The influence of estimation period news events on standardized market model prediction errors

Article Abstract:

The impact of certain types of news releases on stock valuation is examined. Using firm-specific news reported in the 1983 Wall Street Journal Index for firms listed on the CRSP Daily Returns file, it is shown that the distribution of residual returns that are conditional on Wall Street Journal news differs from the distribution of returns when there is no news. An alternative to models generally used in event studies is proposed: a 'news-conditional' model of the security returns generating process.

Author: Dietrich, J. Richard, Olsen, Chris, Thompson, Robert B., III
Accounting and auditing, Stock-exchange, Stock exchanges, The Wall Street Journal (Newspaper), Return on investment, Rate of return

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Analogical reasoning and hypothesis generation in auditing

Article Abstract:

The roles of experience and analogy in hypothesis generation are explored. Data was collected from 73 senior auditors and 51 auditing students who were given a source analog consisting of a problem and its solution, and a target problem to solve. Results indicate that: in unusual situations, expert and novice auditors use analogical reasoning to develop hypotheses; experts do not use analogical reasoning any more than novices; and in familiar situations, auditors used domain specific knowledge.

Author: Merchant, Garry
Analogy

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Subjects list: Research, Accounting
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