Robert Trezevant

Is comprehensive income superior to net income as a measure of firm performance?1

Abstract With the exception of financial firms, we find no evidence that comprehensive income is more strongly associated with returns/market value or better predicts future cash flows/income than net income. Moreover, the only component of comprehensive income that improves the association between income and returns is the marketable securities adjustment. Our results do not support the claim that comprehensive income is a better measure of firm performance than net income. Our results also raise questions about the appropriateness of items included in SFAS 130 comprehensive income as well as the need for mandating uniform comprehensive income disclosures for all industries.

Is a dividend tax penalty incorporated into the return on a firm's common stock?

We find that a firms dividend yield has a positive impact on its common stock return that is decreasing in the level of institutional and corporate ownership, our indicator of whether the marginal investor in a firms common stock is more likely to be a low-tax or a high-tax investor. These results suggest that 1) a dividend tax penalty is incorporated into the return on a firms common stock and 2) both a firms dividend policy and its ownership structure impact the size of the dividend tax penalty.

The Taxable And Book Income Motivations For A Lifo Layer Liquidation

This study examines the potential determinants of LIFO liquidations using a multivariate tobit model.1 Unlike the univariate analysis used in prior LIFO liquidation studies (e.g., Davis, Kahn, and Rozen [1984] and Tse [1990]), our multivariate analysis takes into account both the correlations among these potential determinants and the magnitude of LIFO liquidations. Simple correlation analysis indicates that the sales changes and earnings changes of LIFO liquidation firms are highly correlated. Thus, while univariate support for both the declining-sales and declining-earnings explanations of LIFO liquidations could indicate that both explanations are correct, it could also be the case that support for either explanation stems from the high correlation between sales changes and earnings changes. Our multivariate approach helps avoid such ambiguities in interpretation and supports two conclusions. First,

Insider Trading and Corporate Governance Structure:Evidence from Southeast Asia

By examining the flow of the value-relevant information in annual earnings into stock price, we provide evidence that is consistent with the proposition that insiders of Southeast Asian companies controlled by the richest families are particularly aggressive in trading on their proprietary knowledge concerning this information. We find further support for this insider trading proposition based on tests that assume the presence of a strong incentive for insider trading (i) when there is a large change in earnings and (ii) before the first legal case in a country is brought against insider trading. We do not find similar evidence in the relatively well regulated market of Hong Kong or for family-controlled companies overall. Our test results are robust to controls for company-specific size, growth, and risk, as well as to alternative measures of the flow of information into stock price. These findings expand our understanding of how corporate governance structure affects the flow of information into stock price. In addition, these findings are consistent with the notion that insider trading leads to the incorporation of private information into stock price and improves the accuracy of stock price, which suggests that a companys stock price is more informative for companies in which insiders have relatively more opportunities and incentives to trade on their private information.