, 1960 revealed . . that the typical stock has about half of its variance explained by an element of price change that affects the whole market, and that industry effects account for perhaps an additional ten per cent.' Since there is also both theoretical and empirical support for the contention that a concept of earnings is related to market valuation,2 earnings numbers might also reflect a roughly -similar degree of association.
Keywords
EarningsShareholderValuation (finance)EconomicsEarnings response coefficientPrice–earnings ratioEarnings yieldMonetary economicsAssociation (psychology)Stock marketStock (firearms)Financial economicsEarnings per shareAccountingFinanceCorporate governance
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Publication Info
- Year
- 1967
- Type
- article
- Volume
- 5
- Pages
- 55-55
- Citations
- 230
- Access
- Closed
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Cite This
Philip Brown,
Ray Ball
(1967).
Some Preliminary Findings on the Association between the Earnings of a Firm, Its Industry, and the Economy.
Journal of Accounting Research
, 5
, 55-55.
https://doi.org/10.2307/2489908
Identifiers
- DOI
- 10.2307/2489908