Translated Copy of Graham - Et - Al-2018-Journal - of - Business - Finance - & - Accounting PDF

DOI: 10,1111 / jbfa.
12284
Pengaruh pendapatan komprehensif lain di diskresioner

pengeluaran
Roger C. Graham1 KC Lin2
1Oregon State University, 424 Austin Hall, Vallis cor-, Oregon, USA
2Oregon State University, 430 Austin Hall, Vallis cor-, Oregon , USA
Correspondence Roger C. Graham, Oregon State University, 424 Austin Hall, Corvallis, OR 97.331, USA Email:
roger.graham@bus.oregonstate.edu
Abstrak item pendapatan komprehensif lain (OCI) meningkatkan dan menurunkan nilai buku dan karena itu menunjukkan lebih
atau kurang nilai perusahaan. Oleh karena itu OCI item, meskipun sementara, dapat berkontribusi untuk efek kekayaan yang
mempengaruhi keputusan pengeluaran. Dalam mendukung, hasil regresi kami menunjukkan hubungan antara OCI saat ini tahun
dan masa depan pembiayaan diskresioner, investasi, dan belanja operasional. Bagaimana- pernah, kami juga menemukan bahwa
pengeluaran OCI-dipengaruhi tidak associ- diciptakan dengan profitabilitas masa depan, menunjukkan pengeluaran tersebut tidak
menghargai menciptakan. Dalam pemeriksaan lebih lanjut, kami menemukan bahwa pengeluaran diskresioner masa depan
berhubungan dengan kedua OCI positif dan OCI negatif bagi perusahaan-perusahaan leveraged lebih tinggi tetapi hanya terkait
dengan OCI positif bagi perusahaan leveraged lebih rendah. Hasil ini menunjukkan bahwa, untuk perusahaan berusia sangat
lever-, OCI positif mengendur kendala utang membangun struktur pengeluaran dana masa depan sementara negatif OCI
mengencangkan kendala utang ditures expen- masa depan. Untuk perusahaan tanpa kendala utang hasilnya sugestif dari
kemungkinan transfer kekayaan dari debtholders kepada pemegang saham.
KATA KUNCI kendala utang, kebijaksanaan investasi, pembiayaan dan pengeluaran operasional, pendapatan komprehensif
lainnya, efek kekayaan, kekayaan transfer
1
PENDAHULUANnilai informasi relatif pendapatan komprehensif lain untuk laba belum dipahami dengan baik. Pendapatan
lainnya comprehensive (OCI) dan pendapatan tampaknya memiliki komponen yang sama. OCI dan pendapatan keduanya
mengandung keuntungan yang meningkatkan ekuitas pemilik dan menunjukkan nilai lebih tegas. Demikian pula, OCI dan
pendapatan keduanya mengandung kerugian yang menurunkan ekuitas pemilik dan menunjukkan nilai kurang tegas. Efek
kekayaan keuntungan dan kerugian terhadap nilai perusahaan menunjukkan, semua hal yang sama, bahwa manajer dengan nilai
perusahaan meningkat akan cenderung menghabiskan lebih banyak dan manajer dengan perusahaan penurunan nilai akan
cenderung menghabiskan lebih sedikit. Namun, OCI item dan item pendapatan berbeda secara fundamental. Keuntungan dan
kerugian yang belum direalisasi kemungkinan akan disajikan, setidaknya untuk sementara, ekuitas pemilik sebagai OCI item
sementara keuntungan dan kerugian menyadari muncul di laporan laba rugi sebagai komponen pendapatan. Sebagian karena
keuntungan dan kerugian OCI belum direalisasi, mereka sebagian besar dianggap fana sehingga berpotensi membatasi
kegunaannya untuk memprediksi arus kas masa depan (Jones & Smith, 2011), pendapatan
72 c 2017 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/jbfa J Bus Fin Acc. 2018; 45: 72-91.
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(Rees & Shane, 2012), dan nilai-nilai pasar (Barker, 2004) 0,1 karena itu, keuntungan dan kerugian OCI belum direalisasi
mungkin tidak menunjukkan kekayaan realisasi, dan keputusan pengeluaran terkait akan beralasan.
Pada awalnya, sifat fana dari OCI akan menyarankan sedikit untuk menghubungkan OCI dengan pengeluaran di masa depan.
Namun, Chambers, Linsmeier, Shakespeare, dan Sougiannis (2007) melaporkan koefisien respon lebih besar dari satu untuk
berorganisasi antara OCI keuntungan dan kerugian yang belum direalisasi dari efek tersedia untuk dijual dan return saham.
Meskipun bisa dipahami jika keuntungan dan kerugian tersebut bersifat sementara, koefisien lebih besar dari satu respon bisa
menunjukkan bahwa efek kekayaan dari keuntungan dan kerugian OCI dipandang oleh pelaku pasar sebagai memiliki
konsekuensi. Dalam studi ini, kami menjawab pertanyaan tentang apakah keuntungan dan kerugian OCI memiliki konsekuensi
(yaitu, efek kekayaan) dengan mencari hubungan antara perubahan OCI dan mengikuti-tahun pembiayaan diskresioner, investasi,
dan belanja operasional. Kami mendefinisikan pengeluaran pembiayaan diskresioner sebagai perubahan dalam pembayaran
bersih kepada pemegang saham, pengeluaran investasi diskresioner sebagai jumlah dari perubahan modal dan pengeluaran terkait
akuisisi-, dan pengeluaran operasi diskresioner sebagai perubahan dalam iklan, penelitian dan pengembangan, dan penjualan dan
pengeluaran administratif. Hasil regresi puncak-cate asosiasi positif antara OCI dan satu tahun variabel pengeluaran depan
diskresioner ini.
Kami kemudian menguji asosiasi antara pengeluaran diskresioner OCI-dipengaruhi dan kinerja masa depan yang diwakili oleh
dua tahun ke depan return on asset (ROA). Hasil regresi menunjukkan hubungan negatif antara pengeluaran diskresioner
OCI-dipengaruhi dan masa depan ROA, menunjukkan bahwa OCI-dipengaruhi pengeluaran tidak langsung menghargai
menciptakan. Kami berhipotesis bahwa, meskipun non-nilai menciptakan, OCI dapat mempengaruhi pengeluaran puncak-rectly
karena konflik inheren antara pemilik dan kreditur. Dalam konteks konflik, OCI bisa mempengaruhi pengeluaran diskresioner
bawah dua pengaturan. Pengaturan pertama melibatkan kontrak utang ketika laporan keuangan memiliki pengaruh langsung pada
hasil kontrak (DeFond & Jiambalvo, 1994; Pers & Weintrop, 1990; Watts & Zimmerman, 1986). Secara khusus, kontrak utang
sering mencakup persyaratan berdasarkan angka yang dilaporkan dalam laporan keuangan (Begley & Freedman, 2004).
Keuntungan dan kerugian OCI berdampak neraca saat ini ketika item OCI dicatat dalam ekuitas namun berdampak laporan
pendapatan masa depan ketika item OCI mendaur ulang dari ekuitas ke statement.2 pendapatan Ketika perjanjian utang terikat
dengan neraca, OCI keuntungan yang tercatat dalam ekuitas akan menyebabkan perjanjian menjadi kurang membatasi dan
kebijaksanaan manajerial akan mengendur. Demikian pula, kerugian OCI akan menyebabkan perjanjian menjadi lebih ketat dan
mengelola- kebijaksanaan rial akan dibatasi. Dengan demikian, sebuah perusahaan dengan perjanjian-perjanjian utang akan
meningkat fleksibilitas ketika OCI positif dan kurang fleksibilitas ketika OCI negatif.
Pengaturan kedua di mana OCI bisa mempengaruhi pengeluaran diskresioner melibatkan potensi transfer kekayaan dari
kreditur untuk pemilik (Jensen & Meckling, 1976; Modigliani & Miller, 1958). Transfer kekayaan terjadi karena kreditur dan
pemilik berbagi secara tidak proporsional dalam hasil tegas dan karena pemilik, bertindak melalui manajemen, membuat
keputusan pengeluaran saat ini yang pada akhirnya bergantung pada realisasi arus kas masa depan. Sehubungan dengan efek
kekayaan OCI, pemilik dapat membuat keputusan pengeluaran berdasarkan keuntungan yang belum direalisasi sebelum arus kas
dari keuntungan diwujudkan. Jika arus kas menyadari, manfaat tambahan dari pengeluaran akan bertambah kepada pemegang
saham karena kembali kreditur adalah tetap. Namun, jika arus kas tidak menyadari, kreditur mungkin terpaksa berbagi dalam
setiap kekurangan kas. Dengan demikian, pemegang saham dapat mentransfer beberapa risiko arus kas yang melekat pada
keuntungan belum direalisasi pengakuan untuk itors cred-. Dalam konteks ini, kita bisa berasumsi pengeluaran akan lebih
mungkin dengan efek kekayaan positif dari OCI meningkat dibandingkan dengan efek kekayaan negatif OCI menurun.
Kami mencari bukti apakah OCI mempengaruhi pengeluaran diskresioner karena pembatasan yang berkaitan dengan utang
dan / atau karena potensi transfer kekayaan. Untuk tes ini kita fokus pada perbedaan untuk utang yang lebih tinggi dan
perusahaan utang yang lebih rendah dalam asosiasi antara OCI positif dan negatif dan pengeluaran diskresioner. Kami
memperkirakan bahwa utang-terkait pengeluaran OCI-dipengaruhi akan berbanding terbalik dengan kedua perubahan OCI positif
dan negatif sebagai utang
1
Sifat yang belum direalisasi dari OCI item telah digambarkan sebagai fana karena OCI item lebih terkait dengan fluktuasi pasar
yang luas tak terkendali dan kurang terkait kepada perusahaan-spesifik kinerja dan pertumbuhan peluang (Barker 2004;.
Chambers et al, 2007; Jones & Smith, 2011; dan Rees & Shane, 2012). Rees dan Shane (2012) merujuk pada suatu ketidakpastian
yang melekat antara item OCI dan arus kas selanjutnya sebagai dasar ketentuan yang membutuhkan keuntungan dan kerugian
yang belum direalisasi untuk memotong laporan laba rugi. Salah satu implikasi dari ketidakpastian yang melekat adalah bahwa
OCI item harus kurang representatif dari perubahan nilai perusahaan dan dengan demikian kurang berguna bagi manajer dalam
perencanaan masa depan mereka. Barker (2004) berpendapat bahwa karena OCI item terkait dengan perubahan nilai pasar yang
belum direalisasi (yaitu, perubahan nilai pasar efek tersedia untuk dijual), OCI item tidak dapat diharapkan untuk memprediksi
perubahan nilai pasar di masa mendatang.
2
Fokus kami adalah OCI sebagai item neraca. OCI mendaur ulang dari ekuitas ke laporan laba rugi ketika item yang diwujudkan.
Daur ulang seharusnya tidak berpengaruh pada total ekuitas sebagai daur ulang berlaku bergerak OCI item ke laba ditahan
dengan cara laporan laba rugi.
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perjanjian menjadi lebih atau kurang membatasi dengan perubahan ekuitas. Kami memperkirakan bahwa kekayaan transfer-
terkait pengeluaran OCI-dipengaruhi hanya akan dikaitkan dengan OCI positif perubahan sebagai transfer kekayaan hanya dapat
hasil dari peningkatan pengeluaran. Secara keseluruhan, hasil kami menunjukkan bahwa baik OCI positif dan negatif berkaitan
dengan pengeluaran diskresioner untuk perusahaan dengan utang yang lebih tinggi. Namun, hanya positif OCI dikaitkan dengan
pengeluaran diskresioner untuk perusahaan dengan utang yang lebih rendah. Secara bersama-sama, hasil ini menunjukkan bahwa
OCI-dipengaruhi ditures expen- diskresioner secara kontekstual terkait dengan tingkat utang. Untuk perusahaan dengan tingkat
utang yang lebih tinggi, pengeluaran OCI-dipengaruhi mungkin terkait dengan pembatasan utang. Untuk perusahaan dengan
tingkat utang yang lebih rendah, pengeluaran OCI-dipengaruhi mungkin terkait dengan transfer kekayaan.
Penelitian ini membuat setidaknya tiga kontribusi literatur. Sumbangan pertama berasal dari langsung menghubungkan OCI
untuk pengeluaran masa depan. Literatur sebelumnya menunjukkan bahwa pengambilan keputusan manajemen harus kurang
bergantung pada OCI dari pada pendapatan karena OCI item lebih terkait dengan fluktuasi pasar yang luas, dan pendapatan lebih
terkait dengan kinerja dan pertumbuhan kesempatan khusus perusahaan. Namun, Graham, Harvey, dan Rajgopal (2005), Kaplan
(1984), dan Zimmerman (2011) menunjukkan bahwa sistem akuntansi manajemen yang digunakan untuk pengambilan keputusan
internal terkait erat dengan sistem akuntansi keuangan yang digunakan untuk pelaporan eksternal. Akibatnya, pengungkapan dan
tion presenta- persyaratan, seperti rekaman item yang belum direalisasi dalam OCI, bisa langsung mempengaruhi keputusan arus
kas. Kami menambah literatur ini dengan mendokumentasikan hubungan positif antara OCI dan pembiayaan satu tahun ke depan
diskresioner, investasi dan pengeluaran operasional.
Kontribusi kedua berasal dari menghubungkan OCI kekayaan berpengaruh terhadap kinerja masa depan. Biddle dan Hilary
(2006) dan Biddle, Hilary, dan Verdi (2009) menunjukkan bahwa kualitas informasi akuntansi mempengaruhi efisiensi operasi.
Konsisten dengan hasil mereka, kita menemukan bahwa profitabilitas masa depan memburuk ketika pengeluaran diskresioner
dipengaruhi oleh OCI, menunjukkan potensi dampak yang merugikan dari pengakuan keuntungan dan kerugian yang belum
direalisasi.
Kontribusi ketiga berasal dari menghubungkan OCI kekayaan efek dengan leverage dan kekayaan keuangan transfer.
Mengingat sifat fana dari OCI, hasil kami menunjukkan efek kekayaan OCI memberikan pengaturan yang unik untuk
mencari-bukti dence kendala utang dan kekayaan transfers.3 Potensi konflik antara pemilik dan kreditur dapat dikurangi melalui
kontrak yang membatasi fleksibilitas manajer (Beneish & Press, 1993; Jensen & Meckling, 1976; Smith & Warner, 1979). Hasil
kami menunjukkan bahwa baik positif dan negatif pengeluaran OCI-dipengaruhi berhubungan dengan leverage yang lebih tinggi
menunjukkan bahwa efektivitas kontrak-kontrak tersebut dapat dipengaruhi oleh keuntungan dan kerugian yang belum direalisasi
dicatat sebagai OCI. Hasil kami menunjukkan bahwa hanya positif pengeluaran OCI-dipengaruhi berhubungan dengan leverage
yang lebih rendah konsisten dengan potensi kekayaan transfer dari pemegang utang ke pemegang saham.
Sisa dari penelitian hasil sebagai berikut: bagian selanjutnya ulasan akuntansi untuk OCI dan bukti bahwa OCI memiliki
konsekuensi; bagian ketiga menyajikan metode penelitian kami dan data; bagian keempat menyajikan hasil analisis kami; dan
bagian akhir memberikan komentar penutup kami.
2 PUSTAKA SEBELUMNYA PADA OCI AKUNTANSI DAN PELAPORAN:

