Value Relevance Of Accounting Research Articles

The Value Relevance of Earnings and Book Values: A Case from Financial Institutions in Indonesia

Purpose: This study aims to assess the field of the accounting value relevance of earnings and book value on stock prices of banks and financial institutions listed in the Indonesia Stock Exchange. Methodology: Using a sample of available banks and financial institutions listed in the Indonesia Stock Exchange from 2014 to 2021, this paper accommodates the documented accounting information in an emerging market context by using stock price of four months after year-end as a dependent variable. This study used the panel data regression technique on 31 banks and 36 others financial institution during the study period. Findings: This research find that earnings and book value are statistically significant associated with firm stock price. Also, using these variables together is positively related to the firm stock price. Comparatively between banks and financial institutions, these obtain evidence that earnings per share is statistically more value-relevant than book value. Novelty: This research used the financial sector, both banking and other financial institutions, because both types of institutions are intermediary institutions that greatly influence a country's economy.

The Value Relevance of Accounting and Financial Information in Stock Returns: The Case of Jordanian Commercial Banks

The primary aim of this research is to examine the value relevance of accounting and financial information in explaining stock returns by using panel data for a sample of 13 commercial banks listed in Amman Stock Exchange (ASE), through the period from 2010 to 2018. It uses dividends payout ratio, book value per share and earnings per share as proxies of accounting and financial information.
 The findings indicate that earnings per share, book value per share, dividends payout ratio and bank size do not influence stock returns. These results are consistent with Black and Scholes (1974) and Fama and French (1992), among others.

Value relevance of accounting information in an emerging market: the case of IFRS adoption by non-financial listed firms in Saudi Arabia

PurposeThe paper aims to provide empirical evidence of the impact of IFRS adoption on the value relevance of accounting information in the emerging market of Saudi Arabia.Design/methodology/approachThe sample consists of 98 non-financial listed firms operating in Saudi Arabia from 2014 to 2019, representing the years before and after IFRS adoption. The authors apply basic and extended price models to examine the value relevance of select accounting figures.FindingsThe authors findings provide evidence that accounting information is, generally, value relevant to the Saudi Arabian capital market. However, mixed results exist for particular accounting variables. Both earnings and cash flows are value-relevant in the period before and after IFRS adoption; equity is only relevant in the post-adoption period. Furthermore, IFRS adoption also increases the explanatory power of earnings. An increase in the value relevance of earnings and equity hurts the value relevance of cash flows. The effects are moderated by leverage and dividend policy.Originality/valueThe authors contribute to the ongoing discussion of the economic effects of IFRS adoption in emerging markets. The empirical findings show that initial concerns about IFRS adoption, as reflected by the negative coefficient within the regression analysis, are mitigated once the usefulness of the individual accounting variables published in financial statements is investigated.

Can Accounting Value Relevance and Pricing Error Influence Stock Price of High-Technology Service Enterprises?

This study examines whether relevant accounting ratios influence the stock prices of high-technology service enterprises in five countries, namely, the United States, Japan, China, the United Kingdom, and France. Subsequently, this study determines the existence of pricing error (if any) between the intrinsic value and the market value of the stock price due to the accounting ratios. Content analysis was performed on the annual reports of 326 high-technology service enterprises to determine the effect of three accounting ratios, namely diluted earnings per share, revenue per share, and book value per share, on the stock price of the high-technology service enterprises. This study shows that diluted earnings per share and book value per share influence the stock price of high-technology service enterprises. However, this study shows revenue per share does not influence the stock price of high-technology service enterprises. In addition, this study shows that, on average, the pricing error of high-technology services enterprises is considered moderate, with some countries exhibiting higher pricing errors. This study provides insight into how much accounting ratios can influence the movement of stock prices and, in turn, assist investors in understanding the key metrics within the high-technology industry.

