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Non-operating earnings and firm risk

Non-operating earnings and firm risk
Non-operating earnings and firm risk
We find that non-operating earnings reduce total earnings volatility, stock price volatility, idiosyncratic risk, and crash risk. The risk-reducing effects of non-operating earnings are higher than those of operating earnings for risk measures based on stock market data. Non-operating earnings serve to mitigate risks among firms with operating losses, high financial leverage, high growth uncertainty, and low-ability managers.
earnings volatility, non-operating earnings, stock price crash risk, stock price volatility
1058-3300
1
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b
Wang, Hongxia
d2fef2a2-9988-4d17-bd78-0d9107d0d054
Jory, Surendranath
2624eb24-850a-48f6-b3c6-c96749b87322
Ngo, Thanh
852ea7b9-fd74-4a39-9281-87626e50886b
Wang, Hongxia
d2fef2a2-9988-4d17-bd78-0d9107d0d054

Jory, Surendranath, Ngo, Thanh and Wang, Hongxia (2021) Non-operating earnings and firm risk. Review of Financial Economics, 1, [1111]. (doi:10.1002/rfe.1111).

Record type: Article

Abstract

We find that non-operating earnings reduce total earnings volatility, stock price volatility, idiosyncratic risk, and crash risk. The risk-reducing effects of non-operating earnings are higher than those of operating earnings for risk measures based on stock market data. Non-operating earnings serve to mitigate risks among firms with operating losses, high financial leverage, high growth uncertainty, and low-ability managers.

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Nonoperating_earnings_and_firm_risk - Accepted Manuscript
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Accepted/In Press date: 6 May 2020
e-pub ahead of print date: 15 June 2020
Published date: 12 January 2021
Keywords: earnings volatility, non-operating earnings, stock price crash risk, stock price volatility

Identifiers

Local EPrints ID: 441190
URI: http://eprints.soton.ac.uk/id/eprint/441190
DOI: doi:10.1002/rfe.1111
ISSN: 1058-3300
PURE UUID: ee99da9b-751e-4713-8ab0-f386fd4bf714
ORCID for Surendranath Jory: ORCID iD orcid.org/0000-0002-8265-0001

Catalogue record

Date deposited: 04 Jun 2020 16:31
Last modified: 17 Mar 2024 05:36

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Contributors

Author: Surendranath Jory ORCID iD
Author: Thanh Ngo
Author: Hongxia Wang

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