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This study aims to investigate the persistence ability of accounting variables, namely, abnormal earnings, book value, accruals and cash flows over a period of time and their valuation relevance in Indian scenario.

The study utilizes the generalized version of the Ohlson model which links market prices with abnormal earnings, book value and earning components (accruals and cash flows). Fixed-effect panel data regression is used to analyze six years of data on the sample units to determine the persistence and valuation relevance.

The findings provide evidence on the construct of persistence and value relevance of earnings and book value of equity in the Indian context. The findings further confirm that investors in India are fixated on earnings and fail to attend separately to the cash flow and accrual components of earnings while undertaking their investment decisions.

The empirical findings of the study will enable the analysts and investors to understand the relevance and persistence of accounting variables in case of an emerging market like India.

The study extends the extant literature on value relevance studies in developed markets to an emerging market like India and enriches it in several ways.

In this chapter, we argue that under- and over-reaction are both parts of the price dynamics caused by investor's naïve judgmental extrapolation. We propose to use the Holt–Winters model, a parsimonious model with two parameters, to represent investor's conservatism (anchoring) and representativeness (trending). The complexity of earning information, which is broken down into a drift, a transitory shock, and an autocorrelated permanent shock, add further volatility to the price. We explain the price dynamics caused by the interplay of the earning model and investor's naïve belief. It is further argued that empirical “underreaction” and “overreaction” differ from true under- and overreaction. The simulated results with the proposed model confirm with empirical findings on under- and overreaction.

The purpose of this paper is to examine the relative predictive abilities of current earnings (and its components) and cash flows for next period cash flows in case of Shariah-compliant companies in India.

The study uses the list of CRISIL NSE Index (CNX) Nifty Shariah Index companies as its sample for a period of 10 years for conducting the analysis. The study utilizes the cash flow prediction models to examine the relative predictive abilities of current earnings (and its components) and cash flows for next period cash flows.

The study report that contrary to Financial Accounting Standard Board assertion, current cash flows have superior predictive ability of next period cash flows than current aggregate earnings in case of Shariah-compliant companies in India. The results further show that there are no gains from decomposing earnings into accruals and cash flows in predicting future cash flows. There is no increase in explanatory power (measured by adjusted R2) when aggregate earnings are disaggregated into accruals and cash flows to predict next period cash flows.

The empirical findings of the study will enable the Shariah compliant investors to understand the role of current earnings (and its components) and cash flows in predicting next period cash flows in case of Shariah-compliant companies in India.

To the best of author’s knowledge, this is the first study which examines the relative predictive abilities of current earnings (and its components) and cash flows for next period cash flows in case of Shariah-compliant companies in India.

Social entrepreneurship has become a growing field of research interest. Yet, past research has been held back by the lack of a rigorous measurement instrument. Rather than defining social entrepreneurship as an organizational form that a venture does or does not have, this paper agrees with Dees and Anderson (2006) that the construct is better thought of as a set of practices, processes and behaviors that organizations can engage in to a higher or a lesser degree. In other words, the construct is a set of behaviors that any organization can engage in. The purpose of the paper is to develop scale items to measure the construct of organizational social entrepreneurship (OSE).

Drawing on previous literature, this paper first develops and then validates scales for measuring OSE as a third-order formative construct. As its second order, the scale includes three components that capture the heterogeneity of the OSE concept: social change intention, commercial activity and inclusive governance.

The OSE scale is developed and tested through a sample of 182 nascent social enterprises from 55 different countries in the world and then revalidated using a second sample of 263 mature social enterprises from 6 European countries. Results suggest that the scale items exhibit internal consistency, reliability, construct validity and nomological validity.

The scale presented here offers an important new venue for social entrepreneurship theorizing. First, it allows scholars to take a broad approach toward a diverse field and to study OSE behavior in any empirical field in which it may occur. Second, the scales also allow for more focused theorizing. Scholars are encouraged to delve into the antecedents of all three components presented here and to study the different performance effects they have in terms of likelihood to survive, growth rate or potential to achieve financial sustainability.

The paper develops a multidimensional construct for OSE. In particular, the authors propose scale items for three central components of social entrepreneurship, namely, social change intentions, commercial activities and inclusive governance. The scales thus measure the three formative dimensions identified by Dees and Anderson (2006) and Defourny and Nyssens (2010).

This paper investigates the functional relationships between stock returns and two representative performance measures. The two measures are earnings and cash from operations. In addition, this paper assesses the association of stock returns with the decomposed components of earnings. Our study documents that earnings dominate cash from operations in terms of the relationships with the stock returns. When the stock returns are regressed on the decomposed components of earnings, cash from operations consistently shows strong positive relationships with stock returns. The efficient capital market hypothesis posits that changes in reported earnings without cash flow implications should not affect stock prices. However, our regression results indicate that non‐current accruals have strong relationships with the stock returns even though they lack cash flow implications. Perhaps this may imply that cosmetic earnings increases might be rewarded with increases in stock prices.

The purpose of this paper is to assess the value relevance of product diversification in US commercial banks.

The paper examines differences in the value relevance of commercial bank earnings components from interest and noninterest banking activities. Specifically, it studies market reaction to changes in bank earnings from noninterest sources resulting from expansion into new financial services other than the traditional intermediation activities. A sample of commercial banks between 1993 and 2002 is used.

