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Accounting. v. t. e. In financial economics and accounting research, post–earnings-announcement drift or PEAD (also named the SUE effect) is the tendency for a stock’s cumulative abnormal returns to drift in the direction of an earnings surprise for several weeks (even several months) following an earnings announcement.
The ERC is an estimate of the change in a company's stock price due to the information provided in a company's earnings announcement. The ERC is expressed mathematically as follows: UR = the unexpected return. a = benchmark rate. b = earning response coefficient. (ern-u) = (actual earnings less expected earnings) = unexpected earnings.
The permanent income hypothesis ( PIH) is a model in the field of economics to explain the formation of consumption patterns. It suggests consumption patterns are formed from future expectations and consumption smoothing. [α] The theory was developed by Milton Friedman and published in his A Theory of Consumption Function, published in 1957 ...
In economics, the long-run is a theoretical concept in which all markets are in equilibrium, and all prices and quantities have fully adjusted and are in equilibrium. The long-run contrasts with the short-run, in which there are some constraints and markets are not fully in equilibrium. More specifically, in microeconomics there are no fixed ...
Earnings at risk (EaR) and the related cash flow at risk (CFaR) [1] [2] [3] are measures reflecting the potential impact of market risk on the income statement and cash flow statement respectively, and hence the risk to the institution's return on assets and, ultimately, return on equity . EaR measures the impact on net interest income due to ...
Income distribution. Share of income of the top 1% for selected developed countries, 1975 to 2015. In economics, income distribution covers how a country's total GDP is distributed amongst its population. [1] Economic theory and economic policy have long seen income and its distribution as a central concern.
Free-rider problem. In economics, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them [1] or under-pay. Examples of such goods are public roads or public libraries or services or other goods of a communal nature.
In recent years economic theory has moved towards the study of economic fluctuation rather than a "business cycle" – though some economists use the phrase 'business cycle' as a convenient shorthand. For example, Milton Friedman said that calling the business cycle a "cycle" is a misnomer, because of its non