Title: The effect of earnings-based analysis 'change over financial analysts' investment decisions in Egypt

Authors: Khaled Dahawy; Tamer A. El Nashar

Addresses: The American University in Cairo (AUC), AUC Avenue, P.O. Box 74, New Cairo 11835, Egypt. ' The American University in Cairo (AUC), AUC Avenue, P.O. Box 74, New Cairo 11835, Egypt

Abstract: This paper uses a cross-sectional approach to examine whether earnings-based analysis change ΔEBA affects financial analysts investment decisions in EGYPT. We measure ΔEBA's effect by the positive correlation of firm's earnings quality change represented by change in total accruals, total current accruals and cash flow from operations, and by firm's earnings persistence change ΔEP, earnings power change ΔEP, and earnings valuation represented by changes in price/earnings and price/book ratios, with its change in stock prices. We find that change in stock prices which is used as an indication for financial analysts' investment decisions is affected by earnings quality change represented by changes in total and current accruals and cash flows from operations, as well as by earnings valuation represented by price earnings ratio change.

Keywords: earnings-based analysis change; earnings quality change; earnings persistence change; earnings power change; earnings valuation; financial analysts; investment decisions; Egyptian capital markets; Egypt; accruals; cash flow; price earnings ratio change.

DOI: 10.1504/IJEA.2012.049072

International Journal of Economics and Accounting, 2012 Vol.3 No.3/4, pp.245 - 263

Published online: 06 Aug 2014 *

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