ADALAH MANAJER DIPENGARUHI OLEH OCI?
2.1 akuntansi OCI dan pelaporan
item pendapatan komprehensif lainnya termasuk keuntungan yang belum direalisasi tahun berjalan dan kerugian yang timbul dari:
(1) perubahan nilai wajar surat berharga yang diklasifikasikan sebagai tersedia untuk dijual; (2) penjabaran mata uang asing
penyesuaian; (3) aset pensiun dan kewajiban penyesuaian; dan (4) perubahan nilai wajar instrumen derivatif diklasifikasikan
sebagai lindung nilai arus kas. Keuntungan dan kerugian OCI dikumpulkan di bagian ekuitas dalam neraca daripada mengalir
melalui laporan laba rugi untuk laba ditahan. Umumnya, keuntungan dan kerugian yang belum direalisasi termasuk dalam OCI,
dan dikeluarkan dari laporan laba rugi, ketika keuntungan dan kerugian yang di luar kontrol manajemen (yaitu, efek yang tersedia
untuk dijual pada fluktuasi pasar saham, kurs tergantung pada fluktuasi mata uang), ketika keuntungan dan kerugian
3 Kami berterima kasih kepada resensi anonim untuk wawasan ini.
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bisa membalikkan waktu ke waktu (yaitu, keuntungan tak terduga aset pensiun dan kewajiban dan kerugian) atau ketika
keuntungan dan kerugian akan menyesuaikan transaksi masa depan untuk biaya sebenarnya atau nilai perusahaan (yaitu, lindung
nilai arus kas untuk pembelian persediaan masa depan atau penjualan perjanjian) 0,4
Meskipun OCI item melewati laporan laba rugi, OCI item dimasukkan sebagai bagian dari pendekatan 'all-inclusive' untuk
melaporkan pendapatan. Secara khusus, OCI dikombinasikan dengan hasil laba bersih dalam pendapatan komprehensif, sehingga
wakili ing 'perubahan ekuitas perusahaan bisnis selama periode dari transaksi dan peristiwa lain dan keadaan dari sumber pemilik
tidak' (Financial Accounting Standards Board, 1980).
2.2 OCI pengaruh pada manajer

