A Panel Data Analysis to Assess the Impact of Sustained Earnings on Stock Returns: A Special Reference to the Indian Financial Service Sector

This study was focused on addressing the comprehensive issue of sustainability with special emphasis on sustained earnings as a measurement of earnings. The research work attempted to define the operating and non-operating elements of the earnings model and then examine the variations in the normal profit margin. The sustained earnings were also estimated separately by adopting the Firm-Related Approach and Industry-Based Approach. Dynamic Panel Data-based approach was used for analysis. Findings suggested that the operating elements of earnings are significantly higher than the non-operating elements. In addition, measures related to the intensity of operating earnings were positively associated with sustained earnings. Therefore, this study contributes sizeable evidence on sustained earnings of the financial service sector of the Indian stock market and can potentially be of extensive use to investment companies for managing investors’ funds, security analysts, investors, and firms.

Keywords:

sustainability , intensity of operating-earnings , Transitory earnings , Dynamic Panel , Cross-sectional