Have Financial Statements Lost Their Relevance?

Francis, Jennifer; Schipper, Katherine

doi:10.2307/2491412

Cited by 1,515 publications

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“…These researchers proved that stock prices, returns, and other stock market indicators are associated with accounting numbers (Liu & Liu, 2007). According to Francis & Schipper (1999), there are four diverse methods to view financial statement value relevance. The first view is characterized by the determination of the value of a company's shares or securities through fundamental analysis.…”

Section: Concept Of Value Relevancementioning

confidence: 99%

“…According to Francis & Schipper (1999), the determination of the value will eventually affect the market prices and cause market prices to drift. Hence, the market share price or value eventually digresses towards the calculated intrinsic share value (Nilsson, 2003;Ou & Penman, 1989).…”

Section: Concept Of Value Relevancementioning

confidence: 99%

“…Consequently, financial statement fundamentally summarizes business transactions and other events, as they relate to the performance of organisations. Value relevance here is measured by its ability to summarize accounting information (Francis & Schipper, 1999). For financial reports to be relevant, the information content must be relevant in investment decision-making.…”

Section: Introduction mentioning

confidence: 99%

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Value relevance of financial statements and share price: a study of listed banks in Nigeria

Uwuigbe

Jafaru

Igbinoba

et al. 2016

Banks and Bank Systems

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This paper examined the effects of value relevance of financial statements on firms share price in Nigeria. In achieving the objectives of this research, the fact book from the Nigerian Stock Exchange Market and the audited financial statement of listed banks spanning the period 2010-2014 were used. Also, a total of 15 listed banks in the Nigerian stock exchange market were selected and analyzed for the study using the purposive sampling method. However, in analyzing the research hypotheses, the study adopted the use of both descriptive statistics and the use of Fixed Effects Panel data method of data analysis technique. Findings from the study showed that a significant positive relationship existed between earnings per share (EPS) and Last day share price (LDSP). The study recommends the need for banks in the country to improve on the quality of earnings reported, since it has a stronger ability to explaining share prices of firm.

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Section: Concept Of Value Relevancementioning

confidence: 99%

Section: Concept Of Value Relevancementioning

confidence: 99%

Section: Introduction mentioning

confidence: 99%

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Value relevance of financial statements and share price: a study of listed banks in Nigeria

Uwuigbe

Jafaru

Igbinoba

et al. 2016

Banks and Bank Systems

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“…Value Relevance Francis and Schipper (1999) defined value relevance of accounting information as the ability of accounting values in representing the company condition which is reflected on fluctuation of stock price, so that value relevance shows that there is correlation between accounting information and stock price or stock return. The high-quality accounting information is indicated to have strong correlation to stock price, stock return, profit and equity book value (Barth, et al, 2008).…”

Section: ⅱ Related Literaturementioning

confidence: 99%

Value Relevance of Financial and Non-Financial Information to Investor Decision

Honggowati¹

2015

Glob Bus Financ Rev

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The objective of this study is to examine the value relevance of financial and non-financial information to investor decision. Investors determine investment decisions from financial and non-financial information. In this research investor decision reflected on company's market performance, market performance is measured using Cumulative Abnormal Return (CAR). Financial information is measured using Return on Assets (ROA) and non-financial information using three components of Balanced Scorecard Method, which reflect, customer perspective, internal business process perspective, and learning and growth perspective. This study uses multiple regression to analyze the data of 121 manufacturing companies listed on Indonesia Stock Exchange (IDX) for the period 2010-2012. Sampling method in this research is conducted by the purposive sampling method. The findings show that the financial information which is measured by using the Return on Assets (ROA) was positively related to the market performance. On the other, from three components consist in non-financial information, customer perspective and internal busines and learning growth that has relation with market performance. Finally the results fully confirm the existence of a relationship between financial and non-financial information on market performance. Keywords: Cumulative Abnormal Return; Return on Assets; Customer Perspective; Internal Business Perspective; Learning andGrowth Perspective Ⅰ. IntroductionIn today's market, the changes in the business world from the industrial era into the information era are influenced by economic growth and technological advancement. Technological advancements can be used to obtain the information for the company to strengthen their market position. † Setianingtyas Honggowati Faculty of Economics and Business, Sebelas Maret University, Surakarta, Indonesia E-mail: setianingtyas_27@yahoo.co.id On the contrary, information of company's activities can be useful information to the other parties (e.g. regulators, competitors).Company's information was being able to effecting investor's and stakeholders decision-making processes. Chiung and Ming (2005) suggested that investment decision affect the company's market performance through stock price. Chiung and Ming (2005) suggested that investment decisions affect market performance through stock price. Then, the stock price changes reflect changes in the rate of expected returns or the rate of potential risks (Riley, Pearson and Trompeter, 2003;Wiersma,

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“…Other studies to be mentioned include: Foster (1977); Board and Walker (1990); Strong and Walker (1993); Harris, Lang, and Moller (1994) ;Collins, Pincus, and Xie (1999); Francis and Schipper (1999) ;Dhaliwal, Subramanyam, and Trezevant (1999);Sarlo Neto (2004); Costa and Lopes (2007) ;Lopes, Sant' Anna, and Costa (2007); Galdi and Lopes (2008) ;Bastos, Nakamura, David, andRotta (2009), Malacrida (2009) and Zanini, Cañibano, and Zani (2010).…”

Section: Value Relevance: the Study Of The Relevance Of Accounting Inmentioning

confidence: 99%

Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

Machado

Macedo

Machado

2015

Rev. contab. finanç.

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The usefulness of financial statements depends, fundamentally, on the degree of relevance of the information they disclose to users. Thus, studies that measure the relevance of accounting information to the users of financial statements are of some importance. One line of research within this subject is in ascertaining the relevance and importance of accounting information for the capital markets: if a particular item of accounting information is minimally reflected in the price of a share, it is because this information has relevance, at least at a certain level of significance, for investors and analysts of the capital markets. This present study aims to analyze the relevance, in the Brazilian capital markets, of the information content of the Value Added Statement (or VAS) -referred to in Brazil as the Demonstração do Valor Adicionado, or DVA. It analyzed the ratio between stock price and Wealth created per share (WCPS), using linear regressions, for the period 2005-2011, for non-financial listed companies included in Melhores & Maiores ('Biggest & Best'), an annual listing published by Exame Magazine in Brazil. As a secondary objective, this article seeks to establish whether WCPS represents a better indication of a company's result than Net profit per share (in this study, referred to as NPPS). The empirical evidence that was found supports the concept that the VAS has relevant information content, because it shows a capacity to explain a variation in the share price of the companies studied. Additionally, the relationship between WCPS and the stock price was shown to be significant, even after the inclusion of the control variables Stockholders' equity per share (which we abbreviate in this study to SEPS) and NPPS. Finally, the evidence found indicates that the market reacts more to WCPS (Wealth created per share) than to NPPS. Thus, the results obtained give some indication that, for the Brazilian capital markets, WCPS may be a better proxy concept for referring to a company's result than NPPS.

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Have Financial Statements Lost Their Relevance?

Cited by 1,515 publications

References 0 publications

Value relevance of financial statements and share price: a study of listed banks in Nigeria

Value relevance of financial statements and share price: a study of listed banks in Nigeria

Value Relevance of Financial and Non-Financial Information to Investor Decision

Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

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