Open AccessRound-Off Bias In Earnings-Per-Share Calculations
Author(s) -
Thomas R. Craig
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v8i4.6131
Subject(s) - earnings , earnings per share , value (mathematics) , profit (economics) , price–earnings ratio , econometrics , accounting , actuarial science , business , demographic economics , economics , statistics , mathematics , microeconomics
Using data available on Standard and Poors Compustat Data Files, this study provides overwhelming evidence that managers of public corporations bias the round-off of EPS calculations. In addition, the study reports that the incidence of EPS round-ups is associated with factors affecting differences in the value of EPS round-ups to managers, e.g., differences in Price-Earnings ratios, differences in absolute EPS levels, and whether a profit or loss is reported.