Predictive Power of Aggregate Corporate Earnings and their Components for Future GDP Growths: an International Comparison

• Autorzy: Sumiyana Sumiyana , Sari Atmini , Slamet Sugiri
• Języki publikacji: EN

Abstrakty

EN

This study investigates the predictive power of aggregate corporate earnings and their four components for future GDP growths. It splits aggregate earnings into operating and non-operating incomes as they have different degrees of permanence. It also splits aggregate earnings into operating cash flows and accruals since earnings management affects them distinctively. This study finds aggregate earnings, operating income, operating cash flows, and accruals as predictors for one- and two-years-ahead GDP growths. However, it does not find such predictive power for aggregate non-operating income. Furthermore, this study splits the research sample based on macroeconomic development level and documents how aggregate earnings have predictive power over the longer horizon in developed countries, while aggregate non-operating income is a good predictor only in developing countries. Meanwhile, when splitting the sample based on earnings quality degree, this study demonstrates that the predictive power of aggregate accruals in a high earnings quality subsample is higher than in the low one. In the context of high (low) earnings quality, the predictive power of aggregate accruals is higher (lower) than that of operating cash flows. Overall, besides supporting previous studies' findings, this study also discovers that corporate earnings components are excellent predictors for future GDP growths. (original abstract)

Słowa kluczowe

EN

Company's profit estimation; Gross domestic product (GDP); Forecasting; Comparative analysis

PL

Szacowanie zysku przedsiębiorstwa; Produkt krajowy brutto (PKB); Prognozowanie; Analiza porównawcza

• Czasopismo: Economics & Sociology
• Rocznik: 2019
• Tom: 12
• Numer: nr 1
• Strony: 125--142

Twórcy

autor

Sumiyana Sumiyana

• University of Gadjah Mada, Yogyakarta, Indonesia

autor

Sari Atmini

• University of Gadjah Mada, Yogyakarta, doktorant

autor

Slamet Sugiri

• University of Gadjah Mada, Yogyakarta

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Identyfikatory

DOI

10.14254/2071-789X.2019/12-1/7