Accounting Earnings’ Predictive Power over Future GDP Growth: a Comparative Study of U.S. GAAP and IFRS

• In Event: ACCOUNTING: Earnings Management & Predictive Content

Abstract

Previous research suggests that aggregate accounting earnings growth is a significant leading indicator of future nominal Gross Domestic Product (GDP) growth in the United States. This study expands their research by testing whether the results hold with more recent and extended periods. Furthermore, motivated by the fact that more than 100 countries and jurisdictions are implementing the International Financial Reporting Standards (IFRS), while the United States adopts the U.S. Generally Accepted Accounting Principles (GAAP), this study compares the predictive contents of accounting earnings under IFRS and U.S. GAAP over future GDP growth.

Authors

• Meng Huang, University of Toledo

• Chao Wen, Ohio Northern university