Presentasi rugi komprehensif telah bervariasi dari waktu ke waktu. PSAK No. 130, yang diterbitkan pada tahun 1997,
memberikan perusahaan pilihan untuk melaporkan OCI baik dalam laporan ekuitas pemegang saham atau dalam format
pendapatan-pernyataan seperti sebagai bagian dari pernyataan kinerja. Format pendapatan pernyataan seperti bisa mengambil
salah satu dari dua bentuk yang spesifik: (1) pernyataan yang mencakup informasi dalam laporan laba rugi serta pendapatan
komprehensif, atau (2) pernyataan terpisah yang dimulai dengan laba bersih dan berakhir dengan komprehensif pendapatan.
FASB dihilangkan pilihan untuk melaporkan OCI dalam sebuah pernyataan dari ekuitas dengan Standar Akuntansi Update (ASU)
2011-05 pada tanggal 15 Juni 2011. Baik PSAK No. 130 atau ASU 2011-05 memperkenalkan prinsip akuntansi yang baru atau
bimbingan pengakuan baru untuk OCI. Sebaliknya, perusahaan melaporkan informasi yang sama (yaitu, nilai yang sama dari laba
bersih, OCI, dan pendapatan komprehensif) di bawah baik standar dengan hanya lokasi melaporkan diperbolehkan berubah.
Meskipun melaporkan informasi yang sama, nilai semua termasuk mandat pelaporan kinerja PSAK No. 130 dan ASU 2011-05
diperdebatkan antara regulator, penyusun dan pengguna, serta dalam academia.5 komponen-Propo- berpendapat bahwa
semua-dalam pendekatan pengungkapan inklusif enggan manajemen laba dengan meningkatkan transparansi ment negara bagian
keuangan. Selanjutnya, Linsmeier et al. (1997) berpendapat bahwa disiplin pelaporan kinerja manajer dan analis untuk fokus pada
penciptaan nilai daripada manajemen laba. Lee, Petroni, dan Shen (2006) memberikan dukungan tambahan yang OCI presentasi
masalah. Mereka menemukan bahwa perusahaan asuransi mengelola laba melalui tersedia-untuk-portofolio dijual lebih mungkin
untuk melaporkan OCI dalam laporan perubahan ekuitas (kurang presentasi induk trans- laba rugi komprehensif) daripada ketika
OCI dilaporkan dalam sebuah pernyataan kinerja (trans- presentasi orangtua lebih).
Para penentang berpendapat bahwa termasuk OCI sebagai bagian dari pernyataan kinerja membingungkan persepsi pernyataan
pengguna keuangan dari hasil operasi dan risiko. Menganalisis isi surat komentar pada pendapatan komprehensif expo- yakin
rancangan, Yen, Hirst, dan Hopkins (2007), p. 63) menulis: 'Komentar menyatakan keprihatinan bahwa investor (1) akan bingung
dengan ukuran kinerja baru yang mereka memiliki sedikit pengalaman, (2) mungkin fokus pada hubungan dan perbedaan antara
pendapatan komprehensif dan laba bersih, dan (3) mungkin menghukum perusahaan dengan volatilitas pendapatan komprehensif
tinggi, percaya ada menjadi lebih tinggi atau peningkatan risiko.' Penelitian juga menunjukkan kinerja laporan keuangan
pengguna hakim perusahaan karena lebih stabil hanya jika pendapatan komprehensif muncul dalam sebuah pernyataan kinerja.
Maines dan McDaniel (2000) menggunakan eksperimen untuk menunjukkan bahwa penilaian investor terhadap kinerja
perusahaan dan manajemen mencerminkan volatilitas laba rugi komprehensif hanya ketika disajikan dalam laporan laba rugi
komprehensif. Hirst dan Hopkins (1998) juga menemukan dalam percobaan laboratorium bahwa ketika pendapatan komprehensif
muncul dalam laporan ekuitas, setengah dari kolam renang subjek mereka dari analis keuangan berpengalaman tidak ingat
melihat istilah 'pendapatan komprehensif'. Namun, Dhaliwal, ramanyam Sub-, dan Trezevant (1999) membangun seakan OCI dan
tidak menemukan bukti jelas bahwa pendapatan komprehensif lebih sangat terkait dengan pengembalian saham daripada laba
bersih. Hal ini menunjukkan bahwa persepsi risiko pelaku pasar belum tentu diubah oleh pendekatan pengungkapan all-inclusive.
4
Rees dan Shane (2012, pp. 796-797) daftar 11 OCI item di meja mereka 2. Dari 11 OCI item, tiga terkait dengan transaksi mata
uang asing dan terjemahan (PSAK 52, 1983), tiga sampai pensiun (PSAK 87 dan 106, 1987 dan 1993), empat ke tersedia untuk
dijual sekuritas (PSAK 115, 1994) dan satu untuk lindung nilai arus kas (PSAK 133, 2000). Semua terdaftar sebagai memiliki
ketekunan rendah. Hanya dua OCI item yang terdaftar sebagai di bawah kendali manajemen. Dua yang terdaftar sebagai di bawah
kontrol manajemen yang pensiun biaya jasa lalu dan aset transisi pensiun atau kewajiban.
5 Hampir 300 surat yang diterima oleh FASB dalam menanggapi usulan PSAK 130 (Yen et al., 2007).
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The informativeness dari OCI lebih rumit sebagai manajer menerapkan kebijaksanaan mereka dalam apa item muncul dalam
OCI dan bagaimana OCI disajikan. Misalnya, ASC Topik 320 berurusan dengan surat berharga pada dasarnya memungkinkan
perlakuan yang berbeda untuk investasi identik berdasarkan niat manajemen untuk menjual atau untuk memegang instrumen.
Dan, ASC Topik 715 memungkinkan manajer untuk menentukan tarif diskon untuk kewajiban pensiun dan tingkat pertumbuhan
yang diharapkan untuk aset pensiun. Konsisten dengan pandangan ini, penelitian sebelumnya menunjukkan bahwa manajer
menggunakan kebijaksanaan pelaporan mereka untuk mengelola tion INFORMATION disajikan kepada investor melalui akrual
(Arya, Glover, & Sunder, 2003; Demski, 1998; Louis & Robinson, 2005; Subramanyam, 1996; Watts & Zimmerman, 1986) dan
melalui pro forma laba (Ajinkya & Gift, 1984; Hassel & Jennings, 1986; Raja, Pownall, & Waymire, 1992). Lebih penting di sini,
Bamber, Jiang, Petroni, dan Wang (2010) ana- lyze OCI pengungkapan kebijakannya sebelum ASU 2011-05 dan menemukan
bahwa manajer dengan insentif ekuitas berbasis kuat dan keamanan kerja kurang secara signifikan lebih kecil kemungkinannya
untuk mengungkapkan OCI di pernyataan kinerja laporan laba rugi.
Singkatnya, tampak bahwa OCI mempengaruhi manajer dan manajer percaya informasi di OCI memiliki urutan con. Apakah
OCI mempengaruhi keputusan manajer mengenai pengeluaran diskresioner? Pada bagian berikutnya kami menyajikan desain
penelitian kita gunakan untuk menjawab pertanyaan ini dengan fokus pada pembiayaan, investasi, dan operasi pengeluaran
diskresioner.
3 PENELITIANDESAIN
model regresi Umum3.1
Kami menguji hubungan antara OCI tahun berjalan dan mengikuti perubahan tahun dalam pengeluaran diskresioner. Model
empiris ditentukan sebagai:
Pengeluaran Discretionary
t+1
=a
0
+
1
OCI
t
+
2
ROEPersistent
t
+
3
ROENon
t
-
Persistent
+
4
BTM
t
+
5
RET
t
+
6
UKURAN
t
+
7
AOCI
t-1
+a
8
RATE
t+1
+
9
MKRET
t+1
+
10
INDPROD
t+1
+ Industri tetap Efek
(1)
dalam model, Pengeluaran Discretionary
t+1
sama baik pembiayaan (DV
t+
1), sama dengan persentase perubahan berbayar bersih
keluar (dividen ditambah pembelian kembali saham saham emisi kurang) kepada pemegang saham umum relatif terhadap awal
tahun nilai t + 1 pasar ekuitas, investasi (bERINVESTASI
t+
1),sama dengan persentase perubahan perbaikan dan akuisisi modal relatif terhadap
awal tahun t + 1 nilai pasar ekuitas, atau operasi (OPEXP
t+
1),sama dengan persentase perubahan dalam
penelitian dan pengembangan, periklanan, dan pengeluaran penjualan dan administrasi relatif terhadap awal tahun t + 1 nilai
pasar equity.6
OCI
t
sama dengan jumlah dari penyesuaian penjabaran mata uang asing (PSAK No. 52), yang belum diakui prio pensiun biaya
jasa r, keuntungan dan kerugian aset pensiun, dan keuntungan kewajiban aktuaria dan kerugian (PSAK No. 37), penyesuaian nilai
pasar untuk derivatif (PSAK No. 133) dan penyesuaian nilai pasar untuk efek tersedia untuk dijual (PSAK No. 115 ). Kami
menghitung OCI
t
sebagai persentase perubahan akumulasi OCI (AOCI) dari tahun sebelumnya relatif terhadap awal tahun nilai t
pasar equity.7 umum Jika keuntungan dan kerugian OCI berhubungan dengan pengeluaran tahun berikutnya, maka a
1
akan menjadi positif
dan berbeda dari nol (yaitu,
1>
0) 0,8
6
