Earnings Variability Research Articles

More Education, Less Volatility? The Effect of Education on Earnings Volatility Over the Life Cycle

Much evidence suggests that having more education leads to higher earnings in the labor market. However, there is little evidence about whether having more education causes employees to experience lower earnings volatility or shelters them from the adverse effects of recessions. We use a large British administrative panel data set to study the impact of the 1972 increase in compulsory schooling on earnings volatility over the life cycle. Our estimates suggest that men exposed to the law change subsequently had lower earnings variability and less pro-cyclical earnings. However, there is little evidence that education affects earnings volatility of older men.

Micro Foundations of Earnings Differences

This paper examines how human capital based approaches explain the distribution of earnings. It assesses traditional, quasi-experimental, and new micro-based structural models, the latter of which gets at population heterogeneity by estimating individual-specific earnings function parameters. The paper finds one's ability to learn and one's ability to retain knowledge are most influential in explaining earnings variations. Marketable skills actually acquired in school depend on these two types of ability. However, schools may also implement ability enhancing interventions which can play a role in improving learning outcomes. Policy initiatives that improve these abilities would be a possible strategy to increase earnings and lower earnings disparity.

PENGARUH LEVERAGE, KESEMPATAN BERTUMBUH DAN UKURAN PERUSAHAAN TERHADAP KOEFISIEN RESPON LABA

This study aims to examine the variables of leverage, growth opportunities and the size of the companies that influence the earnings response coefficient. The purpose of the research is to empirically test the influence of Leverage, Growth Opportunities and Firm Size towards Earnings Response Coefficient. This research used 60 property & real estate companies listed on the Indonesia Stock Exchange in 2012-2014. The sampling technique used in this research was purposive sampling, based on criteria there are 35 companies and tested with multiple regression analysis. The type of data used is secondary data obtained from www.idx.co.id and www.yahoo.finance.com. These result indicate that that Leverage, Growth Opportunities and Firm Size has no significant effect on the Earnings Response Coefficient. The ability of independent variables (Leverage, Growth Opportunities and Firm Size) in explaining the dependent variable (Earnings Response Coefficient) is 0,9%. The remaining 99,1% is explained by another variables such as systematic risk, earning persistance, profitability, voluntary disclosure, auditor quality and others.

Debt Financing dan Dampaknya terhadap Perkembangan Usaha Mikro di Bogor

Micro and small enterprises (MSEs) have an important role in supporting the national economy. Nevertheless, MSEs still have a major problem in its development, called limited capital. The presence of BPRS which is part of sharia financial institutions is expected to provide financing assistance for MSEs. The financing provided by BPRS is not only given in the form of equity financing but also in the form of debt financing. This study analyzes the effect of debt financing on MSEs development and also the factors influenceing the income and profit of MSEs after getting debt financing. The method used in this research is paired sample t test and Ordinary Least Square (OLS). The result of paired sample t test showed that the variable of earnings and profit of MSEs have significant change after getting financing. Furthermore, the result of analysis with OLS method showed that labor variable, amount of financing, profit rate, gender dummy, and education dummy have a significant effect to earnings and profit of MSEs

Vertical integration and value-relevance: Empirical evidence from oil and gas producers

Oil and gas exploration companies (E&Ps) exhibit large variations in earnings due to volatile oil and gas prices. Furthermore, their primary asset, oil and gas reserves, is accumulated through high...

Pengaruh Dana Tabarru’ dan Klaim Terhadap Profitabilitas Pada Perusahaan Asuransi PT. Prudential Unit Syariah Periode 2011 – 2015

This study aimed to determine the effect of Tabarru 'and claim as a dependent variable and profit (Profit) as an independent. From here on test whether the effect on the dependent variable independent of either partial (individual) or simultaneously (overall). This type of research used is multiple regression analysis (multiple regression analysis). Based on the partial test (people) can be seen that there is a significant effect on the variable Tabarru '(X1) with sig amounting to 0,118 and (X2) value of 0.997, then based on the partial test (individual) is a real no significant effect on earnings ( profit). Based on the multiple linear regression analysis obtained R2 values of 0,981 (98.1%), which means that Tabarru 'and claims to have a real influence on the variable earnings.

