In accounting terms, what is discussed in the literature is a possible trade-off between accounting liquidity and profitability caused by the assumption that companies that carry more liquid assets would be less apt to generate greater accounting returns
for shareholders (commonly defined as net income per unit of net equity, or return on equity, or simply ROE).
At managerial level, companies use summary measures of aggregate performance, using monetary terms such as profits, accounting returns
and market returns, but none of these is perfect on its own.
Penman (2001) examined the relationship between interest rates and accounting returns
2005) also propose that accounting returns
and market measures represent two distinct dimensions of firm performance.
In their paper the author found marginal evidence that accounting returns
cause stock returns.
But short-term profit measures and accounting returns
often do not do that.
The evidence of volatile performance was less complete, but there was a strong indication that CEO narcissism was associated with large annual fluctuations in accounting returns
It is important to note that these results are based on accounting returns
where firms can take advantage of the tax incentives, such as dividend distributions policy, principal and interest deductions on ESOP loans, provided under ERISA rules.
Letsinger noted that all syndicates currently have to file annual accounting returns
The purpose of this paper is to investigate the impact of bank asset composition on accounting returns
The pair-wise correlations in Table III suggest that firms with committee insiders have lower stock and accounting returns
, more concentrated ownership structures, and pay their CEOs a lower salary.
The intent is to not focus on the pros or cons of relative return definitions, although strong accounting returns
typically lead to good returns for shareholders.