Lampiran menyajikan daftar lengkap definisi variabel.
7
OCI
t
dan Pengeluaran Discretionary
t+1
persen variabel perubahan hanya perubahan dibagi dengan nilai pasar ekuitas dikalikan dengan
100. Multi plying oleh 100 tidak mengubah hasil utama dari regresi kami tetapi tidak membantu dalam eksposisi sebagai
nilai-nilai numerik cenderung cukup kecil.
8
keuntungan dan kerugian OCI terkait dengan nilai pasar siklus penyesuaian dalam dan kemudian keluar dari OCI ketika
mendasari aset direvaluasi dijual atau kewajiban yang mendasari penilaian kembali diselesaikan. Sebagai contoh,
mempertimbangkan keamanan yang tersedia untuk dijual diperoleh untuk $ 100, senilai $ 110 pada tanggal neraca dan dijual
pada periode berikutnya untuk $ 115. Pada tanggal neraca, perusahaan catatan dalam OCI gain yang belum direalisasi sebesar $
10. Pada periode penjualan, perusahaan melaporkan keuntungan menyadari sama dengan $ 15 dan pembalikan dari $ 10
keuntungan yang belum direalisasi. Untuk memastikan bahwa variabel OCI kami menangkap keuntungan yang belum direalisasi
periode berjalan dan kerugian dan tidak artefak daur ulang ini, kita menghitung OCI dalam kasus-kasus tertentu di mana OCI dari
dua tahun yang berlawanan ditandatangani dengan menjumlahkan sebelumnya dan tahun berjalan OCI. Dengan demikian, dalam
contoh di atas, nilai OCI akan menjadi $ 10 untuk tahun pelaporan pertama dan $ 0 untuk tahun pelaporan kedua.
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Variabel yang tersisa mengontrol faktor yang diidentifikasi dalam studi sebelumnya menjadi prediksi masa depan ditures
expen- diskresioner. Misalnya, Bates (2005) dan Smith dan Watts (1992) menemukan hubungan positif antara ditures expen-
diskresioner dan peluang pertumbuhan. Akibatnya, kami menyertakan empat proxy potensial yang berhubungan dengan peluang
pertumbuhan: tahun berjalan return on equity dipisahkan menjadi komponen-komponen gigih dan non-persistent-nya
(ROEPersistent
t
sama dengan pendapatan
operasional tahun t dibagi dengan awal tahun nilai t buku ekuitas pemegang saham biasa, dan ROENon
t
-
Persistent
sama dengan tahun t pendapatan non-operasional juga dibagi dengan awal tahun nilai t buku ekuitas pemegang saham biasa);
kebalikan dari rasio lancar tahun market-to-book (buku-to-market) rasio (BTM
t,
dihitung sebagai ekuitas pemegang saham biasa
dibagi dengan nilai pasar ekuitas umum); dan tahun berjalan return saham (RET
t,
dihitung sebagai terkumpul lated bulanan
saham pulang) 0,9 Kami mengharapkanROEPersistent
t
dan RET
t
pertumbuhanpeluang variabel yang akan positif terkait dengan
pengeluaran diskresioner masa depan dan BTM
t
peluangpertumbuhanterbalik variabel akan nega- tively terkait
dengan pengeluaran diskresioner masa depan (yaitu,
2>
0;
4
<0;
5>
0). Karena pendapatan non-operasional
kemungkinan untuk mewakili campuran satu-off maupun yang belum direalisasi investasi dan pendanaan keuntungan dan
kerugian, dan karena Jones dan Smith (2011) menemukan bahwa item khusus pendapatan (pada dasarnya non-operasi
keuntungan dan kerugian) memiliki nol ketekunan , kami tidak membuat prediksi untuk hubungan antara komponen
non-persistent dari return on equity (ROENon
t
-
persisten)
dan masa depan
expenditures.10 diskresioner
Kami meliputi ukuran perusahaan (sIZE
t
dihitung sebagai logaritma natural dari nilai pasar ekuitas umum) untuk kontrol untuk hubungan
terbalik antara ukuran dan pertumbuhan peluang (Evans, 1987; Sutton, 1997). Lebih sedikit peluang pertumbuhan dan
pendapatan yang konsisten dan arus kas dari beberapa perusahaan besar menyarankan perusahaan-perusahaan besar akan kurang
rentan terhadap perubahan dalam pengeluaran diskresioner karena OCI. Untuk alasan ini, kami berharap tanda negatif pada
UKURAN
t
koefisien(yaitu,
6
<0). Akumulasi OCI pada awal tahun t (AOCI
t-1)
dimaksudkan untuk mengendalikan pengaruh tahun sebelumnya OCI.
Kami tidak membuat prediksi pada tanda koefisien.
Kami mengontrol pengaruh ekonomi makro kontemporer pengeluaran diskresioner dengan variabel yang berhubungan dengan
kondisi kredit (RATE
t+
1),return pasar (MKRET
t+
1)dan produk domestik bruto (INDPROD
t+
1).RATE
t + 1 sama dengan
10-tahun imbal hasil obligasi treasury AS rata-rata bulanan yang diperoleh dari Departemen Keuangan AS
(https://www.treasury.gov/). MKRET
t+1
sama dengan kumulatif indeks S & P kembali dan INDPROD
t+1
sama dengan perkiraan satu tahun
ke depan rata-rata indeks produksi industri diperoleh dari Survei Peramal Profesional, pub-likasikan oleh Federal Reserve Bank
of Philadelphia (https: //www.philadelphiafed.org). Kami berharap koefisien negatif pada RATE
t+1
dan koefisien positif pada MKRET
t+1
dan INDPROD
t+1
(yaitu,
8
<0;
9>
0;
10>
0). Terakhir, kami menyertakan efek
industri tetap untuk mengendalikan perbedaan dalam pengeluaran diskresioner di industries.11
3.2 Data
sampel kami dimulai dengan 246.931 pengamatan untuk 24.862 perusahaan umum untuk database Compustat dan CRSP dari
tahun 1997 (tanggal efektif PSAK No. 130) untuk 2014. Kami dihilangkan 175.693 pengamatan untuk 15.101 perusahaan
dengan- nilai-nilai untuk AOCI dan 10.158 pengamatan untuk 1.397 perusahaan dalam industri perbankan, asuransi, dan utilitas.
Lain 24.810 pengamatan untuk 2698 perusahaan dieliminasi karena representasi jarang dari sampel sebelum 2003 dan karena
data tidak cukup untuk variabel yang digunakan dalam regresi kami analyses.12 Sampel akhir terdiri dari 36.270 observasi
perusahaan-tahun untuk 5666 perusahaan. Panel A dari Tabel 1 memberikan ringkasan dari proses seleksi sampel.
9 Rasio buku-to-market mengurangi pengaruh dalam regresi kami rasio market-to-book besar. Hasil kami tidak kualitatif berbeda
ketika mengganti rasio market-to-book untuk rasio book-to-market.
10 Sumber-sumber lain dari profitabilitas tahun berjalan dapat mempengaruhi pengeluaran diskresioner masa depan. Dengan
demikian,ROE
Persistent
t,ROE
t
Non-Persistent,dan RET
t
variabeljuga dapat
mengontrol profitabilitas tahun berjalan terpisah dari OCI.
11 Selain itu, Billett, Flannery dan Garfinkel (2001), Loughran dan Ritter (1995), dan Spiess dan Affleck-Graves (1999)
menemukan bahwa eksternal ketersediaan pembiayaan pengaruh pengeluaran diskresioner. Kemudian, kami menunjukkan hasil
dari regresi terpisah untuk perusahaan leverage yang tinggi dan rendah. Untuk alasan ini, kami tidak menyertakan variabel
leverage keuangan dalam regresi ini. Meski begitu, hasil kami disajikan kemudian tidak sensitif terhadap termasuk variabel
leverage yang (ekuitas pemegang saham biasa dibagi dengan total aset) untuk mengendalikan pembatasan kontemporer
pengeluaran diskresioner yang dapat hasil dari utang.
12
Firm-tahun sebelum 2003 mewakili kurang dari 1% dari sampel akhir kami (217 pengamatan). Temuan empiris kita tetap
kualitatif serupa ketika perusahaan-tahun sebelum 2003 disertakan.
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TABEL1 distribusi Contoh
Panel A:ContohSeleksi
ContohProsedur Seleksi
PengamatanFirm Tahun Perusahaan Berbeda
Contoh Awal: Semua pengamatan umum di file Compustat Amerika Utara dan
Pusat Penelitian di Harga Keamanan (CRSP) database selama periode 1997 -2014.
246.931 24.862
Kecualikan: Firm-tahun dengan nilai akumulasi pendapatan komprehensif lain hilang. (175.693) (15.101)
Kecualikan: Perusahaan di bidang perbankan, asuransi, dan industri utilitas. (10.158) (1.397)
Kecualikan: Firm-tahun sebelum tahun 2003 karena representasi sampel jarang dan
perusahaan-tahun dengan data yang hilang untuk menghitung variabel kontrol.
(24.810) (2698)
Akhir Contoh 36.270 5.666
Panel B. Contoh Distribusi oleh Tahun Anggaran
Tahun Anggaran Frekuensi Persentase
Kumulatif Persentase
2003 3.467 9,56 9,56 2004 3.692 10,18 19,74
9,00 65,94 2010 3.127 8,62 74,56 2011 3.034
Semua Tahun 36.270 100.00

