Connecting Book Rate of Return to Risk and Return: The Information Conveyed by Conservative Accounting

The Essex Accounting Centre warmly invites you to join Professor Stephen H. Penman from Columbia University as he explores the relationship between book rate of return and risk and return

  • Thu 6 Jun 19

    14:00 - 16:00

  • Colchester Campus


  • Event speaker

    Professor Stephen H. Penman

  • Event type

    Lectures, talks and seminars
    Essex Accounting Centre Research Seminar Series

  • Event organiser

    Essex Business School

  • Contact details

    Dr Osamuyimen Egbon

The aim of the Essex Accounting Centre (EAC) research seminar series is to support our world-class research activities in four key areas: social responsibility and corporate governance; (management) accounting change (in privatised, public and third sectors); global development, corruption and accountability; and reporting, regulation and capital markets. The seminar series is also expected to promote interdisciplinary research that links the work of members of the centre with others both within the university and with external institutes.

Seminar abstract

This paper investigates how the book rate of return relates to risk and the expected return for equity investing and documents the role of conservative accounting in making the connection.

In contrast to asset pricing research where the book rate of return is viewed as positively associated with risk ad expected stock returns, the paper demonstrates the opposite; with the effect of conservative accounting, a lower book rate of return indicates higher risk and a higher expected return.

The empirical analysis indicates that the market prices equities accordingly.


This is a free event. Please bring along your colleagues, friends and classmates.

Speaker bio

Professor Stephen H. Penman is the George O. May Professor in the Graduate School of Business, Columbia University where he is also co-director of the Centre for Excellence in Accounting and Security Analysis and director of the Masters Programme in Accounting and Fundamental Analysis.

Prior to his appointment at Columbia in 1999, Penman was the L.H. Penney Professor in the Walter A. Hass School of Business at the University of California at Berkeley. He joined Berkeley in 1977. From 1990 to 1995 he served as Chair of the Professional Accounting Programme and Chairman of the Accounting Faculty at Berkeley and initiated and chaired Berkeley's Annual Conference on Financial Reporting.

  • Penman has served as Visiting Professor at
  • Brocconi University and
  • University of Padua,
  • London Business School,
  • Jan Wallander Visiting Professor at the Stockholm School of Economics, 
  • Cheng Tsang Mun Chair Visiting Professorship at Singapore Management University.

He has also been a visitor at Peking (Beijing) University and the Swedish Institute for Financial Research. He is an honorary professor at the City University of Hong Kong. 

In 1991 Penman was awarded the Notable Contribution to Accounting Literature Award by the American Accounting Association and the American Institute of Certified Public Accountants.
He also was awarded the American Accounting Association and Deloitte and Touche Wildman Medal for his book Financial Statement Analysis and Security Valuation (McGraw-Hill /Irwin)