RELEVANSI NILAI INFORMASI AKUNTANSI DAN MODAL INTELEKTUAL PADA PERUSAHAAN INDEKS LQ45 DI BURSA EFEK INDONESIA

This study aims to analyze the value relevance of accounting which proxied with earnings per share (EPS) and book value per share (BVPS) as well as value relevance of intellectual capital information. The test was carried out on companies that are members of the LQ45 Index Listed on the Indonesia Stock Exchange (IDX) during the 2018-2020 period. The sample selection used purposive sampling technique. The data collection method in this research is the documentation method. Data were analyzed using multiple linear regression analysis. This study found that earnings per share (EPS) and book value per share (BVPS) as well as intellectual capital information has value relevance. This research can support signal theory, clean surplus theory, and resource based theory (RBT) related to the relevance of the value of earnings per share (EPS) and book value per share (BVPS) as well as intellectual capital information. The research has implications for all parties who need information regarding value relevance of earnings per share (EPS) and book value per share (BVPS) as well as intellectual capital information of companies incorporated in the LQ45 Index

A study of value relevance of accounting and non-accounting information

This study investigates the value relevance of accounting and non-accounting information in the Colombo Stock Exchange, with a view to determining whether accounting information and non-accounting information has the ability to capture data that affect share prices of companies listed on the Colombo Stock Exchange. The required accounting information and non-accounting information are obtained through banks annual reports and data library published by Colombo Stock Exchange. Value Relevance is examined by partially replicating and modifying Ohlson's Value Relevance Model. The Regression analysis is used for evaluating information content of various accounting numbers and non-accounting information. The results revealed that accounting information of BVPS and OCFPS has strong positive correlation with Share Price. And also, it revealed that the non-accounting information of Local number of shareholders, Market Capitalization and Age of the Company has strong positive correlation with Share Price.

Immediately Expense or Capitalize and Amortize? A New Perspective on Accounting for R&D Expenditures

U.S. GAAP generally requires firms to expense R&D outlays as incurred, a requirement that many prominent stakeholders view as deficient in reflecting the value of a firm’s R&D program. Prior academic research supports this view by applying a theory for tangible capital to the issue of R&D accounting. However, tangible capital is modeled in this theory as an item that can be used immediately to generate revenues with no uncertainty. Different from tangible capital, many R&D investments can be described as uncertain multi-period ventures in which measurable progress can be made each period, but revenues can only be generated in future periods after the venture is successfully completed. I apply and extend an alternative theory that models this well documented and uncertain time lag between R&D cash outflows and inflows. Theoretical analyses predict that R&D expensing results in more value relevant accounting numbers than R&D capitalization and amortization. Empirical tests confirm these predictions in a sample of R&D intensive firms, suggesting that current accounting reflects the value of a firm’s R&D program better than R&D capitalization and amortization. This research is timely because many prominent stakeholders believe the opposite, and such beliefs have motivated the FASB to consider changing U.S. GAAP in recent years.

CORPORATE SOCIAL RESPONSIBILITY REPORTING AND VALUE RELEVANCE OF THE BANKING SECTOR IN BANGLADESH

Using a sample of listed Bangladeshi banking companies for the period 2009–2017, this study investigated whether these banks which disclosed superior CSR information are more valued by the investors. CSR reports can also affect market value of equity because the sustainability report may be observed by the market participants to be a basis of supplementary and corresponding evidence along with the customary value-relevant accounting variables. Finally, this study also analyses whether CSR disclosure by Islamic banks operating in banking industries is considered in a different way by investors than CSR disclosure by conventional banks. By using a modified Ohlson model, it is evident that CSR disclosure does have noteworthy positive influence on stock prices. Furthermore, CSR disclosure by Islamic banks is associated with higher market valuations than CSR disclosure by conventional banks. The reason behind the fact is that higher CSR information assists market participants to access the inherent risk associated to potential legal action and impending obligations, by this means sinking information asymmetries and the threat of adverse selection.

Advancing firms performance in Ghana: Does IFRS adoption matter

This study examines whether the transition of local GAAP to IFRS affects listed firms in the Sub-Saharan Africa region. Using binary logistic regression on the dataset from Ghana, we find that profitability and liquidity reduced during the official adoption fiscal year of IFRS but not, earning management. We also find that growth and leverage increase during financial reportage for the post-adoption period of IFRS. We conclude that the adoption of IFRS leads to more value relevant accounting measures in developing country context. Our study is one of first of its kind to investigate the effect of pre-and-post adoption of IFRS in Ghana using accounting measures, implying the study's finding does not only contribute to the literature, but also policy and practice.