Panel C. Sampel Distribusi olehIndustri
IndustriGICS Kode Industri Keterangan Frekuensi Persentase
kumulatif Persentase
101.020 Oil, Gas & Bahan Bakar Consumable 1918 5.29 5.29
453.010 Semikonduktor & Semiconductor Equipment 1.643 4,53 9,82
452.030 Electronic Equipment, Instrumen & Komponen 1.600 4,41 14,23
404.020 Real Estate Investment Trust 1570 4.33 18,56
451.030 Software 1521 4,19 22,75
351.010 Perawatan Kesehatan Peralatan & Perlengkapan 1.484 4,09 26,84
201.060 Mesin 1.229 3,39 30,23
255.040 Retail khusus 1203 3,32 33,55
352.010bioteknologi 1189 3,28 36,83
Hotel253.010, Restauran ts & Leisure 1134 3.13 39,96
452.010 Peralatan Komunikasi 1128 3.11 43,07
254.010 Media 1065 2,94 46,01
151.040 Logam & Pertambangan 983 2,71 48,72
451.010 Internet Software & Layanan 945 2,61 51,33
351.020 Penyedia Layanan Kesehatan & Layanan 912 2,51 53,84
(Berlanjut)
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TABEL1 (Lanjutan )
Panel C. Sampel Distribusi olehIndustri
IndustriGICS Kode Industri Keterangan Frekuensi Persentase
kumulatif Persentase
151.010 Kimia 903 2,49 56,33
202.010 Commercial Layanan & Supply Industri 879 2,42 58,75
451.020 IT Services 871 2,40 61,15
402.030 Capital Markets 811 2.24 63,39
101010 Peralatan Energi & Layanan 791 2.18 65.57
352.020 Farmasi 761 2.10 67,67
lain 11.730 32,33 100,00
semua Industri 36.270 100.00
Catatan: Panel A merangkum proses seleksi sampel dimulai dengan semua pengamatan umum di file Compustat Amerika Utara
dan Pusat Penelitian di Harga Keamanan (CRSP) database selama periode 1997 (yaitu, dimulai dengan tanggal efektif PSAK No.
130) untuk 2014. Kami menghilangkan observasi perusahaan-tahun tanpa nilai untuk akumulasi pendapatan komprensif lainnya,
perusahaan-tahun pengamatan di perbankan, asuransi, dan industri utilitas (yaitu, SIC Kode: 6000-6199; 6300- 6411; 4900-4942)
dan perusahaan-tahun pengamatan kurang data yang cukup untuk perhitungan variabel yang digunakan dalam diskusi-regres-
kami. Perusahaan-tahun pengamatan sebelum tahun 2003 dikecualikan karena representasi jarang (kurang dari 1% dari sampel
akhir kami). Sampel akhir terdiri dari 36.270 observasi perusahaan-tahun untuk 5666 perusahaan. Panel B shows the sample
distribution by year and Panel C shows the sample distribution by industry group based on the Global Industry Classification
Standard developed by MSCI.
Panel B of Table 1 presents the distribution of firms and firm years across the sample years. Observations in the sample
number consistently above or close to 3,000 throughout the sample years. Panel C of Table 1 presents the distribution of firms
and firm-years by Global Industry Classification Standard (GICS) developed by MSCI and Standard and Poors. Bhojraj, Lee, and
Oler (2003) and Boni and Womack (2006) present evidence that the GICS industry classification captures industry-specific
economic movements better than other industry classifications. The sample firms appear fairly evenly distributed over the 21
GICS industries. No industry represents more than six percent or less than two percent of the sample. The number of firm-years
ranges from 1,918 (5.29%) in the Oil, Gas & Consumable Fuels industry to 761 in the Pharmaceuticals industry (2.10%). The five
industries with the largest numbers of firm-years represent approximately 23 percent of the sample. The five industries with the
lowest numbers of firm-years represent approximately 11 percent of the sample. We did not identify a GICS industry for 32
percent of the firm-years.13
3.3 Descriptive statistics

