Degree Name

Master of Arts (MA)

Semester of Degree Completion


Thesis Director

Mukti P. Upadhyay


Konchitchki and Patatoukas (2014a) suggest that aggregate accounting earnings growth is a significant leading indicator of future nominal Gross Domestic Product (GDP) growth in the United Sates, and that earnings growth adds power to contemporaneous GDP growth in predicting future GDP growth. The future GDP growth used in their model is based on the third estimate of GDP for a given quarter, which is released by the U.S. Bureau of Economic Analysis (BEA) three months after the end of the quarter. My study is also centered on predictability of future GDP growth but it provides a useful extension of the research ofKonchitchki and Patatoukas (2014a). My results confirm that aggregate accounting earnings growth remains significant in predicting future GDP growth for one and two quarters ahead conditional on the most recent estimate.

Motivated by the fact that more than 100 countries and jurisdictions are implementing the International Financial Reporting Standards (IFRS) and that the United States may switch to IFRS from the currently used U.S. Generally Accepted Accounting Principles (GAAP), I compare the predictive contents of accounting earnings under IFRS and U.S. GAAP over the one quarter ahead GDP growth. Consistent with my expectations, I find that IFRS earnings do not have as strong predictive power as do U.S. GAAP earnings.