Employee expenses have information about employees and this amount is one of the biggest components in income statement. In this research, we examine the information content of this component relative to only earnings. Then, we test factors affecting this information content. Selected sample includes 33 firms listed in Tehran Stock Exchange and for the test and analysis; we used data for fourteen years, 2002-2016. The statistical tests for data analysis are t-test for a difference in mean and multiple - regression. The article shows that the information content of employee expenses is more than that of only earnings. Average salary per employee, intensity and their persistence has significant roles in changing the predictability and value relevance of earnings. The results show that financial reports users can better predict company’s performance using the information obtained from earnings components and net earnings, and therefore, the information content of net earnings increases.
Babaei, S., & Etemadi, H. (2016). Value Relevance and Earnings Predictability of Earnings’ Components: Employee Expenses. Applied Research in Financial Reporting, 5(1), 115-140.
MLA
Sasan Babaei; Hosein Etemadi. "Value Relevance and Earnings Predictability of Earnings’ Components: Employee Expenses". Applied Research in Financial Reporting, 5, 1, 2016, 115-140.
HARVARD
Babaei, S., Etemadi, H. (2016). 'Value Relevance and Earnings Predictability of Earnings’ Components: Employee Expenses', Applied Research in Financial Reporting, 5(1), pp. 115-140.
VANCOUVER
Babaei, S., Etemadi, H. Value Relevance and Earnings Predictability of Earnings’ Components: Employee Expenses. Applied Research in Financial Reporting, 2016; 5(1): 115-140.
