보고이익 기준점 달성이 가치관련성에 미치는 영향

The importance attached to earnings figures, and the assumption that investors rely on simple heuristics suggest that reporting (1) positive earnings; (2) earnings greater than last year; as well as (3) earnings greater than the consensus analyst forecast will have positive valuation implications. Specially, Managers are more likely to avoid earnings decreases. Academic research has provided evidence that managers use a wide variety of techniques to meet benchmarks. When the benchmark beating is the last year earnings, there are two type earnings. One is the magnitude of annual earnings and another is Earnings Per Shares that is standardized by weighted average number of common stock outstanding. This paper examines whether the pricing multiples on annual earnings are affected (1) by the magnitude of annual earnings increases or not and (2) by the EPS increases or not relative to annual earnings increases. The samples consists of non-banking firms (1,647 firm-years) listed on the Korean Stock Exchange that report annual financial statements over 2006-2008. These results strengthen evidence of prior research that the increase of earnings enhances value relevance of earnings. This is true because we document that investors consider the magnitude of annual earnings increases or not, but not consider the EPS increases or not.