Accounting Research Seminar by Professor Shivakumar Lakshmanan

We are organising an accounting research seminar by Professor Shivakumar Lakshmanan who is Professor of Accounting at the London Business School. The seminar will take place on:

Date: Wednesday, 26th of March 2025

Time: 11.30 to 12.30

Venue: Room G03/04 at the ICMA Centre.

A sandwich lunch will be provided at 12.30 pm.

Professor Lakshmanan is the managing editor of Review of Accounting Studies and former editor of Accounting Review. His research interests are mainly in the area of financial accounting, capital markets, and corporate disclosures. He has published in several leading journals, including Journal of Accounting and Economics, The Accounting Review, Journal of Accounting Research, Review of Accounting Studies, and Contemporary Accounting Research.

For our seminar, Shivakumar will present a paper titled: "Aggregate Earnings of Private and Public Firms and the Macroeconomic Effects of Capital Market Pressures on Investment."

Abstract:

This paper compares the macro-content of aggregate earnings, defined as the relationship between aggregate earnings and year-ahead macroeconomic growth, across private and public firms. Aggregate earnings of private firms, but not public firms, are significantly related to the year-ahead GDP growth. This finding is robust to various controls, including methodological choices and alternative regression specifications. An intra-year analysis reveals that the differences in the macro-content of private and public firms’ aggregate earnings are discernable in analyses of GDP growth over the subsequent three or four quarters. Evaluating alternative explanations, we find that the lesser macro-content of listed firms is primarily attributable to their listing choice, cash flow component of earnings, and investment decisions. We conclude that capital market pressure on investments is a dominant reason why public firms' aggregate earnings have a weaker relationship with future GDP growth.