The Value‐relevance of Earnings and Book Value, Ownership Structure, and Business Group Affiliation: Evidence From Korean Business Groups

Bae, Kee‐Hong; Woo, Jeong， Seok

doi:10.1111/j.1468-5957.2007.02017.x

Cited by 111 publications

(108 citation statements)

References 61 publications

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“…The resulting information asymmetry allows controlling shareholders to expropriate minority shareholders (Lins and Servaes, 2002;Lins, 2003). More directly, Bae and Jeong (2002) show that the accounting information from Korean business groups is less transparent compared to that from unaffiliated firms. There is also strong evidence that controlling shareholders in Korean groups engage in transactions that expropriate minority investors.…”

Section: Liberalization and Corporate Governancementioning

confidence: 99%

Equity Market Liberalization and Corporate Governance

Bae

Goyal

2010

SSRN Journal

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Equity market liberalization opens domestic stock markets to foreign investors. A common view of liberalization is that it improves risk sharing, increases investments and leads to higher growth. Yet the economic benefits of liberalization have not been as large as expected. There is strong evidence that foreign investors prefer to invest in relatively transparent firms and firms with better corporate governance. Such firms should benefit more from liberalization than other firms do. We examine these predictions using firm-level data around the time of the official equity market liberalization in Korea. The results show that firms that pay dividends, have more tangible assets, have lower leverage, and have better corporate governance grow faster and raise more external financing following equity market liberalization. Finally, we examine cumulative abnormal returns around the time of the liberalization in Korea and find that they are significantly higher for firms that have stronger governance. Stock price revaluations are more strongly linked to governance than to enhanced risk sharing.JEL classification: D23, G21, G32, K42

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Section: Liberalization and Corporate Governancementioning

confidence: 99%

Equity Market Liberalization and Corporate Governance

Bae

Goyal

2010

SSRN Journal

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“…Bae and Jeong (2007) and Anandarajan and Hasan (2010) examine the influence of foreign ownership on the value relevance of earnings, while Shamki (2012) examines the influence of foreign and local shareholders on the value relevance of earnings and book value. Dontoh, Radhakrishnan, and Ronen (2004) and Liu and Liu (2007) examine the influence of trading volume on the value relevance of earnings and book value.…”

Section: Introductionmentioning

confidence: 99%

“…The paper extends these studies by examining the influence of foreign ownership on the value relevance of earnings, book value of equity, and cash flows from operation in Jordan. Since foreign ownership has strong positive influence on the value relevance of earnings (Bae and Jeong, 2007;Anandarajan & Hasan, 2010;Shamki, 2012), It is expected that this factor will positively influence the value relevance of book value and cash flows. Foreign ownership as one of the current study's independent variables is measured as whether a company has foreign ownership at the end of financial year (Anandarajan & Hasan, 2010).…”

Section: Introductionmentioning

confidence: 99%

The Influence of Economic Factors on the Value Relevance of Accounting Information in Jordan

Shamki¹

2013

IJBM

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The paper examines the influence of economic factors namely foreign ownership and trading volume on the value relevance of earnings, book value and cash flows relative to three share price proxies namely average annual share price, annual closing share price and share price after a three-month period following the financial year-end (hereafter ATM-share price), after controlling company's size and leverage for Jordanian services and industrial companies within the period [2004][2005][2006][2007][2008][2009]. Since the paper is the first, as the researcher believes, that examines the influence of foreign ownership and trading volume on the value relevance of earnings, book value and cash flows in an emerging exchange, it aims to provide evidence regarding the influence of these factors on the value relevance of accounting information. The paper found that the value relevance of earnings and book value is greater for companies having foreign ownership and larger trading volume. With the effect of these factors, closing share price shows more response than the other share price proxies. The findings suggest that market participants might be able to extract the firm value via these economic factors. The paper extends the valuation model by including cash flows together with earnings and book value. The findings demonstrate that there is a shift away from earnings towards book value as the basis of firm valuation.

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“…To name a few, [23] examines value relevance of accounting numbers in Middle East and North Africa (MENA) countries [24], in the Korean chaebols [25], in Tunisia [18], during the Mexican financial crises [26], in the Czech Republic, and [27] in different segments of the Chinese market, with no conclusive results.…”

Section: Value Relevance Of Accounting Numbersmentioning

confidence: 99%

Value Relevance of Accounting Data in an Emerging Market: Did Accounting Reforms Make a Difference?

Aksu¹,

Çetin²,

Mugan³

2017

Accounting and Corporate Reporting - Today and Tomorrow

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This study investigates the association of accounting earnings (NI) and book value of equity (BV) with stock prices in Istanbul Stock Exchange (ISE), currently Borsa Istanbul (BIST), during the 1992-2006 period. We also explore the effect of accounting reforms on value relevance that is measured as the strength of the association between a firm'sNIand BV and its market value. We specifically investigate the impact of the Turkish Uniform Chart of Accounts (1994), mandatory inflation accounting, consolidations and voluntary (2003)(2004), and the mandatory (2005) adoption of International Financial Reporting Standards (IFRS). We hypothesize that these reforms have reduced information asymmetry and thus are expected to enhance the value relevance of accounting information. We find strong evidence that the Ohlson model is a valid model, and BV is more value relevant than NI in BIST. We also find that inflation accounting and consolidations have enhanced the value relevance of BV, while IFRS has increased the value relevance of NI, but reduced that of BV. We contribute to the debate by exploiting the unique sequence of reforms, to come up with comparative value relevance testing designs and interesting results for all major reforms, which we believe will be instructive for researchers and for all emerging and developed economies undergoing similar reforms and best practices.

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The Value‐relevance of Earnings and Book Value, Ownership Structure, and Business Group Affiliation: Evidence From Korean Business Groups

Cited by 111 publications

References 61 publications

Equity Market Liberalization and Corporate Governance

Equity Market Liberalization and Corporate Governance

The Influence of Economic Factors on the Value Relevance of Accounting Information in Jordan

Value Relevance of Accounting Data in an Emerging Market: Did Accounting Reforms Make a Difference?

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