Volatility of accounting earnings

Steve Su

    Research output: Contribution to journalArticle

    Abstract

    The theoretical derivation of the volatility of accounting earnings is an important topic. Not only does it concern the uncertainty in earnings measurement, but it also allows for an objective comparison between different accounting allocation procedures. An accounting allocation that yields a lower volatility of earnings can be desirable because it makes periodic earnings better estimates of underlying long-term earnings of a firm over time. Based on this information, accounting professionals can make more rational judgements of the most appropriate accounting method to be used in preparing financial reports. This paper shows how to calculate the volatility of earnings under uncertainty across a range of different scenarios. © 2013 Taylor & Francis.
    Original languageEnglish
    Pages (from-to)558-578
    JournalAccounting and Business Research
    Volume43
    Issue number5
    DOIs
    Publication statusPublished - 2013

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