The role of the firm in worker wage dispersion: an analysis of the Ghanaian manufacturing sector

This paper uses a linked employer-employee dataset from the Ghanaian manufacturing sector to analyze earnings dispersion in Ghana from 1992 to 2003, a period post extensive economic reforms. I find that variance of earnings increased from 1992 to 1998 and decreased thereafter, resembling an inverted u-shaped relationship. I use analysis of variance and variance decomposition approaches to understand the underlying factors that led to such a pattern in earnings inequality. I find that between-firm factors explain this pattern more than within-firm factors. I also find that the mean earnings gap between workers above and below the 90th percentile of income distribution can explain the majority of the initial surge in inequality (61 %) but only explains a very small fraction of the eventual decline (9 %). I run OLS regressions similar to Mincerian equations and decompose the variance components to find that the decline in earnings inequality is consistent with decline in variance of firm-level earnings whereas variance of predicted wage from worker characteristics have increased. I also find suggestive evidence of changing patterns of worker-firm sorting which contributes to the decline in inequality. These patterns however only hold up for private domestic firms and not for foreign-owned firms. JEL Codes: J31, O15

Did partnership in Ireland deliver for all workers? Unions and earnings

PurposeAfter 20 years of social partnership in Ireland the purpose of this paper is to use a national survey of firms and employees to examine the extent of the wage gap between union and non-union workers in the private sector and compare the degree of wage inequality in union and non-union firms and among union and non-union employees.Design/methodology/approachThe analysis in the paper is based on the National Employment Survey carried out by the Central Statistics Office in October 2008. Approximately 9,000 enterprises were sampled and almost 5,000 enterprises responded – a response rate of over 50 per cent while almost 100,000 employees were sampled and 65,535 completed the questionnaire – a response rate of over 60 per cent. In total 22 per cent (14,619) of respondents worked in the public sector and 78 per cent (50,916) in the private sector.FindingsIt appears that over time the earnings premium enjoyed by unionised workers has declined. This may reflect a long term decline in union bargaining power in the private sector as union density levels have declined. Even so unionised employees enjoy a wage premium over non-union employees and collective coverage appears to reduce levels of income inequality. However, the overall union wage gap is relatively modest – being generally below 10 per cent possibly due to the harmonising effects associated with the period of social partnership supported by government trade unions and employers.Research limitations/implicationsThe cross-sectional nature of the data means that the factors associated with variations in employee earnings over time cannot be identified.Practical implicationsThere is substantial evidence of a considerable spill-over effect as nationally agreed rates of pay percolated from the union to the non-union sector. It may also be the case that social partnership has acted to reduce wage inequality in non-union as well as union establishments. It appears that partnership type arrangements have the capacity to deliver for all workers in the private sector.Originality/valueA unique aspect of the national survey data used here is the availability of employer/employee matched data from a robust national level survey with measures of union membership, earnings, individual and employment characteristics.

CASE STUDY: EARNINGS INEQUALITY AT TWO UNIVERSITIES

ABSTRACT Income inequality has increased dramatically in the United States, and many have assumed that this is a result of the dispersion of earnings between workers in a firm. Recent research, however, has indicated most of the variation in earnings can be attributed to a rising dispersion between firms in the average wages they pay. A relatively small percent of the variation can be attributed to differences within firms. That is, the wage gap between the most highly paid employees and the lowest paid employees has remained relatively constant, while the average pay differences between firms has increased. In this study, these results are generalized to universities. The 13-year cumulative average pay differential by academic rank was calculated for two universities within the same major metropolitan area. The cumulative differences range from approximately $350,000 for assistant professors to more than $900,000 for full professors. Implications for these differences are extrapolated to a full career. Keywords Inequality, Faculty earnings, Differences, Academic Ranks, Inter-Organizational

Rewarding schooling success and perceived returns to education: Evidence from India

This paper tests two specific mechanisms through which individuals can form expectations about returns to investments in education: recognition for schooling performance, and exposure to successful students through family or social networks. Using a regression discontinuity design, we study the impact of two fellowship programs recognizing educational performance in secondary schools in India. We find that the fellowship award is associated with a significant increase in the perceived value of education, by both increasing the perceived mean of earnings (0.74 standard deviations (SD)) and decreasing the perceived variance in earnings (1.03 SD) associated with additional years of schooling. The effects spill over only selectively to social and family networks. Peers exposed to successful students do not update their beliefs but parents of fellows report higher perceived returns to education. Peers of fellows are however more informed about fellowship opportunities and report a higher intention to apply for the fellowship, thus contributing to the persistence of the potential impact of the fellowship across different cohorts.

