Accounting based valuation: a simultaneous equations model for forecasting earnings to proxy for ‘other information’

Bergmann, Iris; Schultze, Wolfgang

doi:10.1007/s11156-017-0654-9

Cited by 2 publications

(2 citation statements)

References 54 publications

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“…Specifically, we developed an empirical analysis based on panel data, generalized least squares (GLS), representing a methodological approach suitable for quantitative accounting research based on evaluating financial dynamics (Bhushan, 1993; Pacini and Marlett, 2001). In particular, many forecasting and analysts’ evaluation studies have been conducted, considering GLS as a methodological approach (Barniv et al , 2022; Bergmann and Schultze, 2018). As regards the functional form of the empirical model, we evaluated the interlinkages between a dependent variable that synthesizes analysts’ forecast accuracy and a set of independent, interaction and control variables able to collect valuable insights about the impacts related to the adoption of the GRI instead of the SASB and vice versa: …”

Section: Methodsmentioning

confidence: 99%

Do sustainability reporting standards affect analysts’ forecast accuracy?

Pizzi,

Caputo,

de Nuccio

2024

SAMPJ

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Purpose This study aims to contribute to the emerging debate about materiality with novel insights about the signaling effects related to the disclosure of environmental, social and governance (ESG) information using the guidelines released by the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). Design/methodology/approach An empirical assessment using panel data analysis was built to evaluate the relationship between sustainability reporting standards and analysts’ forecast accuracy. Findings The analysis revealed that the proliferation of sustainability reports prepared on mandatory or voluntary basis mitigated the signaling effects related to the disclosure of ESG information by companies. Furthermore, the additional analysis conducted considering sustainability reporting quality and ESG performance revealed the existence of mixed effects on analysts’ forecasts accuracy. Therefore, the insights highlighted the need to consider a cautionary approach in evaluating the contribution of ESG data to financial evaluations. Practical implications The practical implications consist of identifying criticisms related to disclosing ESG information by listed companies. In detail, the analysis underlines the need to enhance reporting standards’ interoperability to support the development of more accurate analysis by investors and financial experts. Social implications The analysis reveals increasing attention investors pay to socially responsible initiatives, confirming that financial markets consider sustainability reporting as a strategic driver to engage with stakeholders and investors. Originality/value This research represents one of the first attempts to explore differences between GRI and SASB using an empirical approach.

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Section: Methodsmentioning

confidence: 99%

Do sustainability reporting standards affect analysts’ forecast accuracy?

Pizzi,

Caputo,

de Nuccio

2024

SAMPJ

View full text Add to dashboard Cite

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“…Third, this paper contributes to the value relevance literature on modeling “other information” in the Ohlson’s (1995) model (e.g. Myers, 1999; Ohlson, 2001; Barth et al , 2005; Bergmann and Schultze, 2017). The results imply that voluntary valuation-related disclosures constitute a suitable proxy for “other information.” Such disclosures are found to increase the incremental value relevance of traditional accounting metrics like book value and earnings.…”

Section: Introductionmentioning

confidence: 96%

Enhanced business reporting: value relevance and determinants of valuation-related disclosures

Reitmaier

Schultze

2017

JIC

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Purpose Enhanced business reporting (EBR) seeks to address the information needs of investors when making company valuations for investment decisions. The purpose of this paper is to analyze the relevance for market valuation of EBR disclosures that are directly related to firm valuation (value-based reporting (VBR)). Design/methodology/approach Data are hand collected from annual reports of German publicly listed companies over five years. The content analysis is based on the valuation-related disclosure framework of the German Schmalenbach Society of Business Administration. A 2SLS approach accounts for potential endogeneity. Findings Share-based compensation, leverage, corporate size, and share volatility are significant determinants of VBR. The level of VBR is significantly associated with market values and provides additional market value explanatory power, indicating its relevance to investors in the process of valuation and decision making. Also, the relevance of book value and earnings for explaining market values increases for firms with better VBR. The findings are robust to the exclusion of banks and assurance companies and to alternative model and variable specifications. Research limitations/implications The research contributes to the literature on voluntary disclosures by testing an EBR framework explicitly derived from valuation theory. The results provide indirect evidence of the investors’ use of respective valuation techniques in decision making. A contribution is made to the value relevance literature by showing that valuation-related disclosures constitute a suitable proxy for “other information” in the Ohlson’s (1995) model. Such disclosures complement traditional accounting metrics, i.e. book value and earnings, as basis for valuations. Potential caveats relate to the content analysis of annual reports and the endogeneity of voluntary disclosures. Originality/value This paper informs the debate on further developments of EBR in helping to identify important components thereof.

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Accounting based valuation: a simultaneous equations model for forecasting earnings to proxy for ‘other information’

Cited by 2 publications

References 54 publications

Do sustainability reporting standards affect analysts’ forecast accuracy?

Do sustainability reporting standards affect analysts’ forecast accuracy?

Enhanced business reporting: value relevance and determinants of valuation-related disclosures

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