Why Are Losses Less Persistent Than Profits? Curtailments vs. Conservatism
研究了亏损比利润持续性更差的原因，发现企业缩减运营是重要因素，并指出流行的保守主义衡量指标也反映了缩减效应。
It is well documented that losses are less persistent than profits and that stock prices anticipate the lower persistence of losses. Yet the underlying explanation for these results is unclear. One explanation lies in the abandonment option, whereby firms with losses are more likely to curtail operations (e.g., Hayn [Hayn C (1995) The information content of losses. J. Accounting Econom. 20(2):125–153]). Another explanation involves timely loss recognition stemming from conservative accounting (e.g., Basu [Basu S (1997) The conservatism principle and the asymmetric timeliness of earnings. J. Accounting Econom. 24(1):3–37]). We provide direct evidence that curtailments are an important factor contributing to the lower persistence of losses. An implication of our results is that popular measures of conservatism, such as the measure proposed by Basu, also reflect curtailments. This paper was accepted by Suraj Srinivasan, accounting.