GOVERNANCE IN EARNINGS: A NEW PERSPECTIVE
Abstract
Purpose: The governance in earnings is a need of the hour. As all stakeholders focus on earnings. The governance is captured through the persistence it carries in future. It is an important evaluation criterion for firms’ stakeholders. If earnings are not persistent, they are likely to decline, due to which returns in the future will also decline and vice-versa. In this study, the persistence of earnings is measured as the increase in earnings per share consecutively for five years. To evaluate the performance of earnings, firms are classified into two groups: firms enhancing earnings through revenue-growth strategies and firms enhancing earnings through cost-reduction strategies. In this study, panel methodology is applied and data is analysed for fifteen years. This study is first of its kind in India, as per researcher’s knowledge.
Keyword : Persistence of Earnings, Revenue-growth Strategy, Cost-reduction Strategy, Panel Data.
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