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In addition to stock price synchronicity and cost of equity mentioned above, other information asymmetry proxies such as analyst forecast precision, earnings response coefficient, crash risk and discretionary earnings accrual have been considered but not adopted given the smaller and homogeneous sample size to create meaningful results.
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For the fourth quarter, the Irvine-based manufacturer of precision measuring equipment reported net earnings of $452,723 compared with $50,581 a year earlier.
But cost reductions often can be calibrated with enough precision to ensure that earnings (and EPS) meet the desired targets.
The attack-related warnings that deserve closer scrutiny are those that pegged earnings with greater precision in face of the uncertainty.
"The name 'stress test' implies a level of precision for predicting future losses and earnings that simply does not exist," Tom Brown, an analyst at Bankstocks.com, wrote.
In the Internet sector, where you can't even predict earnings, we're seeing precision to the point of ludicrousness.
While CIRP generally holds, it does not hold with precision due to the presence of transaction costs, political risks, tax implications for interest earnings versus gains from foreign exchange, and differences in the liquidity of domestic versus foreign assets.
Since it is impossible to determine true alpha until some time has passed, employee compensation based on current reported earnings represent "fake alpha". True alpha, assuming it can be determined with some precision, may be higher or lower.
Or precision.
Letter precision.
His precision?
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com