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UID:20250801T152935EDT-4560dd7nHZ@132.216.98.100
DTSTAMP:20250801T192935Z
DESCRIPTION:On the Contemporaneous Reporting of Income-Increasing and Incom
 e-Decreasing Special Items: Initial Evidence\nKalin KolevYale University\n
 Date: April 11\, 2014Time: 11:00 am - 12:30 pmLocation: Room 310\nAbstract
 : \nExtant research finds that the use and information content of special 
 items is contingent on their sign. In particular\, income-increasing speci
 al items are typically attributable to company-initiated transactions and 
 have been linked to boosting reported earnings in an effort to achieve ear
 nings targets. The incidence of income-decreasing special items\, however\
 , often depends on factors outside the immediate control of management. Mo
 re so\, as statement users generally discount these items relative to othe
 r income statement components\, firms have been shown to use income-decrea
 sing special items to shift attention away from bottom line earnings. Anec
 dotal and empirical evidence\, however\, suggests that companies often rep
 ort both types of special items during the same fiscal period\, a reportin
 g practice which is counter-intuitive in light of the evidence presented b
 y extant research. In this study we take the first step to shedding light 
 on this puzzling phenomenon. Using a novel dataset based on detailed hand-
 collected data for a sample of one hundred S&P 500 companies over twenty q
 uarters\, we confirm that the concurrent reporting of income-decreasing an
 d income-increasing special items is too frequent to be attributable to ch
 ance and explore three potential explanations linked to firm-level economi
 cs\, equity holders\, and debt holders\, respectively. Our analysis reveal
 s that the reporting practice is linked to financial health\, but we fail 
 to find robust evidence that it is associated with reaching targets typica
 lly examined in equity markets research. However\, we document that the co
 ncurrent reporting of positive and negative special items is related to av
 oiding debt-covenant violations\, as the effect is driven by income-based 
 covenants not shielded from special items and decreases in covenant slack.
   \nFor more information\, please contact Darlene Fowler at: darlene.fowle
 r [at] mcgill.ca. 
DTSTART:20140411T150000Z
DTEND:20140411T163000Z
LOCATION:Room 310\, Bronfman Building\, CA\, QC\, Montreal\, H3A 1G5\, 1001
  rue Sherbrooke Ouest
SUMMARY:Seminar: Kalin Kolev\, Yale University
URL:/desautels/channels/event/seminar-kalin-kolev-yale
 -university-235129
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