Earnings Response Coefficient and Persistence: New Evidence Using Tobin's Q as a Proxy for Persistence

T. Harikumar; Charles I. Harter

doi:10.1177/0148558X9501000215

Earnings Response Coefficient and Persistence: New Evidence Using Tobin's Q as a Proxy for Persistence

T. Harikumar
, Charles I. Harter

Accountancy

University of Alaska Fairbanks

Research output: Contribution to journal › Article › peer-review

4 Scopus citations

Abstract

Prior studies have documented that the earnings response coefficient is positively related to persistence and growth and negatively related to beta and the risk-free rate. Although these studies provide interesting tests of economic theories, they do not provide a current measure of persistence. A current measure of persistence is useful for investors to assess the information content in current earnings innovations. We provide evidence that indicates a statistically significant positive relation between the earnings response coefficient and Tobin's q , thus suggesting that a firm's q ratio is a current proxy for persistence.

Original language	American English
Journal	Journal of Accounting, Auditing and Finance
Volume	10
DOIs	https://doi.org/10.1177/0148558X9501000215
State	Published - Apr 1 1995

Disciplines

Accounting

Keywords

Tobin's Q

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10.1177/0148558X9501000215License: Unspecified

Cite this

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title = "Earnings Response Coefficient and Persistence: New Evidence Using Tobin's Q as a Proxy for Persistence",

abstract = " Prior studies have documented that the earnings response coefficient is positively related to persistence and growth and negatively related to beta and the risk-free rate. Although these studies provide interesting tests of economic theories, they do not provide a current measure of persistence. A current measure of persistence is useful for investors to assess the information content in current earnings innovations. We provide evidence that indicates a statistically significant positive relation between the earnings response coefficient and Tobin's q , thus suggesting that a firm's q ratio is a current proxy for persistence.",

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AU - Harter, Charles I.

PY - 1995/4/1

Y1 - 1995/4/1

N2 - Prior studies have documented that the earnings response coefficient is positively related to persistence and growth and negatively related to beta and the risk-free rate. Although these studies provide interesting tests of economic theories, they do not provide a current measure of persistence. A current measure of persistence is useful for investors to assess the information content in current earnings innovations. We provide evidence that indicates a statistically significant positive relation between the earnings response coefficient and Tobin's q , thus suggesting that a firm's q ratio is a current proxy for persistence.

AB - Prior studies have documented that the earnings response coefficient is positively related to persistence and growth and negatively related to beta and the risk-free rate. Although these studies provide interesting tests of economic theories, they do not provide a current measure of persistence. A current measure of persistence is useful for investors to assess the information content in current earnings innovations. We provide evidence that indicates a statistically significant positive relation between the earnings response coefficient and Tobin's q , thus suggesting that a firm's q ratio is a current proxy for persistence.

KW - Tobin's Q

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DO - 10.1177/0148558X9501000215

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JF - Journal of Accounting, Auditing and Finance

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Earnings Response Coefficient and Persistence: New Evidence Using Tobin's Q as a Proxy for Persistence

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