Results show that annual abnormal returns have more significant positive relation with changes in the noninterest component of bank earnings compared with changes in the interest component of earnings. These results are more obvious for small banks and after 1999, the year in which the Gramm‐Leach‐Bliley Act allowed banks to expand into more noninterest banking activities.

This paper is an extension of the long and extensive accounting research strand in the value relevance of earnings applied to bank earning components. It may also contribute to banking and Finance literature regarding the effect of product diversification in the banking industry.

This paper seeks to investigate whether disaggregated bank earnings better predict next period earnings than contemporaneous aggregated earnings.

Fairfield et al.'s (1996) regression approach is used for predicting next period's return of equity (ROE) and stock prices using disaggregated earnings data.

The results show that the mean adjusted R‐square significantly increases with the progressive disaggregation of earnings. The results also demonstrate that disaggregated components are better able to predict next period earnings and stock prices than aggregated earnings.

The findings support the US Financial Accounting Standard Board's contention that disaggregated information may be more useful than aggregated information for investment, credit, and financing decisions.

Investors and analysts should use disaggregated income statement information in predicting next period earnings and stock prices for the banking industry.

The main contribution of this paper is to demonstrate how fully disaggregated earnings explain ROE, stock prices, and analysts forecast error in the banking industry.

In the Theory of Continuous Competitiveness (CC) presented in Chapter 1, two necessary conditions for CC are: (1) technology transfer (Techtransfer) and (2) recipient‐initiated modification of transferred technology (Modifications). Public statements by the Prime Minister of Malaysia and the Deputy Prime Minister confirm that the two necessary conditions are virtually absent, making it necessary for CC to be achieved in other ways. To provide a macro‐perspective, we identify numerical measures of importance of Electrical & Electronic (E&E) [Industry] to the nation. E&E, the single largest foreign exchange earner, earned 66.0 percent of the export earnings from manufactured goods in 1995. Electronic components earned 42.86 percent, consumer electronics 25.9, and industrial electronics 31.95 percent of E&E exports in 1995. To improve CC, the 1995 share of global exports of semiconductors (9.7%) and consumer electronics (27.9%) should be enhanced. E&E should increase its share of the major markets: Asia, USA, and Europe. We develop three original measures of Export Productivity: (1) per unit of Capital Investment, (2) per unit of Import Input, and (3) per unit of Raw Material Input. Where should capital investment be made to boost E&E exports? In consumer electronics which yield 2.95 times as much exports share as electronic components; and in industrial electronics with a yield of 2.35 times. In 1995, E&E output was RM 71 million, but exports were RM 85 million. We attribute to the Assembly Technology contribution of Multi‐national Corporations (MNCs) the majority, if not all, of the RM 14 billion. Southeast Asia's first fully integrated silicon manufacturing facility, expected to start production in Malaysia in 1998, is estimated to increase the value‐added from the current 8% for Assembly to 35% for Fabrication.

This paper investigates the financial strength of banks in Bangladesh and factors affecting the financial strength over the years 2010–2015 on 35 banks.

Additive value function with CAMEL rating (capital stength, asset quality, managerial efficiency, earning ability, liquidity) has been employed to calculate banks’ financial strength index (FSI). In the second stage, panel regression has been exercised to find out the determinants of banks’ financial strength.

Empirical finding exhibits that the Islamic banks of Bangladesh are financially stronger and outperform conventional and Islamic window banks with higher liquidity. In the ownership category, private banks have more financial strength with higher capital strength, asset quality, managerial efficiency and earning ability than public banks. Bank size, loan recovery, salary and banking sector development positively affect whereas the loan-asset negatively affect the bank’s financial strength in Bangladesh.

This study has its limitations despite its importance. CAMELS is a more improved form than using CAMEL. But because of the data deficiency on “S” which represents sensitivity, it would not be possible to use CAMELS framework. Further researchers could incorporate this.

Government and banks should allow Islamic banks to enter the market on easy terms because of their outstanding performance in the existing market. In addition, banks should provide loans with consideration so that they cannot create credit risk. In addition, they should calculate composite financial strength annually to understand which components they need to work on.

This study extends the extant result on the composite FSI. It is hard to examine the financial strength of banks using only ratio value, which misleads most of the time. The study offers evidence on how the FSI provides more rigorous results and what are the factors contribute most to the financial strength of banks.

We investigate the relative roles of key components of earnings change in explaining the value relevance of earnings across different life‐cycle stages of the firm. We hypothesize that firms in different life‐cycle stages take different strategic actions: change in sales is emphasized in the growth and mature stages, while in later stages, profitability is emphasized. Because payoffs to such strategies vary across the life‐cycle, the stock market reaction to the success firms have in employing these strategic actions is likely to vary across the life‐cycle. To test our hypotheses, we disaggregate changes in earnings into three key components: earnings change from change in sales, earnings change from change in profitability, and an interaction term comprising both sales change and profitability change. Our findings are consistent with our hypotheses: when firms are in the growth stage, the value‐relevance of change in sales is relatively greater than that of change in profitability. In the mature stage, the value relevance of change in profitability increases, relative to that of change in sales. When firms are in stagnant stage, the value‐relevance of changes in profitability are relatively greater than that of change in sales. Collectively, the results demonstrate a shift in the value relevance of earnings components from a growth emphasis early in the life‐cycle to a profitability emphasis later in the life‐cycle.