Table 2 presents summary statistics for the Equation (1) variables. The mean of the financing discretionary expenditures variable
as a percentage of beginning of year market value (DV
t+1
) equals 0.0996, but the median equals zero suggesting that
most firms do not have changes in net payout to shareholders and those firms that do have changes, increase their net payouts.
The mean of the investing discretionary expenditures variable (INVEST
t+1
) as a percentage of beginning of
year market value of equity equals 0.4501 and the median equals 0.1248, suggesting that, on average, firms over time increase
their discretionary investing expenditures. The mean of the operating discretionary expenditures variable as a percentage of
beginning of year market value of equity (OPEXP
t+1
) equals 0.0008 and the median equals zero
suggesting that, on average, firms over time do not change their percentage of discretionary operating expenditures, although for
the ones that do, the change will tend to be an increase. In comparison, the mean of the OCI variable as a percentage of beginning
of year market value of equity (OCI
t
) equals 0.0991 and the median equals zero, suggesting
that the value of positive OCI exceeds the absolute value of negative OCI, on average.14
13 We also categorized firms in industries using Fama and French (1993) industries with no qualitative difference in our
regression results.
14
Chambers et al. (2007) report mean, median, and standard deviation for their measurement of OCI equal to 0.0009, 0.0000, and
0.0262. Divided by 100, our measurement of OCI (OCI
t
) has a similar distribution with mean, median, and standard deviation equal to 0.0019, 0.0000, and 0.0275.
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TABLE2 Summary statistics
Variables Mean P25 P50 P75 Std. Dev.
Discretionary Expenditure Variables
DV
t+1
0.0996 0.0000 0.0000 0.0859 1.6541
INVEST
t+1
0.4501 −2.6983 0.1248 3.9785 18.4398
OPEXP
t+1
0.0008 0.0000 0.0000 0.3667 2.3636
Explanatory Variable
OCI
t
0.0991 −0.1412 0.0000 0.3034 2.7207
Control Variables
ROE
Persistent t
0.1529 0.0223 0.1570 0.2952 0.3854
ROE
Non t
-
Persistent
0.0211 0.0004 0.0070 0.0218 0.0425
BTM
t
0.6527 0.3004 0.5041 0.8040 0.5661
RET
t
0.2112 −0.1729 0.1121 0.4232 0.6572
SIZE
t
6.2901 4.8192 6.2444 7.6830 2.1014
AOCI
t−1
−0.0088 −0.0056 0.0000 0.0010 0.0520
RATE
t+1
3.6007 3.0792 3.6667 4.2900 0.9065
MKRET
t+1
0.1237 0.1119 0.1262 0.1383 0.0198
INDPROD
t+1
1.0878 0.9989 1.1175 1.1505 0.0879
Notes: Discretionary expenditure variables equal the percentage change in annual net payout to shareholders in year t + 1 relative
to beginning of year t + 1 market value (DV
t+1
), the percentage change in the sum of capital and acquisition expenditures less
the change in inventory from year t to year t + 1 relativ e to beginning of year t + 1 market value (INVEST
t+1
), and the percentage
change in the sum of research and development, advertising and selling and administrative expenditures from year t to year t+ 1
relative to beginning of yeart prehensive income relative to beginning of year + 1 market value t market value of (OPEXP
common t+1
equity, ). OCI t
ROE equals Persistent
t
the percentage of yeart other com- equals year t operating income divided by beginning of year year t common equity. BTM t
t equals common the equity book value and ROE
of common Non
t
-
Persistent
equals year t non-operating income divided by beginning of shareholder's equity divided by the market value of common equity
at the end of year t. RET
t
equals the cumulative monthly stock return for year t. SIZE
t
equals the log of market value of common
equity at the end of year t. AOCI
t−1
equals beginning of year t accumulated other comprehensive income divided by
beginning of yeartmarket value of common equity.RATE
t+1
equals the average monthly 10-year US treasury bond yield during year t +
1.MKRET
t+1
equals the cumulative S&P index return for yeart + 1.INDPROD
t+1
equals the average forecast over year t + 1 of the
one-year ahead change in industrial production. See the Appendix for complete variable definitions. All variables are winsorized
at the 1st and 99th percentiles.
With regard to the control variables, the mean of the persistent component of return on equity variable (ROEPersistent
t
) equals 0.1529 and the median equals 0.1570, and the mean of the non-persistent component of return on equity
variable (ROENon
t
-
Persistent
) equals 0.0211 and the median equals 0.0070, indicating our sample firms are prof- itable on
average. The mean of the book-to-market ratio variable (BTM
t
) equals 0.6527 and the median equals 0.5041, and the mean
of the firm size variable (SIZE
t
) equals 6.2901 and the median equals 6.2444, indicating that our sample firms are
growing and large on average. The prior year AOCI variable (AOCI
t−1
) has a mean equal to −0.0088 and a median equal to
zero. The mean firm stock return variable for the firms in the sample (RET
t
) equals 0.2112 and the median equals
0.1121, the mean market return (MKRET
t+1
) over the sample period equals 0.1237 and the median equals 0.1262,
and the mean borrowing rate variable (RATE
t+1
) over the sample period equals 3.6007 and the median equals
3.6667. Lastly, the mean forecast change in industrial production (INDPROD
t+1
) equals 1.0878 and the median equals
1.1175.
Table 3 presents Pearson correlation coefficients for the variables in Equation (1). All but three of the correlation coefficients
are smaller than ±0.30. The three largest correlation coefficients are between the persistent component of return on equity
(ROEPersistent
t
) and firm size (SIZE
t
) (r
p
= 0.36), book-to-market ratio (BTM
t
) and firm size (SIZE
t
) (r
p
= −0.39) and 10-year bond yield (RATE
t+1
) and industry production forecasts (INDPROD
t+1
) (r
p
= 0.84). To ensure that our
regression results are not driven by these high correlations, we re-estimate Equation (1) after omitting the
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TABLE3 Pearson correlation coefficients
Variables (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Discretionary Expenditure Variables
(1) DV
t+1
1.00
(2) INVEST
t+1
0.05*** 1.00
(3) OPEXP
t+1
0.02*** 0.10*** 1.00
Explanatory Variable
(4) OCI
t
0.04*** 0.08*** 0.04*** 1.00
Control Variables
(5) ROE
Persistent t
0.04*** 0.02*** 0.11*** 0.01 1.00
(6) ROE
Non t
-
Persistent
0.02*** 0.00 0.00 0.01** −0.00 1.00
(7) BTM
t
−0.08*** −0.11*** −0.16*** 0.00 −0.16*** −0.07*** 1.00
(8) RET
t
0.03*** 0.04*** −0.09*** −0.04*** −0.03*** −0.02*** 0.25*** 1.00
(9) SIZE
t
0.05*** 0.01** 0.10*** −0.01*** 0.36*** 0.02*** −0.39*** −0.14*** 1.00
(10) AOCI
t−1
−0.01** −0.04*** −0.01** −0.20*** −0.10*** −0.03*** −0.00 -0.05*** −0.06*** 1.00
(11) RATE
t+1
−0.00 0.04*** 0.03*** 0.06*** −0.01*** 0.07*** −0.15*** −0.01* * −0.06*** 0.01** 1.00
(12) MKRET
t+1
0.04*** 0.05*** 0.08*** 0.05*** 0.04*** 0.02*** −0.15*** −0.20*** 0.14*** 0.01*** −0.24*** 1.00
(13) INDPROD
t+1
0.03*** 0.05*** 0.04*** 0.09*** −0.01** 0.05*** −0.17*** −0.04*** −0.06*** −0.00 0.84*** −0.12***
Notes: Discretionary expenditure variables equal the percentage change in annual net payout to shareholders in year t + 1 relative
to beginning of year t + 1 market value (DV
t+1
), the percentage change in the sum of capital and acquisition expenditures less
the change in inventory from year t to year t + 1 relative to beginning of year t + 1 market value (INVEST
t+1
), and the percentage
change in the sum of research and development, advertising and selling and administrative expenditures from year t to year t + 1
relative to beginning of year t + 1 market value (OPEXP
t+1
). OCI
t prehensive income relative to beginning of year t
market value of common equity, ROE
equals the percent of year t other com-
Persistent
divided by beginning of year t common equity year t common equity. BTM
t
equals the book value and ROE
of common Non
t
-
Persistent
t equals year t non-operating equals year t operating income income divided by beginning of shareholder's equity divided by the
market value of common equity at the end of year t. RET
t
t
equals the log of market value of common
equity at the end of year t. AOCI
t−1
equals beginning of year t accumulated other comprehensive income divided by
beginning of yeartmarket value of common equity.RATE
t+1
equals the average monthly 10-year US treasury bond yield during year t+
1.MKRET
t+1
equals the cumulative S&P index return for year t + 1.INDPROD
t+1
equals the average forecast over year t + 1 of the
one-year ahead change in industrial production. See the Appendix for complete variable definitions. All variables are winsorized
at the 1st and 99th percentiles. *p < 0.10, **p < 0.05, ***p < 0.01.
SIZE
t
andRATE
t+1
variables in an untabulated sensitivity test and our inferences are unaffected. Overall, multicollinear- ity does not
appear to be an issue in our regression results.
4 REGRESSION RESULTS
4.1 Results for the general regression model
Regression results are presented in Table 4. Column (1) presents results when discretionary expenditures relate to financing
activities (DV
t+1
), column (2) presents results when discretionary expenditures relate to investing activities (INVEST
t+1
), and column (3) presents results when discretionary expenditures relate to operating activities (OPEXP
t+1
). Across the three
regressions, the coefficients relating OCI to discretionary expenditures are positive and significant, suggesting that current year
OCI is associated with following year discretionary expenditures.
The regression coefficients for the control variables are generally consistent with our expectations. Specifically, the coefficient
on ROEPersistent
t
is positive and significant (p <0.001) in columns (1) and (3), and is negative but insignificant in column
(2). The coefficient on ROENon
t
-
Persistent
is negative at acceptable statistical significance levels in columns (2) and
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TABLE4 The association between other comprehensive income and discretionary expenditures
Dependent Variables
Explanatory Variables
Predicted
(1)
(2) Sign
DV
t+1
INVEST
t+1
(3) OPEXP
t+1 OCI
t
+ 0.0254*** 0.4811*** 0.0281***
ROE
Persistent t
+ 0.0009*** −0.0004 0.0051***
ROE
Non t
-
Persistent
? 0.0037 −0.0568** −0.0067*
BTM
t
− −0.0025*** −0.0476*** −0.0052***
RET
t
+ 0.0015*** 0.0225*** −0.0013***
SIZE
t
− 0.0000 −0.0034*** 0.0003***
AOCI
t−1
? 0.0006 −0.0938*** 0.0007
RATE
t+1
− −0.0016*** 0.0005 0.0000
MKRET
t+1
+ 0.0002*** 0.0049*** 0.0006***
INDPROD
t+1
+ 0.0178*** 0.0669*** 0.0058**
Industry Fixed Effect Yes Yes Yes
Intercept Yes Yes Yes
N 36,270 36,270 36,270
R2 0.0240 0.0332 0.0439
R2
adj
0.0220 0.0312 0.0419
Notes: This table reports ordinary least squares results for the regression model: Discretionary Expenditures
t+1
=a
0
+a
1
OCI
t+a
8
RATE
t+1
++a
2a
REOPersistent
9
MKRET t
t+1
+ - + aa
3
10
ROENon
INDPROD
t
Persistent
+a
4
BTM
t
+a
5
RET
t
+a
6
SIZE
t
+a
7
AOCI
t−1
t+1
+ Industry Fixed Effects Discretionary expenditure
variables equal the percentage change in annual net payout to shareholders in year t+ 1 relative to beginning of yeart + 1 market
value (DV
t+1
), the percentage change in the sum of capital and acquisition expenditures less the change
in inventory from year t to year t + 1 relative to beginning of year t + 1 market value (INVEST
t+1
), and the percentage change in the
sum of re search and development, advertising and selling, and administrative expenditures from year t to year t + 1 relative to
beginning of year t + income relative to beginning of year t 1 market market value value of (OPEXP
common t+1
equity, ). OCI t
ROE equals Persistent
t
the percentage of year t other comprehensive equals year t operating income divided by beginning of year t common equity mon
equity. BTM t
equals the book and value ROE
of Non t common -
