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Changes in Operating Margins during a Sales Decline and Abnormal Returns.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	Changes in Operating Margins during a Sales Decline and Abnormal Returns./
Author:	Park, Han-Up.
Description:	1 online resource (96 pages)
Notes:	Source: Dissertation Abstracts International, Volume: 79-01(E), Section: A.
Contained By:	Dissertation Abstracts International79-01A(E).
Subject:	Accounting. -
Online resource:	click for full text (PQDT)
ISBN:	9780355171655

Changes in Operating Margins during a Sales Decline and Abnormal Returns.
Park, Han-Up.

Changes in Operating Margins during a Sales Decline and Abnormal Returns. - 1 online resource (96 pages)

Source: Dissertation Abstracts International, Volume: 79-01(E), Section: A.

Thesis (Ph.D.)

Includes bibliographical references

I examine the implications of changes in operating profit margins during a sales decline for future earnings and abnormal stock returns. When sales decrease, managers decide whether to cut slack resources. Managers who are optimistic about their future operations often retain slack resources in anticipation of resurging sales, thereby decreasing concurrent profitability. Conversely, managers who are pessimistic about their future operations typically reduce slack resources to gain efficiency, thereby increasing concurrent profitability. I find that analysts and investors persistently underestimate the future profitability of firms that exhibit a large decrease in current profitability. I also find that subsequent quarterly earnings announcements gradually reveal future profitability, resulting in concentrated positive abnormal returns in short pre-announcement windows for about a year after a sales decline. These results suggest that analysts and investors have difficulties evaluating managers' resource adjustment decisions when a large decrease in concurrent profitability can indicate managers' optimistic expectations.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2018

Mode of access: World Wide Web

ISBN: 9780355171655Subjects--Topical Terms:

561166
Accounting.
Index Terms--Genre/Form:

554714
Electronic books.

Changes in Operating Margins during a Sales Decline and Abnormal Returns.
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245 1 0 $a Changes in Operating Margins during a Sales Decline and Abnormal Returns.
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300 $a 1 online resource (96 pages)
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500 $a Source: Dissertation Abstracts International, Volume: 79-01(E), Section: A.
500 $a Adviser: Rajiv Banker.
502 $a Thesis (Ph.D.) $c Temple University $d 2017.
504 $a Includes bibliographical references
520 $a I examine the implications of changes in operating profit margins during a sales decline for future earnings and abnormal stock returns. When sales decrease, managers decide whether to cut slack resources. Managers who are optimistic about their future operations often retain slack resources in anticipation of resurging sales, thereby decreasing concurrent profitability. Conversely, managers who are pessimistic about their future operations typically reduce slack resources to gain efficiency, thereby increasing concurrent profitability. I find that analysts and investors persistently underestimate the future profitability of firms that exhibit a large decrease in current profitability. I also find that subsequent quarterly earnings announcements gradually reveal future profitability, resulting in concentrated positive abnormal returns in short pre-announcement windows for about a year after a sales decline. These results suggest that analysts and investors have difficulties evaluating managers' resource adjustment decisions when a large decrease in concurrent profitability can indicate managers' optimistic expectations.
533 $a Electronic reproduction. $b Ann Arbor, Mich. : $c ProQuest, $d 2018
538 $a Mode of access: World Wide Web
650 4 $a Accounting. $3 561166
650 4 $a Finance. $3 559073
650 4 $a Business administration. $3 1148568
655 7 $a Electronic books. $2 local $3 554714
690 $a 0272
690 $a 0508
690 $a 0310
710 2 $a ProQuest Information and Learning Co. $3 1178819
710 2 $a Temple University. $b Business Administration/Accounting. $3 1182477
773 0 $t Dissertation Abstracts International $g 79-01A(E).
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