Scale Effects in Capital Markets-Based Accounting Research

Barth, Mary E.; Clinch, Greg

doi:10.2139/ssrn.201228

Cited by 155 publications

(180 citation statements)

References 24 publications

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“…30 All variables, except DISC, YEAR_FE, COUNTRY_FE, and InvMillsRatio are deflated by market value of equity at the beginning of year t (e.g., Barth and Clinch 2009). 31 My inferences remain the same if I use market value of equity at the end of the fiscal year.…”

Section: Market Valuation and Value Relevance Tests Of Recognized Vermentioning

confidence: 99%

Recognition versus disclosure: evidence from fair value of investment property

Israeli

2015

Rev Account Stud

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The application of International Accounting Standard 40, Investment Property, in the European Union created a unique setting to study the implications of a decision to recognize versus disclose financial statements' items, because in this setting recognized and disclosed investment-property-related amounts share a common measurement base, i.e., fair value. I use this setting to (1) explore a firm's choice to recognize versus disclose fair values of investment properties, (2) test whether recognized and disclosed amounts are valued equally by investors, and (3) determine whether these amounts exhibit equivalent associations with future financial outcomes. To correct for self-selection concerns and assure I compare analogous amounts, I develop a selection model and construct investment-property-related amounts that differ only in whether their components are recognized or disclosed. I find that (1) contractual and asset-pricing incentives help to explain the recognition versus disclosure choice, (2) investors place smaller valuation weights on disclosed amounts, and (3) recognized and disclosed amounts exhibit statistically equivalent associations with future changes in net rental income and cash flows from operations. Taken together, the evidence suggests that managers are opportunistic in making the recognition versus disclosure choice and that even when recognized and disclosed amounts share an equivalent measurement base and are equally relevant for future financial outcomes, investors weight disclosed information less heavily in determining a firm's value.Keywords Recognition versus disclosure Á Fair value of investment property Á Analogous amounts Á Value relevance

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Section: Market Valuation and Value Relevance Tests Of Recognized Vermentioning

confidence: 99%

Recognition versus disclosure: evidence from fair value of investment property

Israeli

2015

Rev Account Stud

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“…A variety of literature has discussed the 'scale effect' in financial studies (Barth and Clinch, 2001;Barth and Kallapur, 1996;Brown et al, 1999;Christie, 1987;Easton and Sommers, 2003). In market-based research, financial variables might cause spurious result if they do not take into account the scale of the companies involved.…”

mentioning

confidence: 99%

Ethical Commitment, Financial Performance, and Valuation: An Empirical Investigation of Korean Companies

Choi¹,

Jung

2007

J Bus Ethics

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“…Indeed, the study of Qi et al (2000), applied on time series data, finds that non-stationarity is mitigated in the Ohlson model if the data are scaled (Akbar and Stark 2003;Easton and Sommers 2003;Barth and Clinch 2009). Consistently with (Callen and Morel (2001)) and Morel (2003), we choose to normalize by total assets rather than book value, because total assets are a better measure of firm size for levered firms.…”

Section: Valuation Equationmentioning

confidence: 99%

A regime switching Ohlson model

Leccadito

Veltri

2014

Qual Quant

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This paper proposes a regime-switching version of the Ohlson model (Contemp Account Res 11:661-687, 1995). We assume that abnormal earnings and the other information variable follow a regime-switching dynamics, which represents a simple yet rigorous way to incorporate the stochastic volatility pattern revealed by financial variables. We derive closed form formulae for market values of equity and show that the resulting model is still tractable. In our empirical investigation we consider firms from the USA stock market during the period 1980-2011 and find that the regime-switching model improves upon the traditional Ohlson model in predicting market prices.

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Scale Effects in Capital Markets-Based Accounting Research

Cited by 155 publications

References 24 publications

Recognition versus disclosure: evidence from fair value of investment property

Recognition versus disclosure: evidence from fair value of investment property

Ethical Commitment, Financial Performance, and Valuation: An Empirical Investigation of Korean Companies

A regime switching Ohlson model

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