Persistent
shareholder's equals yeart non-operating equity divided income by divided by beginning of year t com- the market value of
common equity at the end of year t. RET
t
t
equals the log of market value of common equity at the
end of year t. AOCI
t−1
equals beginning of year t accumulated other comprehensive income divided by beginning of
yeartmarket value of common equity.RATE
t+1
equals the average monthly 10-year US treasury bond yield during yeart+ 1. MKRET
t+1
equals the cumulative S&P index return for year t + 1. INDPROD
t+1
equals the average forecast over year t + 1 of the one-year
ahead change in industrial production. See the Appendix for complete variable definitions. All variables are winsorized at the
1st and 99th percentiles and standard errors are adjusted for firm clustering effects. Industry fixed effects are based on the Global
Industry Classification Standard developed by MSCI. *p < 0.10, **p < 0.05, ***p < 0.01.
(3) but positive and insignificant in column (1). Across the three columns, the coefficients on BTM
t
are all significantly negative (p <
0.01) as predicted. The coefficients on the cumulative monthly stock return variable (RET
t
) are significantly positive
(p < 0.01) as predicted in columns (1) and (2), but inexplicably negative and significant in column (3). The coefficient on SIZE
t
is significantly negative (p < 0.01) in column (2) but significantly positive (p < 0.01) in column (3),
contrary to expectations. The inconsistent sign may be due in part to the capitalization and amortization of operating
expenditures. The coefficient on the prior year accumulated other comprehensive income variable (AOCI
t−1
) is significantly
different from zero only in column (2), the investing discretionary expenditures regression.15
15
We reran the Table 4 regressions without the (AOCI
t−1
) variable. The coefficients on OCI become 0.0249 (DV
t+1
regression), 0.4651 (INVEST
t+1
regression) and 0.0264
(OPEXP
t+1
regression) with significance unchanged.
LIN
GRAHAM
AND
With respect to macroeconomic controls, across the three columns the coefficients on MKRET
t+1
and INDPROD
t+1 are all
significantly positive (p < 0.01) as predicted. However the coefficient on RATE
t+1
is negative and significant (p < 0.01) only
in column (1), the financing discretionary expenditure regression. Overall, the results for the control variables indicate
entity-specific factors (ie, profitability, persistence, and growth) and macroeconomic factors (ie, market returns, industrial
production, and credit condition) influence discretionary expenditures.16
4.2 The relation between discretionary expenditures and OCI and future performance (ROA)
The results presented in Table 4 suggest an association between changes in OCI and following year discretionary expenditures. In
this section, we present regression results testing whether the discretionary expenditures influenced by OCI are associated with
future firm performance calculated as operating income in year t + 2 divided by beginning of year t + 2 total assets (ROA
t+2
).17 With ROA
t+2
as the dependent variable and discretionary expenditures, OCI and their
interaction as explanatory variables, we specify an empirical model as:
ROA
t+2
=b
0
+b
1
Discretionary Expenditures
t+1
+b
2
OCI
t
+b
3
(
t+1
× OCI
t
)
+b
4
ROEPersistent
t
+b
5
ROENon
t
-
Persistent
+a
6
BTM
t
+a
7
RET
t
+a
8
SIZE
t
+a
9
AOCI
t−1
+a
10
RATE
t+1
+a
11
MKRET
t+1
+a
12
INDPROD
t+1
+ Industry Fixed Effects (2)
All other variables in Equation (2) are as previously defined. Here, our primary interest lies with discretionary expenditures,
OCI, and the interaction between discretionary expenditures and OCI.
Healy and Palepu (1988), Lang and Litzenberger (1989), and Michaely, Thaler, and Womack (1995) report a positive
association between changes in dividends and contemporaneous changes in stock prices and McConnell and Muscarella (1985)
report a positive association between investment-related expenditures and changes in stock prices. To the extent that stock price
represents the capitalization of expected future earnings, the positive associations docu- mented in prior literature suggest that the
changes in discretionary expenditures we identify here will be predictive of future earnings. For these reasons, we expect positive
associations between our discretionary expenditures variables and future performance (ie, b
1
> 0). The relationship between current year OCI and following year ROA depends on the extent that
changes in AOCI are related to economic factors that are themselves associated with future performance. As stated earlier, OCI
includes various components. Some components, such as gains and losses from exchange rate fluctuations, could be indicative of
future performance, while other components, such as pension prior service costs, may not be indicative of future performance.
Chambers et al. (2007) and Dhaliwal et al. (1999) also find no clear evidence that comprehensive income is incrementally more
informative about future cash flows and future net income than current net income. The absence of evidence that OCI is
incrementally informative suggests that OCI is, for the most part, transitory. Accordingly, we make no prediction about the
coefficient on the OCI variable alone.
If OCI is transitory, it follows that there should be little association between decisions influenced by OCI and future
performance. For this reason, we expect a negative coefficient on the interaction variable between OCI and discretionary
expenditures (ie, b
3
< 0). Table 5 presents the results for this analysis. Similar to Table 4, column (1) presents results when
discretionary expenditures relate to financing activities (DV
t+1
), column (2) presents results when discretionary expenditures relate to investing
activities (INVEST
t+1
) and column (3) presents results when discretionary expenditures relate to operating
16
To provide assurance that the Table 4 results are not affected by unusually large observations, we replicated the general
regression model with ordered logit and percentile ranked variables. The untabulated results for our variables of interest are
similar to the main results as reported in Table 4. Specifically, we find that the ranked OCI variable is positively and significantly
(at least at the 0.05 level) related to the ranked discretionary expenditure variables.
17
We use two-year ahead ROA rather than one-year ahead because of the possibility of a mechanical relation between current
year expenditures and following year income. Even so, results with one-year ahead ROA (ROA
t+1
) are qualitatively similar to the results with two-year ahead ROA (ROA
t+2
).
LIN 83
84 GRAHAM
AND
TABLE5 The association between OCI and discretionary expenditures and future firm performance
Dependent Variable= ROA
t+2
Explanatory Variables Predicted Sign (1) (2) (3)
DV
t+1
+ 0.1737***
INVEST
t+1
+ 0.0109***
OPEXP
t+1
+ 0.0958**
OCI
t
? 0.0675*** 0.0642*** 0.0637***
OCI
t
− −1.8965**
OCI
t
× DV
t+1
− −0.1935**
OCI
t
× INVEST
t+1
− −2.4462**
ROE
× OPEXP
t+1 Persistent t
+ 0.2034*** 0.2035*** 0.2030***
ROE
Non t
-
Persistent
? −0.3085*** −0.3066*** −0.3065***
BTM
t
− −0.0095*** −0.0094*** −0.0093***
RET
t
+ 0.0460*** 0.0461*** 0.0464***
SIZE
t
+ 0.0162*** 0.0163*** 0.0162***
AOCI
t−1
? 0.1077*** 0.1081*** 0.1078***
RATE
t+1
− 0.0014 0.0011 0.0011
MKRET
t+1
? −0.0035*** −0.0035*** −0.0035***
INDPROD
t+1
+ 0.0032 0.0052 0.0060
Intercept Yes Yes Yes
N 36,270 36,270 36,270
R2 0.4826 0.4825 0.4825
R2
adj
0.4815 0.4814 0.4814
Test of linear coefficient restriction:
(a) OCI
t
< 0 −1.8290**
(b) OCI
t
+ OCI
t
× DV
t+1
< 0 −0.1293*
(c) OCI
t
+ OCI
t
× INVEST
t+1
< 0 −2.2325**
Notes: This table reports ordinary least squares results for the regression model: ROA
t+2
+ OCI
t
× OPEXP
t+1
=b
0
+b
1
t+1
+b
2
OCIt + b
3
t+1
× ROEPersistent + + Industry b
5
ROENon
t
-
Persistent
+a
6
BTM
t
OCIt + a
7
RET
t
+a
8
SIZE
t
+a
9
AOCI
t−1
+a
10
RATE
t+1
+a
11
MKRET
+b
4
t+1
+a
12 t INDPROD
t+1 Fixed Effects
ROA
t+2
equals year t + 2 operating income divided by beginning of year t+ 2 total assets. Discretionary expenditure variables
equal the percentage change in annual net payout to shareholders in year t+ 1 relative to beginning of yeart + 1 market value (DV
t+1
), the percentage change in the sum of capital and acquisition expenditures less the change in inventory from year t to year t
+ 1 relative to beginning of year t + 1 market value (INVEST
t+1
), and the percentage change in the sum of research and
development, advertising and selling, and administrative expenditures from year t to year t + 1 relative to beginning of year t
tmarket + 1 market value value of common (OPEXP
equity,ROE t+1
). OCI
t
equals Persistent
the percentage of year t other comprehensive income relative to beginning of year
ROE of common Non
t
-
Persistent
equals year t non-operating t
equals yeartoperating income divided by beginning of yeartcommon equity and income divided by beginning of year t common
equity. BTM
t
equals the book value shareholder's equity
divided by the market value of common equity at the end of yeart.RET
t
equals the cumulative monthly stock
return for year t. SIZE
t
equals the log of market value of common equity at the end of year t. AOCI
t−1
equals beginning of
year t accumulated other comprehensive income divided by beginning of year t market value of common equity. RATE
t+1
equals the average monthly 10-year US treasury bond yield during year t + 1. MKRET
t+1
equals the cumulative S&P index return
for year t + 1. INDPROD
t+1
equals the average forecast over year t + 1 of the one-year ahead change in industrial
production. See the Appendix for complete variable definitions. All variables are winsorized at the 1st and 99th percentiles and
standard errors are adjusted for firm clustering effects. Industry fixed effects are based on the Global Industry Classification
Standard developed by MSCI. *p < 0.10, **p < 0.05, ***p < 0.01
LIN
GRAHAM
AND
are activities (OPEXP
t+1
positive and highly
significant (p < 0.01). Across the columns, the coefficients on OCI
t
are positive and highly significant (p < 0.01),
suggesting that OCI gains and losses, albeit unrealized, contain some information related to future firm performance.18 Also,
and as expected, the coefficients on the interaction between OCI and discretionary expenditures are negative and significant
across the columns (p < 0.05). We test and find that the sums of the coefficients on the OCI
t and on the
interaction between OCI
t
and discretionary expenditures are negative and different from zero at acceptable levels of
significance (p < 0.1). Overall, the results presented in Table 5 show consistent evidence that firms experience weaker future
performance when OCI influences discretionary expenditures.19
The firm-related control variable coefficients are highly significant and, for the most part, consistent with prior st ud- ies that
entity-specific factors as well as macroeconomic factors are associated with future performance. For exam- ple, the coefficients on
ROEPersistent
t
are significantly positive and the coefficients on ROENon
t
-
Persistent
are significantly negative,
suggesting that core earnings are more persistent than transitory income items (eg, Baber, Kang, & Kumar, 1998). The
coefficients on BTM
t
are negative and highly significant consistent with prior evidence of a negative association
between firm performance and investment opportunity (eg, Baber, Janakiraman, & Kang, 1996; Hutchinson & Gul, 2004). The
coefficients on RET
t
and SIZE
t
are positive and highly significant, suggesting that stock prices impound future
earnings information (eg, Kothari & Sloan, 1992). The coefficients on MKTRET
t+1
are negative and highly significant, perhaps
suggesting mean reversion.
4.3 Debt constraints and wealth transfers

