Accounting quality and the macroeconomic environment
On Tuesday 7 January 2020 Svein Abrahamsen will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.
Prescribed topic for the trial lecture:
The role of accounting quality in capital markets
Trial lecture:
10:15 in Jebsen Centre, NHH
Title of the thesis:
Accounting quality and the macroeconomic environment
Summary:
The thesis is a monograph and studies the association between accounting quality and the macroeconomic environment. The empirical analyses use data for a large sample of U.S.-listed firms in the time period from 1988 to 2015. Accounting quality is measured by proxies for value relevance, accounting conservatism and earnings management, i.e. accrual-based and real earnings management. The thesis studies how these proxies for accounting quality is associated with respectively macroeconomic conditions (the state of the economy), macroeconomic uncertainty, and market betas, as a proxy for firms’ sensitivity toward the macroeconomic environment.
The study finds accounting quality to be associated with the macroeconomic environment to some degree. In the main tests, the study finds no association between the value relevance of respectively earnings or book values and positive and negative macroeconomic conditions, as measured by whether the economy is growing above or below its trend growth. However, macroeconomic uncertainty is found to decrease the value relevance of both earnings and book values. Further, the study finds a negative association between market betas and the value relevance of earnings while no association is found between market betas and the value relevance of book values.
In line with previous research, firms are found to be more conservative under negative than under positive macroeconomic conditions in the main tests.
In the main tests, using the Basu-model, no association is found between macroeconomic uncertainty and accounting conservatism while a positive association is found between market betas and accounting conservatism. However, this result is not robust when using other empirical models for measuring conservatism.
The thesis finds some evidence for accrual-based and real earnings management to be associated with the macroeconomic environment. However, these results are sensitive to model specification. and should be interpreted with caution.
Defense:
12:15 in Jebsen Centre, NHH
Members of the evaluation committee:
Associate Professor Ting Chiu (leader of the committee), Department of Accounting, Auditing and Law, NHH
Professor John Christian Langli, BI Norwegian Business School
Professor Per Olsson, ESMT Berlin
Supervisors:
Professor Frøystein Gjesdal, Department of Accounting, Auditing and Law, NHH
Professor Kjell Henry Knivsflå, Department of Accounting, Auditing and Law, NHH
The trial lecture and thesis defence will be open to the public.