Purpose

Prior literature provides empirical evidence that financial performance improves for core remaining operations after a firm discontinues some of their operations. This study aims to examine whether the association between discontinued operations and future financial performance improvement is affected by a regulatory rule (i.e. Statement of Financial Accounting Standards 144 [SFAS 144]) that significantly altered the reporting requirements of discontinued operations. This study also examines whether the association is dependent on the profitability of the operations discontinued.

Design/methodology/approach

Ordinary least square regressions are used to test the association between discontinued operations and financial performance improvement, conditional on the profitability of operations discontinued in the pre-SFAS 144 and SFAS 144 regulatory regimes. Data on profitability of operations discontinued is hand-collected.

Findings

Results suggest that firms experience improvement in financial performance following the reporting of discontinued operations in the pre-SFAS 144 era. Using hand-collected data on the profitability of operations discontinued, this research study also shows that improvement in performance is stronger for firms that discontinue loss operations compared to those that discontinue profitable operations.

Originality/value

This study explores the impact of regulatory change on the association between discontinued operations and future performance. Furthermore, unique hand-collected data is used to understand whether financial performance improvement is conditional on the profitability of the operations discontinued. Results documented in this paper should be of interest to investors, regulators and analysts in understanding the long-term strategic implications of discontinued operations.

中文翻译：

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终止运营后的财务业绩

目的

先前的文献提供了经验证据，表明在一家公司停止部分剩余业务后，其核心剩余业务的财务业绩有所改善。这项研究旨在检查已终止运营与未来财务绩效改善之间的关联是否受到监管规则（即财务会计准则声明144 [SFAS 144]）的影响，该规则显着改变了已终止运营的报告要求。这项研究还检查了关联是否取决于已终止业务的盈利能力。

设计/方法/方法

普通最小二乘回归用于检验终止运营与财务绩效改善之间的关联，条件是在SFAS 144之前和SFAS 144监管制度下终止运营的盈利能力。手工收集已终止经营的盈利数据。

发现

结果表明，在报告SFAS 144之前的时代中，中止业务报告后，公司的财务绩效得到了改善。使用手工收集的有关已终止经营的盈利能力的数据，这项研究还表明，与终止已获利的经营的公司相比，中止亏损经营的公司的绩效提高更为明显。

创意/价值

这项研究探讨了监管变化对停业与未来绩效之间关联的影响。此外，使用独特的手工收集的数据来了解财务绩效的提高是否取决于已终止业务的盈利能力。本文所记录的结果应使投资者，监管机构和分析家对理解停产业务的长期战略影响感兴趣。