The results presented in Table 4 suggest a positive association between OCI and future discretionary expenditures. The results
presented in Table 5 suggest that the positive association between OCI and future discretionary expenditures can have an inverse
relation to future profitability. In this section we look for evidence of the motivation for OCI-influenced discretionary
expenditures. As discussed in the earlier section, these results may be motivated by debt contracts or wealth transfers.
The debt motivation assumes that discretionary expenditures may be explained by the effect of OCI gains and losses on the
constraints imposed by debt contracts. OCI gains will be associated with lesser debt constraints and OCI losses will be associated
with greater debt constraints. This dual effect suggests that if the contracts influence discretionary expenditures, then the
expenditures will be associated with both positive and negative OCI.
Alternatively, the wealth transfer motivation suggests that discretionary expenditures are influenced by the risk and return
sharing structure between shareholders and creditors and the potential for shareholders to transfer wealth to themselves. Because
shareholders will seek a wealth transfer in their favor, wealth transfers will only be associated with favorable information.
Consequently, wealth transfers will be associated with positive OCI but not with negative OCI.
To distinguish between the two motivations, we expand Equation (1) by decomposing OCI
t
into OCI gains (OCI+
t
) and OCI losses
(OCI−
t
) such that
t+1
=c
1
OCI+
t
+c
2
OCI−
t
+c
3
ROEPersistent
t
+c
4
ROENon
t
-
Persistent
+c
5
BTM
t
+c
6
RET
t
+c
7
SIZE
t
+c
8
AOCI
t−1
+c
9
RATE
t+1
+c
10
MKRET
t+1
+c
11
INDPROD
t+1
+ Industry Fixed Effects
(3)
18
As mentioned earlier, OCI items are generally believed to be transitory, albeit with conflicting evidence. The greater than one
earnings response coefficient for available-for-sale (AFS) securities unrealized holding gains and losses reported in Chambers et
al. (2007) suggests AFS unrealized holding gains and losses may not be transitory. Jones and Smith (2011) report negative
persistence for OCI gains and losses, but caution that the negative persistence could be an artifact of recycling.
19 One potential issue with our analysis is that the OCI
t
variable is highly skewed such that our findings may be attributable to a small set of
observations with non-normal data. To address the issue, we replace the continuous variable OCI
t
in Equation (2) with an indicator variable that equals 1 if OCI
t
is in the highest quintile of
the sample distribution, and 0 otherwise. We find that our inference remains unchanged. Specifically, the results (untabulated) are
consistent that firms experience weaker performance when OCI influences discretionary expenditures.
LIN 85
). Consistent with our prediction, the coefficients on DV
t+1
, INVEST
t+1
, and OPEXP
t+1
(3) OPEXP
t+1 OCI
+t
0.0327*** 0.5093*** 0.0340***
OCI
−t
0.0174** 0.4503*** 0.0216**
ROE
Persistent t
0.0009*** −0.0005 0.0051***
ROE
Non t
-
Persistent
0.0034 −0.0580** −0.0069*
BTM
t
−0.0026*** −0.0478*** −0.0053***
RET
t
0.0015*** 0.0225*** −0.0013***
SIZE
t
0.0000 −0.0035*** 0.0003***
AOCI
t−1
0.0015 −0.0905*** 0.0014
RATE
t+1
−0.0016*** 0.0005 0.0000
MKRET
t+1
0.0002*** 0.0049*** 0.0006***
INDPROD
t+1
0.0179*** 0.0676*** 0.0059**
N 36,270 36,270 36,270
R2 0.0241 0.0332 0.0439
R2
adj
0.0220 0.0311 0.0419
Test of linear coefficient restriction:
OCI+
t
− OCI−
t
= 0 0.0153 0.0590 0.0124
t+1
=c
1 + OCI+ c
8
AOCI
t
+c
t−1 2
OCI− + t
c
9
+ RATE c
3
ROEPersistent
t+1
+t
+c
10
MKRET
c
4
ROENon
t+1
+t
-
Persistent
+c
5
BTM
t
+c
6
RET
t
+c
7
SIZE
tc
11
INDPROD
t+1
+ Industry Fixed Effects Discretionary
expenditure variables equal the percentage change in annual net payout to shareholders in year t+ 1 relative to beginning of yeart
+ 1 market value (DV
t+1
t+1
sum of research and development, advertising and selling, and administrative expenditures from year t to year t + 1 relative to
beginning hensive income relative to of beginning year t + of 1 market yeartmarket value (OPEXP
value of t+1
common ). OCI + t
equals the percentage of year t positive equity and zero otherwise and OCI
− t age of yeartnegative other comprehensive income relative to beginning of yeartmarket value and zero otherwise.ROE
other compre- equals the percent- Persistent
equals year t operating income income divided by beginning of divided year t common by beginning equity. of BTM year t
equals t common the book equity value and ROE
of common Non
t
-
Persistent
t equals year t non-operating shareholder's equity divided by the market value of common equity at the end of yeart.RET
t
equals the cumulative monthly stock return for yeart.SIZE
t
equals the log of
market value of common equity at the end of year t. AOCI
t−1
equals beginning of year t accumulated other comprehensive
income divided by beginning of yeartmarket value of common equity.RATE
t+1
equals the average monthly 10-year US treasury
bond yield during year t + 1. MKRET
t+1
equals the cumulative S&P index return for yeart + 1. INDPROD
t+1
equals the average
forecast over yeart+ 1 of the one-year ahead change in industrial production. See the Appendix for complete variable definitions.
All variables are winsorized at the 1st and 99th percentiles and standard errors are adjusted for firm clustering effects. Industry
fixed effects are based on the Global Industry Classification Standard developed by MSCI. *p < 0.10, **p < 0.05, ***p < 0.01*
All variables are as previously defined except for OCI+
t
, which equals OCI
t
when OCI
t
is positive and zero otherwise; and OCI−
t
, which equals OCI
t
when OCI
t
is negative and zero otherwise.20 The intercept is suppressed for these and subsequent
regressions.
Similar to Table 4, column (1) of Table 6 presents results when discretionary expenditures relate to financing activities (DV
t+1
), column (2) presents results when discretionary expenditures relate to investing activities (INVEST
t+1
)
20 The regressions are not singular because OCI equals zero for a small number of firm-year observations.
86 GRAHAM
AND
TABLE6 The association between positive and negative OCI and discretionary expenditures
Dependent Variables
(1) DV
t+1
(2) INVEST
t+1
LIN
GRAHAM
AND
TABLE7 Financial leverage and the association between positive and negative OCI and discretionary expenditures
Lower Leverage Firm-Years Higher LeverageFirm-Years
Dependent Variables Dependent Variables
(1) DV
t+1
(2) INVEST
t+1
(3) OPEXP
t+1
(4) DV
t+1
(5) INVEST
t+1
(6) OPEXP
t+1 OCI
+t
0.0337*** 0.4446*** 0.0444** 0.0332*** 0.5908*** 0.0320***
OCI
−t
−0.0117 0.1929 0.0109 0.0321*** 0.4978*** 0.0421***
ROE
Persistent t
0.0015*** 0.0052 0.0077*** −0.0001 −0.0089* 0.0031***
ROE
Non t
-
Persistent
0.0065* −0.0597* −0.0018 0.0025 −0.0481 −0.0054
MTB
t
−0.0010*** −0.0306*** −0.0099*** −0.0054*** −0.0746*** −0.0023***
RET
t
0.0011*** 0.0179*** −0.0008 0.0016*** 0.0238*** −0.0021***
SIZE
t
0.0001* −0.0024*** 0.0005*** −0.0002*** −0.0031*** 0.0000
A OCI
t−1
0.0009 −0.0675 0.0051 −0.0037 −0.1441*** 0.0010
RATE
t+1 MKRET
t+1
−0.0010*** 0.0049** 0.0012*** −0.0008*** 0.0028 −0.0001
INDPROD
t+1
−0.0001 0.0038*** 0.0009*** 0.0003*** 0.0041*** 0.0001*
Industry Fixed Effect 0.0073*** −0.0004 −0.0106*** 0.0055*** 0.0149 0.0005
N 14,434 14,434 14,434 14,470 14,470 14,470
R2 0.0195 0.0357 0.0670 0.0460 0.0484 0.0402
R2
adj
0.0145 0.0308 0.0622 0.0409 0.0434 0.0350
t+1
=+c
1
c OCI+
8
AOCI t
+ t−1 c
2
OCI− + c
9t
RATE + c
3
t+1
ROEPersistent
+t
c
10
MKRET + c
4
t+1
ROENon + tc
11
-
INDPROD
Persistent
+c
5
BTM
t+1
+t
+c
6
RET
t
+c
7
SIZE
t Industry Fixed Effects
Columns (1)–(3) report regression results for firm-years in the first two quintiles (lower leverage) of the LEV
t
variable calculated as the
difference between assets and common shareholders' equity divided by common shareholders' equity at th e end of yeart.
Columns (4)–(6) report regression results for firm-years in the third and fourth quintiles (higher leverage) for the LEV
t variable.
Discretionary expenditure variables equal the percentage change in annual net payout to shareholders in yeart + 1 relative to
beginning of year t + 1 market value (DV
t+1
t+1
sum of research and development, advertising and selling, and administrative expenditures from year t to year t + 1 relative to
beginning hensive income relative to of beginning year t + of 1 market yeartmarket value (OPEXP
value of t+1
common ). OCI + t
equals the percentage of year t positive equity and zero otherwise and OCI
− t age of yeartnegative other comprehensive income relative to beginning of yeartmarket value and zero otherwise.ROE
other compre- equals the percent- Persistent
equals year t operating income income divided by beginning of divided year t common by beginning equity. of BTM year t
equals t common the book equity value and ROE
of common Non
t
-
Persistent
t equals year t non-operating shareholder's equity divided by the market value of common equity at the end of yeart.RET
t
equals the cumulative monthly stock return for yeart.SIZE
t
equals the log of
market value of common equity at the end of year t. AOCI
t−1
equals beginning of year t accumulated other comprehensive
income divided by beginning of yeartmarket value of common equity. RATE
t+1
equals the average monthly 10-year US treasury
bond yield during year t + 1. MKRET
t+1
equals the cumulative S&P index return for year t + 1. INDPROD
t+1
equals the average
forecast over year t+ 1 of the one-year ahead change in industrial production. See the Appendix for complete variable definitions.
All variables are winsorized at the 1st and 99th percentiles and standard errors are adjusted for firm clustering effects. Industry
fixed effects are based on the Global Industry Classification Standard developed by MSCI. *p < 0.10, **p < 0.05, ***p < 0.01
and column (3) presents results when discretionary expenditures relate to operating activities (OPEXP
t+1
). The results show positive
and highly significant (p <0.01) coefficients on OCI+
t
and on OCI−
t
regardless of the expenditure measure- ments. While
the coefficient on OCI+
t
appears consistently greater than the coefficient on OCI−
t
, the results of F-tests do not indicate
that the differences in the size of the coefficients are significant. The results presented in Table 6 suggest that debt may motivate
OCI-influenced discretionary expenditures because both positive and negative OCI are associated with future expenditures.
LIN 87
88 GRAHAM
AND
Creditors have a greater stake in monitoring as default risk increases (Jensen & Meckling, 1976). To reduce the cost of
monitoring, creditors impose more stringent debt covenants and, consequently, reduce the risk of wealth transfer from creditors to
shareholders. In this context, it may be that the results reported in Table 6 are sub- ject to the extent that managers are constrained
by their firm's creditors. Positive OCI may alleviate constraints and negative OCI may tighten constraints as firms incur greater
amounts of debt. More specifically, negative OCI- influenced discretionary expenditures will be more likely when firms are highly
leveraged. Conversely, negative OCI-influenced discretionary expenditures will be less likely when firms are not highly
leveraged. As positive OCI- influenced discretionary expenditures can be motivated by both debt constraints and wealth transfers,
positive OCI will likely be associated with discretionary expenditures for highly leveraged firms and for lesser leveraged firms.
For the above reasons, we repeat the analysis reported in Table 6 separately for firm year observations in the first two quintiles
(lower leverage) and in the last two quintiles (higher leverage) of the leverage variable (LEV
t
). Table 7 reports
the results of this analysis. Regarding the lower leverage observations, the regressions presented in columns (1), (2), and (3) show
positive and highly significant (p < 0.01) coefficients for positive OCI (OCI+
t
) while none of the
coefficients for negative OCI (OCI−
t
) are significant. Regarding the higher leverage observations, the regressions presented
in columns (4), (5), and (6) show positive and highly significant (p < 0.01) coefficients for both positive OCI (OCI+
t
) and negative OCI (OCI−
t
). Taken together, the results presented in Table 7 are consistent with an OCI wealth
effect related to debt constraints for higher leveraged firms and related to wealth transfers for lower leveraged firms. Both positive
and negative OCI appear related to the future discretionary expenditures for higher leveraged firms consistent with firms moving
closer to or farther from their debt constraints. Only positive OCI appear related to the future discretionary expenditures for lower
level firms, which is consistent with potential wealth transfers.
5 CONCLUDING REMARKS
Other comprehensive income includes items that many consider to be transitory. Unrealized holding gains and losses, the effects
of fluctuations in exchange rates, discount rates and/or growth rates, and items that will later be used to adjust costs and revenues
all flow directly into and out of shareholders' equity as OCI. Realized gains and losses, earned revenues, and incurred costs appear
directly on the income statement. The ongoing nature of most businesses suggests currently earned revenues and currently
incurred costs will be indicative of future earned revenues and future incurred costs. OCI items may not be indicative of future
performance as unrealized holding gains and losses reverse and exchange rates, discount rates and growth rates fluctuate. Even
so, OCI has the appearance of changing firm value by increasing and decreasing shareholders' equity.
In this study we examine whether OCI has implications for future expenditures. We acknowledge that OCI items may not
influence future expenditures because of their transitory nature. However, changes in shareholders' equity that occur from the
recognition of OCI gains and losses could contribute to a 'wealth effect' that can influence discretionary spending. Further, we
conjecture that OCI may influence future expenditures when debt restrictions are loosened or tightened as OCI increases or
decreases shareholders' equity. We also conjecture that OCI increases (but not decreases) in owners' equity will increase the
potential for wealth transfers from debtholders to shareholders. Our results are largely in support of the conjectures.
Specifically, our regression results indicate an association between current year OCI and following year discretionary
financing, investing, and operating expenditures while also suggesting that such OCI-influenced discretionary expenditures are
not value creating, consistent with OCI's transitory nature. Despite the lack of evidence that OCI- influenced discretionary
expenditures are value creating, subsequent regressions suggest that an OCI wealth effect may be related to debt constraints and
potential wealth transfers. For higher leveraged firms, we find that both positive and negative OCI are associated with following
year discretionary expenditures, consistent with the loosening and tightening of debt constraints. For lower leveraged firms, we
find that only positive OCI is associated with following
LIN
GRAHAM
AND
year discretionary expenditures. For lower leverage firms, positive OCI appears to be associated with wealth transfers from debt
holders to shareholders. (Paper received April 2016, revised revision accepted September 2017)
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AND
APPENDIX: VARIABLE DEFINITIONS
AOCI
t−1
Accumulated other comprehensive income at the end of year t – 1 (Compustat annual item: ACOMINC),
divided by the market value of common equity at the end of year t – 1 (Compustat annual item: PRCC_F × CSHO).
BTM
t
Book value of common equity (Compustat annual item: CEQ) divided by market value of common equity
(Compustat annual item: PRCC_F × CSHO) at the end of yeart.
DV
t+1
The percent change in annual net payout to shareholders in yeart + 1 relative to the market value of
common equity at the beginning of yeart + 1. (Compustat annual item: PRCC_F × CSHO). Net payout to shareholders is
calculated as cash dividend plus share repurchase minus share issuance (Compustat annual item: DV + PRSTKCC − SCSTKC).
INDPROD
t+1
Average forecast of the one-year-ahead change in industrial production during yeart + 1. The forecasts
are obtained from The Survey of Professional Forecasters, published by the Federal Reserve Bank of Philadelphia
(https://www.philadelphiafed.org).
INVEST
t+1
The percent change in annual investing discretionary expenditures (Compustat annual item:
CAPX + AQC − − INVCH) in year t+ 1 relative to the market value of common equity at the beginning of year t+1 (Compustat
annual item: PRCC_F × CSHO).
LEV
t
Difference between total assets and total common equity (Compustat annual item: AT − CEQ) divided
by total common equity (Compustat annual item: CEQ) at the end of year t.
MKRET
t+1
Cumulative S&P index return in year t + 1 (CRSP monthly item: SPRTRN).
OCI
t
The percent change in accumulated other comprehensive income in year t(Compustat annual item:
ACOMINC) relative to the market value of common equity at the beginning of the year (Compustat annual item: PRCC_F ×
CSHO).
OCI
+t
Equal to OCI
t
ifOCI
t
> 0 and 0 otherwise.
OCI
−t
Equal to OCI
t
ifOCI
t
< 0 and 0 otherwise.
OPEXP
t+1
The percent change in operating discretionary expenditures (Compustat annual item:
XRD + XAD + XAGT) in year t+ 1 relative to the market value of common equity at the beginning of yeart + 1 (Compustat
annual item: PRCC_F × CSHO).
RATE
t+1
Average monthly 10-year US treasury bond yield in yeart + 1 obtained from the US Department of The
Treasury (https://www.treasury.gov/).
RET
t
Accumulated monthly stock return in year t (CRSP monthly item: RET).
ROE
Persistent t
Operating income (Compustat annual item: OIADP) in yeart divided by book value of common equity at
the beginning of year t (Compustat annual item: CEQ).
ROE
Non t
-
Persistent
Non-operating income (Compustat annual item: NOPI) in year tdivided by book value of common equity
at the beginning of yeart (Compustat annual item: CEQ).
ROA
t+2
Operating income (Compustat annual item: OIADP) in yeart + 2 divided by total assets at the beginning
of yeart + 2 (Compustat annual item: AT).
SIZE
t
Natural logarithm of market value of common equity (Compustat annual item: PRCC_F × CSHO) at the
end of yeart.
LIN 91

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Pengaruh pendapatan komprehensif lain di diskresioner

2 PUSTAKA SEBELUMNYA PADA OCI AKUNTANSI DAN PELAPORAN:

2.2 OCI pengaruh pada manajer

2003 3.467 9,56 9,56 2004 3.692 10,18 19,74

9,00 65,94 2010 3.127 8,62 74,56 2011 3.034

Semua Tahun 36.270 100.00

3.3 Descriptive statistics

4.3 Debt constraints and wealth transfers

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