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March 18, 2026The Accounting Review

On the Association Between Smoothing Measures and the Risk of Common Stocks.

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Authors

BLBaruch LevSupélecSKSergius KunitzkyUniversity of Chicago

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Overview

This article examines the link between financial statement measures and market risk, suggesting implications for investment decisions.

Key Points

  • To explore the relationship between financial statement measures and market-determined risk measures to improve investment decision-making.
  • Analyzed recent developments in finance regarding portfolio construction and capital markets.
  • Examined existing literature on accounting and market risk measures.
  • Highlighted financial statement measures related to firm risk characteristics.
  • Identified a weak to moderate association between accounting-based and market-based risk measures.
  • Noted a lack of evidence on accounting data's ability to enhance risk measurement and portfolio selection.
  • Emphasized the need for further research to address unresolved questions in the field.

Cite This Study

Lev et al. (1974) studied this question.

synapsesocial.com/papers/69ba425c4e9516ffd37a2849https://doi.org/10.2308/tar-4510780
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1Accounting-Based Risk Predictions: A Re-examination.1980
  2. 2The Impact of the Choice of Market Index on the Empirical Evaluation of Accounting Risk Measures.1982
  3. 3The Effect of Risk on the Use of Financial Statements by Investment Decision-Makers: A Case Study.1973
  4. 4The Forecasting Ability of Accounting Risk Measures: Some Additional Evidence.1979
  5. 5Risk disclosure, earnings smoothing and firm perceived risk2024