- Title
- Do capital expenditures influence earnings performance: Evidence from loss-making firms
- Creator
- Kim, Sungsoo; Saha, Amitav; Bose, Sudipta
- Relation
- Accounting & Finance Vol. 61, Issue S1, p. 2539-2575
- Publisher Link
- http://dx.doi.org/10.1111/acfi.12675
- Publisher
- Wiley-Blackwell
- Resource Type
- journal article
- Date
- 2021
- Description
- We examine the association between capital expenditures and near-term earnings performance for loss-making firms. Using a sample of 24,030 firm-year observations from 2006 to 2015, we find that loss-making firms show different patterns of capital expenditures than profit-making firms. Moreover, we find that capital expenditures of loss-making firms have a greater influence on the absolute value of near-term earnings performance. We also examine the effect of capital expenditures on stock compensation and find a positive association between them for profit-making firms but not for loss-making firms. Further, our results indicate that the negative association between capital expenditures and near-term earnings performance for loss-making firms is not conditional on the monitoring by institutional investors and creditors. Our findings contribute to the debate on capital expenditure accounting in loss-making firms.
- Subject
- capital expenditures; investment; loss-making firms; near-term earnings performance
- Identifier
- http://hdl.handle.net/1959.13/1462153
- Identifier
- uon:46396
- Identifier
- ISSN:0810-5391
- Language
- eng
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