On the intertemporal value relevance of conventional financial accounting in Australia

Brimble, Mark; Hodgson, Allan

doi:10.1111/j.1467-629x.2007.00241.x

Cited by 55 publications

(54 citation statements)

References 27 publications

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“…In this nexus, accounting information is crucial, as the extant literature has demonstrated that accounting information is related to value, and by extension, relevance (Ball & Brown, 1968;Beaver, 1968;Lee, 1989;Brimble & Hodgson, 2007). Biesland (2008) defines value relevance as the ability of financial statement information to capture and summarize information that determines firm value.…”

Section: Review Of Literature and Hypotheses Developmentmentioning

confidence: 99%

The Value Relevance of Accounting Information: Evidence from Nigeria

Omokhudu¹,

Ibadin²

2015

AFR

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Value relevance of accounting information addresses the degree to which accounting information summarizes the information that is impounded in share prices. Therefore, the purpose of this paper is to contribute to the empirical literature on value relevance by examining the extent to which accounting information is associated with firm value, from an emerging market context. The paper uses the basic Ohlson (1995) model and the modification of the model that includes cash flow from operation, and dividends, to ascertain the value relevance of accounting information in Nigeria. The paper accommodates the documented relative inefficiency of the market by using stock price at three months and six months after year end as dependent variable. The study employs a pooled and panel data in the regression of share price and returns on accounting numbers. The ordinary least square (OLS) estimation and dynamic model estimation, with the Random and Fixed effects variants were used in the regression. We find that earnings, cash flow and dividends were statistically significantly associated with firm value but book value was related but not statistically significant. Based on these findings, it is suggested that the focus of investors should be on earnings, dividends and cash flows while less emphasis be placed on book values. Besides, the accounting information for investment purposes should be communicated to the investing public; and such information should be of high quality to avoid sub-optimal investment decisions by investors, with negative consequences for the overall economy

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Section: Review Of Literature and Hypotheses Developmentmentioning

confidence: 99%

The Value Relevance of Accounting Information: Evidence from Nigeria

Omokhudu¹,

Ibadin²

2015

AFR

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“…The study conducted by Ball and Brown (1968) is one of the earliest comprehensive study investigating the association between unexpected earning and abnormal stock returns. Thereafter, a significant body of research has been conducted in the context of different markets (e.g., Amir, Harris, &Venuti, 1993;Collins, Maydew, & Weiss, 1997;Holthausena & Watts, 2001;Brimble & Hodgson, 2007;Soderstrom & Sun, 2007). Holthausena and Watts (2001) classified the studies relating to value relevance into three sub-classes: 'relative association studies', 'incremental association studies', and 'marginal information content studies'.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of IFRS Adoption on the Value Relevance of Accounting Information: Evidence from the Insurance Sector

Alnodel¹

2018

IJBM

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This paper aims to investigate whether the adoption of International Financial Reporting Standards (IFRS) increases the value relevance of accounting information for insurance firms listed in the Saudi stock market. The study employs the Ohlson model (1995) and the Easton-Harris valuation model (1991) in order to examine the association among stock market value and book value and earnings per share. The data was collected for 21 insurance companies listed in the Saudi stock market during the period 2007-2014, which covered pre-/ post-IFRS periods. The results reveal that the book value of equity becomes less value relevant whereas earnings are more value relevant. Further analysis suggests that the increase in the value relevance of accounting information is positively influenced by companies' attributes, especially profitability and size rather than IFRS adoption. These results highlight the importance of institutional factors in the determination of the value relevance of accounting information in emerging stock markets. These results also expand IFRS research through a consideration of the insurance industry, which is more vulnerable to the accounting evaluation model.

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“…The model provides a valuation 3 International evidence of the debate of comprehensive income reporting in countries such as UK and New Zealand can be found in O'Hanlon and Pope (1999), Cahan et al (2000), Brimble and Hodgson (2007), and Lin (2006). framework that includes many different parameter inputs which generate a wide range of estimates that can be presented statistically by a distribution with a mean and variance. The user of the model can easily examine the implication of alternative underlying firm-level and economy-wide environment changes on the equity share prices.…”

Section: Warren and Shelton Model (1971)mentioning

confidence: 99%