Lifecycle variation, errors-in-variables bias and nonlinearities in intergenerational income transmission: new evidence from Canada

This paper uses Canadian administrative data to test the impact of lifecycle earnings variation and errors-in-variables bias on estimates of intergenerational earnings and income mobility. We find lower levels of mobility compared to previous studies, with a new estimate of the father-son intergenerational earnings elasticity of 0.32. Our analysis also shows that the father-daughter elasticity is much less sensitive to these biases. We investigate whether improved measures of father/child permanent earnings may have a distinct impact on the estimated intergenerational persistence at different parts of the distribution. Taking advantage of exceptionally high sample sizes, we find that the impact of lifecycle bias is more pronounced at the top of the income distribution. We also document that much of the average intergenerational income persistence in Canada can be accounted for by limited mobility at the top, while mobility is significantly higher among children born to low-income fathers. These nonlinear patterns resemble those found in Northern Europe and are different from those observed in the United States.

Firing Costs and Capital Structure Decisions

ABSTRACTI exploit the adoption of state‐level labor protection laws as an exogenous increase in employee firing costs to examine how the costs associated with discharging workers affect capital structure decisions. I find that firms reduce debt ratios following the adoption of these laws, with this result stronger for firms that experience larger increases in firing costs. I also document that, following the adoption of these laws, a firm's degree of operating leverage rises, earnings variability increases, and employment becomes more rigid. Overall, these results are consistent with higher firing costs crowding out financial leverage via increasing financial distress costs.

The econometric analysis of retail rents in Singapore

PurposePrimarily based on Alonso’s bid-rent model, the purpose of this paper is to examine the dynamics of the Singapore’s overall retail rental market by adopting a vector error correction model (VECM) estimation.Design/methodology/approachThis paper uses the proxy for the overall retail rental value, which is indicated by a combination of the shop rent index from 2004 to 2013 and the retail rent index (RRI) in 2014, maintained by the Urban Redevelopment Authority (URA). The independent factors are the real gross domestic product (GDP), monthly earnings of individuals and vacancy rates (VR).FindingsSuch a behavioral model examines the dynamic structures that overshoot and/or diverge from equilibrium.Research limitations/implicationsThe variables LOGGDP and VR are co-integrated of order one, I(1), while variables LOGME and LOGSRI are co-integrated of order two, I(2), to enable them to be employed in the VECM model.Practical implicationsThe VECM model shows a good fit that allows the error correction term (ecm) together with the economic, financial and rental variables to jointly explain about 79.2 percent of the variation in the overall RRI. With a positive CoinEq1 coefficient that is positive and statistically significant at 5 percent level, it would take a long time for the system to return to its equilibrium once it has been shocked. Another variable that shows significant explanatory relationships includes past rents (index points) in the second order lags [D(LOGSRI(−2))]. The variable [D(LOGGDP(−3))], with a significantt-statistic value at 2.916, also helps to explain the changes in the overall rents.Social implicationsThis paper highlights the importance of the first and third differences of the lagged macroeconomic variables of the monthly earnings of individuals is moderately significant. The VR in the first and second differences is significant in accounting for the variation in changes of overall retail rents with theirt-statistics values being above 3.0. It is thus meaningful for policy makers to so enhance their in-depth understanding.Originality/valueThis paper fulfills an identified need to study how the results from theex postforecasting estimates from the VECM for overall retail rents in Singapore can be enabled.

Does The Market See Through Seasonal Quarterly Earnings Patterns?

Evidence such as Das, Shroff, and Zhang (2009) suggests that firms routinely reverse their earnings pattern during their fourth quarter compared to that of last year, possibly leading to earnings management. Motivated by these findings, this study seeks to document whether the market sees through seasonal quarterly earnings patterns and reacts consistent with an earnings management hypothesis. Using an amended Easton and Harris (1991) model, I study whether the earnings variables are more informative based upon the seasonal differencing patterns by incorporating dummy variables, along with their respective interaction terms, to signify the first time the pattern occurs. My results show the market sees the seasonal quarterly earnings pattern; the earning levels and changes in earnings variables are more informative but the (managed) earnings tend to be transitory, not permanent in nature. All other tests performed support these general conclusions.

The Influence of Profitability and Income Tax on Income Smoothing Rankings

Income smoothing is logical and rational action that managers attempt to reduce abnormal variation in earnings using special tools in accounting. The objective of this study is to investigate the influence of profitability and income tax on income smoothing rankings of the companies in basic industry and chemical sectors listed in Indonesia Stock Exchange. Statistical sample of the present study is formed from 45 companies in 2014. ROA is used as the proxy of profitability. In calculating the income smoothing, it is used Tucker-Zarowin (TZ) statistic for five year from the year 2010 to 2014 amounted to 225 firm-years observations. Income smoothing is measured by the negative correlation between the change in discretionary accruals and change in pre-discretionary income. The results from the hypotheses testing indicated that there is a negative and significant relationship between profitability and income smoothing. However, it is also found that there is no significant relationship between variables of income tax and income smoothing.