Pengaruh Pengungkapan Other Comprehensive Income Terhadap Relevansi Nilai Informasi Akuntansi dengan Kualitas Audit sebagai Variabel Pemoderasi pada Perusahaan Industri Barang Konsumsi yang Terdaftar di Bursa Efek Indonesia Periode 2015-2017

AbstractThis study aims to examine the effect of other comprehensive income disclosure towards value relevance of accounting information with the audit quality as moderating variables. The data used in this study is the secondary data obtained from the financial statements of consumer goods industry companies listed on the Indonesia Stock Exchange for the period of 2015-2017. The sampling technique used by using purposive sampling and it obtained the sample of 34 consumer goods industry companies. The data analysis technique used is multiple linear regression analysis and dummy variable moderation test (subgroup) using SPSS version 20. The results showed that the disclosure of other comprehensive income donot affect the value relevance of accounting information which is moderated by audit quality. Keywords: Disclosures of Other Comprehensive Income, Value Relevance of Accounting

임원배상책임보험과 회계정보의 가치관련성

임원배상책임보험과 회계정보의 가치관련성

Corporate governance and family firm performance during the Global Financial Crisis

AbstractWe investigate the impact of corporate governance on accounting and market performance relationships of family firms during the Global Financial Crisis (GFC). We expect the monitoring aspects of corporate governance to complement the long‐term orientation of family firms, improving the value relevance of accounting and market performance during times of exogenous financial shocks such as the GFC. We find that the family‐firm value is more sensitive to book value than earnings changes. We also find better corporate governance, irrespective of whether it is a family firm or non‐family firm, is associated with better accounting and market performance during the GFC.

기업의 파생금융상품 사용과 회계정보의 가치관련성

기업의 파생금융상품 사용과 회계정보의 가치관련성

The Role of IFRS on Financial Reporting Quality and Global Convergence: A Conceptual Review

This study examines the role of International Financial Reporting Standards on financial reporting quality and the global convergence. The IFRS adoption is already an issue of global relevance across countries of the world due to the quest for uniformity, reliability and comparability of financial statements of companies. The adoption of IFRS in Europe is an example of accounting quality across-borders with different institutional frameworks and enforcement rules. This allows investigating whether, and to what extent accounting regulation per se can affect the quality of financial reporting and leads to convergence in financial reporting. Specifically, the study review how the change in the recognition and measurement of firms operating accrual item, the loan loss provision, affects income smoothing behaviour and timely loss recognition. The study found that the IFRS convergence reduces the scope for earnings management, is related to more timely loss recognition and leads to more value relevant accounting measures. Thus, the study reviews background and guidance on the change in financial reporting quality following extensive IFRS adoption around the world countries. The study found that a difference in accounting quality is related to country’s overall infrastructure setting. The study also highlights the importance of investor protection for financial reporting quality and the need for regulators to design mechanisms that limit managers' earnings management practice. The study found from different literatures that the adoption of IFRS leads to higher quality of accounting numbers and improve foreign direct investment across countries.

Do Macro-economic Crises Determine Accounting Value Relevance?

We investigate whether the value relevance of earnings and book values in Turkey significantly changed across periods of financial uncertainty. Our enquiry differs from the mainstream literature that posits a unidirectional association determined by the ‘quality’ of individual firm accounts towards price. We find divergence in accounting value relevance components across the 1997–2012 period. Dominant value relevance shifts from earnings and negative interest rates in hyper-inflation, to the balance sheet after IFRS in 2005. On the other hand, the global financial crisis (GFC) is associated with diminished accounting value relevance for all variables. Policy issues are raised about value relevance consistency, the use of negative (low) interest rates as fiscal policies and the asymmetric application of market based valuations in emerging economies.

