Asset Revaluations and Share Price Revisions

Emanuel, David

doi:10.1111/j.1468-5957.1989.tb00014.x

Cited by 24 publications

(11 citation statements)

References 11 publications

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“…Aboody et al find that upward revaluations are significantly positively related to future firm performance (proxied by operating income and cash flow), the revaluation balance is positively associated with current share price, but revaluation surplus is only weakly positively associated with contemporaneous share return. Whether revaluation provides timely signals is open to question: earlier work by Sharp and Walker (1975), Standish and Ung (1982), Emanuel (1989) and Easton et al (1993) yields mixed results regarding the impact of revaluations on share prices. Furthermore, the credibility of such signals remains an open question.…”

Section: Discussionmentioning

confidence: 99%

Fixed Asset Revaluation and Equity Depletion in the UK

Lin

Peasnell

2000

Business Fin & Account

102

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UK GAAP has traditionally allowed the write-off of purchased goodwill directly to reserves, resulting in the widespread depletion of book equity. Companies have also been permitted to revalue fixed assets at management's discretion. This study examines whether upward revaluations have been associated with the depletion of book equity and with other costly contracting explanations identified in prior research. Our results provide strong support for the equity depletion hypothesis, both with regard to the decision to revalue and the timing of the revaluations. Indebtedness, liquidity, size and fixed asset intensity are also consistently associated with upward revaluation. Copyright Blackwell Publishers Ltd 2000.

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Section: Discussionmentioning

confidence: 99%

Fixed Asset Revaluation and Equity Depletion in the UK

Lin

Peasnell

2000

Business Fin & Account

102

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“…Earlier studies examined information content of revaluations by conducting events studies around the disclosure date of revaluations by Australian, New Zealand and UK firms (e.g., Sharpe and Walker, 1975;Standish and Ung, 1982;Emanuel, 1989). These studies examined whether revaluations triggered investor reaction.…”

Section: Literature Reviewmentioning

confidence: 99%

Management Motivation and Market Assessment: Revaluations of Fixed Assets

Jaggi

Tsui

2001

Financ Manag Account

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The study examines Hong Kong managers' motivation for upward revaluation of fixed assets. The results show that revaluations are positively associated with the firms' future operating performance, suggesting that the managers' primary motivation for upward revaluation of fixed assets has been to signal fair value of assets to financial statements users. Another motivation for revaluations has been to improve the firm's borrowing capacity. The results also indicate a significantly positive association between revaluations and stock prices and returns, suggesting that the market's assessment aligns with the managers' revaluations.Journal of International Financial Management and Accounting 12:2 2001 *** Significant at the .001 level. RR1 is the net increment to the revaluation balance from revaluations to fixed assets in year t, i.e., current year revaluations scaled by market value of t-1. )OPINC is operating income before depreciation, interest, taxes, and gains on assets in year t minus operating income in year t-1. )WC is working capital in year t minus working capital in year t-1. MB is market to book ratio at end of fiscal year t, where book value of equity excludes the revaluation balance. ASSETS is the log of book value total asset, excluding the revaluation balance, at end of year t. One, two, and three years ahead refer to operating income or cash from operations in year t+1, t+2, and t+3 minus operating income or cash from operations in year t. All variables, except for MB and ASSETS, are deflated by market value of equity at the beginning of year t. The regression equations include untabulated year-specific intercepts. * Significant at the .05 level. *** Significant at the .001 level. RR1 is the net increment to the revaluation balance from revaluations to fixed assets in year t, i.e., current year revaluations scaled by market value of t-1. LEVERAGE is debt-equity ratio at the end of fiscal year t where book value of equity excludes the revaluation balance. )OPINC is operating income before depreciation, interest, taxes, and gains on assets in year t minus operating income in year t-1. )WC is working capital in year t minus working capital in year t-1. MB is market to book ratio at the end of fiscal year t, where book value of equity excludes the revaluation balance. ASSETS is the log of book value total asset, excluding the revaluation balance, at end of year t. One, two, and three years ahead refer to operating income or cash from operations in year t+1, t+2, and t+3 minus operating income or cash from operations in year t. All variables, except for MB and ASSETS, are deflated by market value of equity at the beginning of year t. * Significant at the .05 level. *** Significant at the .001 level. RR1_SM is the net increment to the revaluation balance from revaluations to fixed assets in year t, i.e., current year revaluations scaled by market value of t-1 for small firms. RR1_LG is the net increment to the revaluation balance from revaluations to fixed assets in year t, i.e., current year revaluations...

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“…Feldstein and Seligman (1981), Martin and Henderson (1983), Dhaliwal (1986), Landsman (1986), Bulow, Morck and Summers (1987), Kemp (1987), Maher (1987), Gopalakrishnan and Sugrue (1990, Landsman and Ohlson (1990), Reiter (1991Reiter ( , 1992, Barth, Beaver and Landsman (1992), Maher and Ketz (1993). Sharpe and Walker (1975), Standish and Ung (1982), Emanuel (1989), Easton, Eddy and Harris (1993), Barth and Clinch (1998), Aboody, Barth and Kaznik (1999), Gaeremynck and Veugelers (1999), Lin and Peasnell (2000a).…”

Section: Empirical Evidencementioning

confidence: 99%

Concept and Relevance of Income

Obinata

2002

SSRN Journal

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Asset Revaluations and Share Price Revisions

Cited by 24 publications

References 11 publications

Fixed Asset Revaluation and Equity Depletion in the UK

Fixed Asset Revaluation and Equity Depletion in the UK

Management Motivation and Market Assessment: Revaluations of Fixed Assets

Concept and Relevance of Income

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