Studies also find that investors perceive
research and development and advertising expenditures and bank core deposits as assets of
the firm (e.g., Abdel-khalik 1975; Hirschey and Weygandt 1985; Bublitz and Ettrcdgc 1989;
Landsrnan and Shapiro 1995; Barth ct al. 1996: Ecchcr ct al. 1996; Lev and Sougiannis
1996; Healy et. al. 1997; Joos 2000]. Barth and McNicho1s (1994) and Hughes (2000) find
that unbooked environmental liabilities are also priced.
One would expect various components of eamings to be associated with different pric-
ing multiplcs based on the persistence of that eamings component (Sloan 1996; Ohlson
1999). Empirical evidence indicates that the accrual components of eamings are not only
less persistent than the cash-flow components in forecasting future earnings, but also that
the accrual components are associated with a lower eamings multiple (Barth ct al. 1999).
Also for banks, earnings before security gains and losses is associated with a higher pricing
multiple than security gains and losses (Barth et al. 1990).