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Issue 5(1), October 2010 -- Paper Abstracts

Girard  (p. 9-22)

Cooper (p. 23-32)

Kunz-Osborne (p. 33-41)

Coulmas-Law (p.42-46)

Stasio (p. 47-56)

Albert-Valette-Florence (p.57-63)

Zhang-Rauch (p. 64-70)

Alam-Yasin (p. 71-78)

Mattare-Monahan-Shah (p. 79-94)

Nonis-Hudson-Hunt (p. 95-106)

JOURNAL OF ACCOUNTING AND FINANCE

Value Implications of the Proportion of Non-Operating Income

Author(s): Andrew Ayimbila Anabila

Citation: Andrew Ayimbila Anabila, (2012) "Value Implications of the Proportion of Non-Operating Income," Vol. 12, Iss. 3, pp. 54 - 70

Article Type: Research paper

Publisher: North American Business Press

Abstract:

The Senate Committee that investigated Enron’s collapse suggests that analysts misled the public by ignoring signals like the firm’s high proportion of non-operating income. The analysts denied intentional deceit, alleging instead that they were fooled by Enron. This study examines the implications of a firm’s proportion of non operating income for its information environment and its valuation. The objective is to ascertain whether market participants’ ability to value a firm decreases as the proportion of nonoperating income increases. The results show that non-operating income is associated with information asymmetry and overvaluation. These results apply to the pre- and post-Enron era, so analysts should be more critical about firms’ non-operating income.