Christos I. Negakis

Size and book-to-market factors in the relationship between average stock returns and average book returns: some evidence from an emerging market

The present paper examines the association between average stock returns and average book returns and addresses the question as to whether there are common size and book-to-market factors in earnings and returns. The results of the empirical research, conducted in the Athens Stock Exchange, suggest that when the sample firms are grouped into size, book-to-market portfolios stock returns properly reflect differences in the evolution of accounting profitability. Moreover, it is found that the return on investment (ROI) measure contains size and book-to-market factors analogous to the mimic risk factors inherent in stock returns, in the sense that they capture information missed by ROI.

Analysis of divisional profitability using the residual income profile: a note on cash flows and rates of growth

The present note expands on the (Frigo and Ciecka (1995)) residual income profile in order to analyze the relationship between residual income (RI), return on investment (ROI) and cash flows. The results indicate that in addition to the question of whether RI and ROI are useful in divisional performance evaluation, both measures also have an important role to play as a means of approximating actual cash flow.

The explanatory power of earnings for stock returns in the pre‐ and post‐IFRS era: Some evidence from Greece

Purpose - This study aims to examine the effects of the introduction of the International Financial Reporting Standards (IFRS) on the explanatory power of earnings for stock returns in Greece. Design/methodology/approach - The study uses variants of the Easton and Harris model. Moreover, the study controls for asymmetries in the information content of earnings and losses. Findings - The findings show that the IFRS had several effects on the value relevance of earnings. In particular, the available information content of both earnings and earning changes decreased after the introduction of the IFRS. The reduction in the information content of earnings for returns (or the information content of book values of equity for stock prices) could be attributed to the IFRS and, in particular, to the introduction of the fair value principle. Moreover, even after controlling for the existence of asymmetries, the findings of reduced information content of earnings and earning changes for stock returns persist. Originality/value - The study makes a significant contribution to the research of the implementation of the IFRS. In particular, the study examines the adoption of a set of high quality standards in a country where accounting was dominated by tax laws and governmental intervention.

Disclosure requirements and voluntarily reporting of cash flow information in Greece

Purpose – To review the disclosure requirements for cash flow reporting in Greece and the willingness of Greek companies to voluntarily disclose cash flow information. Design/methodology/approach - The empirical research was conducted on a sample of 97 Greek firms listed in the Athens Stock Exchange by examining the relation between cash flows and other measures of profitability for year 1994 when IAS No. 7 was set in effect. Findings - The results show that despite the fact that cash flows are more informative than an accruals definition of profits, in deciding about financial policy issues Greek companies show an increased preference to funds flows defined in terms of working capital. Practical implications - The publication of a cash flow statement may reveal that many listed companies in Greece are not as robust as the balance sheet and the income statement potentially indicates. Thus, the main conclusion of the paper is that publication of the cash flow statement in Greece should become mandatory. Originality/value - The present study shows that, despite the desire of the regulatory authorities that investors receive adequate and relevant information, voluntarily cash flow disclosure is not apparent in Greece because cash flows reveal financial problems that other measures of performance do not. Thus, it provides directions for standard setters in making mandatory the publication of cash flow statement in Greece.

Business and Economic Education - Criteria for Choice of Studies and Student Expectations

This paper examines the stance of the students of the Economic Department Sciences of the Aristotle University of Thessaloniki1 respecting the course of study they have chosen, with reference to the criteria behind their choice and the people that influenced them. It also looks at the expectations students have for the future application of their studies in their professional life. Then, criteria of choice of subject, influence and position advancement were analysed statistically by factor analysis. The results of the above study show that the students of the Economics Department chose their studies on the principal criterion of employment prospects. The role played by their own wishes indicates the conscious choice of subject according to their abilities and inclination to study economics and business-related subjects.

Recent Developments in Modelling Abnormal Stock Returns: A Review Essay

The paper provides a guide to the standard methodology applied in event studies in order to evaluate the information content of accounting numbers and to test the efficiency of securities markets. Moreover, the paper refers to the issue of non-stationarity of stock returns. De Jong, et al., (1992) have test for one form of non-stationarity, namely conditional heteroskedasticity, and found that it may lead to inefficient estimates of beta factors. In this context, De Jong et al., propose an extended version of the Market Model for event studies which is exposed separately in the paper.