Investors' Future Earnings Expectations Shaped by Current Earnings Attributes
The article explores how different aspects of a company's earnings affect what investors expect its future earnings to be, as shown in market prices. By looking at how current earnings influence future earnings predictions, the researchers found that future earnings expectations are not solely based on current earnings. They studied eleven factors related to earnings quality, such as volatility, predictability, and cash flow smoothness, to see how they impact future earnings predictions.