Stephen H. Penman’s research while affiliated with Bocconi University and other places

... On the profit/loss -basis, the profit rate includes value growth, operative expenses, interests, and amortizations, but neglects investments and withdrawals. It is worth noting that the profit rates in Eq. (1) are additive, instead of compounding [26,50]. On the other hand, the expected value of the capitalization is ...

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Complex economics of simple periodic systems

... H 2 : Combining operating cash flow with aggregate accruals can effectively predict future operating cash flow Barth et al. (2001) highlight that the predictive power of different accrual components varies, challenging the effectiveness of relying solely on aggregated accruals (Ali et al., 2022;Efayena, 2015;Nallareddy et al., 2020;Nguyen & Nguyen, 2020;Oh & Penman, 2024) for accurate cash flow predictions. Disaggregating accrual components, such as changes in accounts receivable (AR), accounts payable (AP), inventory (INV), and depreciation and amortization expenses (DAE), can further enhance the accuracy of OCF predictions. ...

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Operating Cash Flow Prediction: A Comparative Study of Earnings and Accruals

... Guay et al., 2011). The recent work of Penman et al. (2023) This table reports 95% asymptotic confidence intervals for the value of the firm computed using (7). We also report the range of the interval as a percentage of the stock value. ...

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Income growth, forecasting and stock valuation

... Several scientists also present conclusions on the recognition of IA in the financial reports. According to authors, at present, one of the most topical studies have been performed by Penman (2023) who analyzed specialists' views and discussed on the most appropriate accounting for IA, including internally generated IA. This scientist concludes that investments (tangible and intangibleauth.) ...

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Intellectual property rights in Latvia: issues of valuation and accounting

... Analysing the SMB factor, Asness et al. (2018) tried to dig behind the mere notion of size, correcting it for the 'quality' risk implicit in the firm. Penman and Reggiani (2022) emphasize the role the earning growth risk of small firms related to the outcome of R&D expenses in determining expected return 1 . They argue that the potential growth of a firm, associated with R&D, advertising, and other expenses that may generate goodwill, is at risk of not being realized, and the risk associated with this possibility needs to be compensated by extra return. ...

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Big Moves, Small Gains: Unpacking the Size Effect in Takeovers and Other Corporate Deals

... Return on Assets (ROA) is a financial ratio that measures a company's profitability relative to its total assets. According to Penman and Zhu (2022), ROA indicates how efficiently a company is using its assets to generate earnings, calculated as net income divided by total assets. Kubick et al. (2020) describe ROA as a crucial metric for assessing managerial effectiveness in utilizing assets to produce profit. ...

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Indirect Taxes and the Financial Performance of Listed Consumer Goods Firms in Nigeria

... Accounting increasingly addresses temporal and probabilistic factors in value creation, seeks to identify the value characteristics of assets, and considers those aspects of enterprise functioning that cannot be quantified in monetary terms-such as anthropogenic impacts, social responsibility and fairness, contributions to sustainable societal development, and more (Barker et al, 2022). ...

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Transformation of Accounting in the Challenging Context of Digital Era

... However, in the condition of growing sales, it can have an impact on the opportunity cost because investment in long-term assets is financed by debt. There is an argument that investment decisions in working capital have a relationship with funding decisions that can have an impact on liquidity risk in the short term and financial risk in the long term because of funding sources mismatch and operating risk due to sales uncertainty (Imbierowicz and Rauch, 2014;Li, Nissim and Penman, 2014;Sajjad, 2018). Therefore, it is necessary to manage working capital that is able to bridge the liquidity risk and operating risk, namely through optimization of free cashflow as the impact of both risks as a trade-off. ...

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Working Capital Behavior and Risk: Empirical Study of Manufacturing Companies in Indonesia

... Complementarily, the balance sheet reports less risky assets, fulfilling a role for the balance sheet in reporting assets that back up debt. Oh and Penman (2020) report that the market discounts investment expensed to the income statement as more risky than that booked to the balance sheet. Oswald et al. (2020) report that R&D deemed successful is priced with a 2% premium to that not so, indicating that the market reprices the investment when uncertainty is reduced. ...

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Accounting for intangible assets: suggested solutions

... Identifiable intangible assets as a whole support debt financing in companies that lack tangible assets. Although such data sets provide estimates of the fair value of intangible assets for only a small percentage of companies Intangible assets has gained fundamental economic benefits in the company, where causing businesses to rely more Intangible assets (Zambon et al., 2020 andBarker et al., 2020). Today's economy is mainly driven by development and management Intangible assets, which is a key factor in the company's competitiveness and main driver of growth (Córcoles, 2010 andZambon et al., 2020). ...

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The Effect of Intangible Assets on The Financial Performance, Financial Policy and Corporate Value of LQ 45 Companies Listed on The IDX in 2018-2022