sas code problems in Jones model
Posted: 16 November 2011 07:40 AM   [ Ignore ]
Newbie
Rank
Total Posts:  18
Joined  2011-11-16

Hi,
  I am using the sas code for jones model in the Repository. However, I think there maybe puzzling in line 88 as following:
  * Calculate Current Accruals as in Dechow, Sloan, and Sweeney (1995);
CADechowEtAl     = (ACT-ACTtm1)-(LCT-LCTtm1)
              -(CHE-CHEtm1)-(DLC-DLCtm1)-DP;

I think it should be
CADechowEtAl     = (ACT-ACTtm1)-(LCT-LCTtm1)
              -(CHE-CHEtm1)+(DLC-DLCtm1)-DP;
  since we should calculate the deference between the change of current asset ( (ACT-ACTtm1) -(CHE-CHEtm1)) and current operating liability (LCT-LCTtm1)-(DLC-DLCtm1)

  Would you like to tell me if I am wrong?
Thanks!
Kai

Profile
 
 
Posted: 16 November 2011 08:59 AM   [ Ignore ]   [ # 1 ]
Administrator
Avatar
RankRankRankRank
Total Posts:  901
Joined  2011-09-19

hi Kai,

I understand your concern. On page 203 of the article the change in debt in current liabilities is added and not subtracted, like you suggest.

I have contacted Adam Yore (the author of the macro) to verify; it is indeed a typo. I have updated the macro.

Thanks for your feedback!

Joost

 Signature 

To reply/post new questions: Please use the group WRDS/SAS on Google Groups! http://groups.google.com/d/forum/wrdssas

Profile
 
 
Posted: 16 November 2011 09:43 PM   [ Ignore ]   [ # 2 ]
Newbie
Rank
Total Posts:  18
Joined  2011-11-16

Thank you for your prompt reply.
I have learned more from the codes in the website.
Thanks!
Kai

Profile