Augmenting the Human Capital Earnings Equation with Measures of Where People Work

We augment standard log earnings equations for workers in US manufacturing with variables reflecting measured and unmeasured attributes of their employer. Using panel employee-establishment data, we find that establishment-level employment, education of coworkers, capital equipment per worker, and firm-level R&D intensity affects earnings substantially. Unobserved characteristics of employers captured by employer fixed effects also contribute to the variance of log earnings, although less than unobserved characteristics of individuals captured by individual fixed effects. The observed and unobserved measures of employers mediate the effects of individual characteristics on earnings and increase earnings inequality through sorting of workers among establishments.

Property crime, earnings variability, and the cost of capital

We show that firms located in states where property crime is more prevalent have more uncertain earnings and higher financing costs. Specifically, firms located in states with higher property crime rates have more volatile and less persistent earnings as well as lower quality analysts' earnings forecasts. Firms located in states with higher property crime rates also have a higher cost of equity and debt capital. These results are robust to accounting for econometric and endogeneity concerns in various ways. Overall, our results suggest that a potentially large and overlooked cost of crime is a higher cost of capital.

The links between implementing ISA 540 and mitigating the practice of smoothing reported net earnings using write-offs of accounts receivable and inventory by reporting entities in Poland

The paper addresses the question of the links between implementing ISA 540 and mitigating the practice of smoothing reported net earnings using write-offs of accounts receivable and inventory by reporting en-tities in Poland. The research question stems from the previous analysis carried out by the author in which evidence was provided that reporting entities in Poland in the period 2000–2010 effectively used write-offs of accounts receivable and inventory in order to mitigate fluctuations of reported net earnings. This paper provides evidence that before implementing ISA 540 reporting entities used write-offs of receivables and inventory for income smoothing in effective manner, however in the period after implementing the standard (2009–2014) no link was observed between the write-offs and reduced fluctuations of reported net earnings. The research has been carried out using Wilcoxon signed-rank test used to check equality of medians of mean deviations of net earnings before write-offs of receivables and inventory and mean deviations of net earnings after write-offs. For the period before implementing ISA 540 there are grounds to reject the hy-pothesis of equality of medians of mean deviations of net earnings, however in the post-adoption period there is no justification to reject the hypothesis of equality of medians. The research provides evidence of positive impact of ISA 540 mitigating the processes of accounting earnings management. The indicated regularity does not apply to banks, because within this group of companies we have not observed the use of write-offs of loan receivables in order to reduce the variability of net earnings before implementing ISA 540 and in the period following the implementation of the standard.

Quality Investing Industry versus Academic Definitions

textabstractIn this study we provide an overview of common quality definitions that are currently used in the industry and those used in academic studies, and we outline the differences between these definitions. We show that there is a large dispersion in the definitions that are used for the quality factor with ‘industry’ definitions ranging from return-on-equity and profit margins to leverage and earnings variability, and ‘academic’ definitions such as operating accruals, net stock issues, and gross profitability. We document large performance differences between the different quality definitions. While ‘academic’ definitions for quality all seem to have significant predictive power for stock returns above and beyond common factors, we do not find significant predictive power for individual ‘industry’ definitions. Our results have important implications for the design of investment vehicles that provide investors exposure to the quality factor.

Pakistan Export Earnings -Analysis 2009 -2011

<p><span>Statistical year books have published the data on export revenue in dollars earned for<span> each item for 2009 to 2011. In all 48 items have been recorded, which include<span> Agricultural as well as manufactured items. Some items, which are mostly Agricultural<span> earn a significantly large amount of earnings compared to the non-agricultural items.<span> However the number of items of non-agricultural items is quite large. Some<span> manufactured items which have an important position as export item are the petroleum<span> products.</span></span></span></span></span></span></span></p><p><span><span><span><span><span><span><span><span>In this paper a probability model has been developed, called the Exponential and in order<span> to asses the variation in export earnings a Lorenz curve is calculated .From it the Gini<span> Index is obtained. The variability in earnings is measured by Gini Index and forecast in<span> this variation has been made .The items which have small variation from the ideal<span> variation are selected,which are : Rice , Cotton ,Cotton added value items<br /><br class="Apple-interchange-newline" /></span></span></span></span></span></span></span></span></span></span></span></span></p>