The accounting value relevance of earnings and book value: Tunisian banks and financial institutions

PurposeAs an increasing number of business organizations around the world are engaged in the value relevance of accounting information, this study aims to assess the field of the accounting value relevance of book value and earnings in share prices of banks and financial institutions listed in the Tunisian stock exchange.Design/methodology/approachUsing a sample of available banks and financial institutions listed in the Tunisian Stock Exchange from 2010 to 2015, this paper accommodates the documented accounting information in an emergent market context by using stock price of three months after year-end as a dependent variable. This study uses the panel regression technique on 24 banks and financial institutions during the study period.FindingsThe authors find that earnings and book value are statistically significantly associated with firm value. Also, using these variables together is positively related to the firm stock price share. Comparatively, these obtain evidence that book value is statistically more value-relevant than earning per share models; expectedly, the earnings explain a higher proportion of the stock price for the group of financial institutions than the group of banks.Originality/valueA Web-based search is performed during the second quarter of 2016, locating the corporate websites of the sample firms, and the official site of the Datastream (worldscope) is identified. The sample period is 2010-2015 (144 firm-year observations).

Value relevance of accounting and Non-Accounting information

This study investigates the value relevance of accounting and non-accounting information in the Colombo Stock Exchange, with a view to determining whether accounting information and non-accounting information has the ability to capture data that affect share prices of companies listed on the Colombo Stock Exchange. The required accounting information and non-accounting information are obtained through banks annual reports and data library published by Colombo Stock Exchange. Value Relevance is examined by partially replicating and modifying Ohlson's Value Relevance Model. The Regression analysis is used for evaluating information content of various accounting numbers and non-accounting information. The results revealed that accounting information of BVPS and OCFPS has strong positive correlation with Share Price. And also, it revealed that the non-accounting information of Local number of shareholders, Market Capitalization and Age of the Company has strong positive correlation with Share Price. So, Not only accounting information and non-accounting information but also other factors that affect changes in share prices, future study can include impact of other information sources like rumour, insider trading and noise among others on share prices.

Imperfect Accounting and Reporting Bias

ABSTRACTErrors and bias are both inherent features of accounting. In theory, while errors discourage bias by lowering the value relevance of accounting, they can also facilitate bias by providing camouflage. Consistent with theory, we find a hump‐shaped relation between a firm's propensity to engage in intentional misstatement and the prevalence of unintentional misstatements in the firm's industry for the whole economy and a majority of the industries. The result is robust to using firms’ number of items in financial statements and exposure to complex accounting rules as alternative proxies for errors and to using the restatement amount in net income to quantify the magnitude of bias and errors. To directly test for the two effects of errors, we show that when errors are more prevalent, the market reacts less to firms’ earnings surprises and bias is more difficult to detect. Our results highlight the imperfectness of accounting, advance understanding of firms’ reporting incentives, and shed light on accounting standard setting.

Why Do Individual Investors Disregard Accounting Information? The Roles of Information Awareness and Acquisition Costs

Individual investors often neglect value-relevant accounting information and instead underperform by trading on technical trends. We investigate the frictions that impede individual investors’ use of accounting information, and in particular their costs of monitoring and acquiring accounting disclosures. We do so using an archival setting where individuals are presented with automated media articles that report both current earnings news and past stock returns. Although these investors have earnings information readily available, we find no evidence that their trades incorporate earnings news. Instead we find that they trade in response to the trailing stock returns presented in the articles. Our study raises questions about the likely efficacy of regulations that aim to aid less sophisticated investors by increasing their awareness of, and access to, accounting information.

Value Relevance of Accounting and Other Variables in the Junior-Mining Sector

Unique fundamentals and severe uncertainty in the junior-mining-sector ( JMS) make valuing JMS ventures problematic. However, potentially enormous returns draw many investors into the JMS. While financialinstrument-pricing theory suggests that accounting values/ratios should have little influence on JMS-firm outcomes, this study’s simple OLS and Panel-data findings show strong correlation between those variables and JMS-firm-share prices. After discounting market failure, it is conjectured that JMS nonfinancial factors, share prices and accounting values are co-determined in a simultaneous relationship that is obscurely linked to outcomes. The notions uncovered in this study should greatly interest academics and business sector participants.