The Impact of Earnings Volatility on Earnings Predictability

• Main Author: Anh Do Nguyet
• Format: Article
• Language: English
• Published: People & Global Business Association (P&GBA) 2017-06-01
• Series: Global Business and Finance Review
• Subjects: earnings volatility; earnings persistence; earnings predictability; earnings management
• Online Access: http://www.gbfrjournal.org/pds/journal/thesis/20170629083213-6NFE2.pdf

This paper is aim to investigate the influence of earnings volatility on earnings predictability. In particular, by using sample of non-financial Vietnam listed companies on the Ho Chi Minh stock exchange from 2010 to 2014, we find the evidence to confirm the inverse relation between earnings volatility as well as earnings predictability in both short term and long term duration. Moreover, based on regression models estimated for earnings volatility quintiles, for the high profitable company, if it has the low volatility of earnings, the predictability of earnings is higher than those has the high volatility. Thus, in this case, the extent of earnings volatility can be successful to predict the future earnings.