Comparative Value Relevance Studies: Country Differences Versus Specification Effects

Veith, Stefan; Werner, Jörg R.

doi:10.1016/j.intacc.2014.07.002

Cited by 21 publications

(23 citation statements)

References 48 publications

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“…Neither of the alternative dependent variables leads to different results compared to the original models. Moreover, the results of Veith and Werner (2014) also indicate that the return window that maximizes the adjusted R 2 of value relevance regressions differs between countries. In Germany, capital markets seem to take longer to fully impound financial information into prices.…”

Section: Variation Of the Dependent Variablementioning

confidence: 93%

“…Four segment models, however, substantially decrease the sample size and should thus be interpreted carefully. Veith and Werner (2014) show that the choice of the return window can substantially impact the findings of value-relevance studies. We use stock price 90 days after fiscal year-end as the dependent variable in the original model.…”

Section: Two Segment Modelsmentioning

confidence: 99%

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The Impact of IFRS 8 Adoption on the Usefulness of Segment Reports

Kajüter

Nienhaus

2017

Abacus

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We analyze the impact of IFRS 8 on the usefulness of segment reports from an investor's perspective. The analysis comprises three steps. First, we compare the value relevance of segment reports before and after the introduction of IFRS 8. Second, we analyze a treatment group of firms that had to change their segmentation upon IFRS 8 adoption and a control group that was unaffected by its introduction. Third, the requirement to report financial information for the current and previous year under current accounting rules allows us to analyze a unique data set of segment reports for the same company and the same year under two different standards. Our results based on German listed firms show superior value relevance of segment reports according to IFRS 8 compared to IAS 14 in all three steps. Additional analyses suggest that the adoption of IFRS 8 is also related to a decline in information asymmetry. Our findings are robust to a number of alternative specifications.

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Section: Variation Of the Dependent Variablementioning

confidence: 93%

Section: Two Segment Modelsmentioning

confidence: 99%

The Impact of IFRS 8 Adoption on the Usefulness of Segment Reports

Kajüter

Nienhaus

2017

Abacus

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“…Following the methodology of Veith and Werner (2014), it is possible to determine that recognised goodwill therefore explains approximately 19.683 per cent of the increased abnormal returns of the conventional hedge.…”

Section: [Insert Figure 1 About Here]mentioning

confidence: 99%

“…Following Skinner and Sloan (2002), stocks are allocated to hedge portfolios based on quintiles of market-to-book ratios on the date of portfolio formation. To determine whether investors price recognised goodwill accurately, this study uses the methodology of Veith and Werner (2014) to compare hedge returns of the conventional hedge to those of a hedge where recognised goodwill has been excluded from the market-tobook ratio calculation [3] . This methodology reveals not only whether goodwill is priced by investors (its "value-relevance") but also the degree of accuracy with which it is priced.…”

Section: Introductionmentioning

confidence: 99%

Acquisitions and the value versus growth phenomenon

Badenhorst

2016

MEDAR

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Purpose: To investigate whether investors value the future growth from acquisitions and the subsequent realisations thereof accurately.Design/methodology/approach: The paper calculates conventional and adjusted market-to-book ratios and investigates abnormal cumulative returns over 20 quarters after portfolio formation for a sample of S&P 500 firms using a hedge portfolio and regression approach.Findings: Hedge portfolios formed using adjusted market-to-book ratios underperform conventional hedge portfolios over a five year period. Dividing the hedge into its comprising elements reveals that the underperformance of the adjusted hedge is mainly caused by weaker returns from value firms. Research limitations/implications:Findings are specific to large firms in a specific setting and future research is needed to determine if findings are equally applicable to other situations. Findings imply that investors underrate the growth from new acquisitions and overrate the extent to which this has materialised. Practical implications:The study highlights that the extrapolation of future growth rates should be carefully considered in any equity valuation of a firm with current or past acquisitions. Originality/value:This study shows that inaccurate valuation of the growth of new acquisitions and the realisation thereof is at least partially responsible for the value versus growth phenomenon. It shows that the accounting information could be improved and highlights the importance of extrapolating past growth rates with care.

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“…Chambers et al (2007) demonstrate that investors pay more attention to the OCIs reported in the statement of changes in owners' equity although firms could decide the presentation format of CI or OCI information in the financial statements. Rees and Shane (2012) and Veith and Werner (2014) suggest more effort is needed to study the effect of CI reporting from the perspective of accounting standards setting consequences.…”

Section: Literature Reviewmentioning

confidence: 99%

Analyst Following, Information Environment and Value Relevance of Comprehensive Income: Evidence from China

Lin

2015

Asia-Pac J of Fin Stud

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This study investigates the value relevance of comprehensive income (CI) reporting contextual to the specific market and financial reporting environment in China. We posit the information content of CI or other comprehensive incomes (OCI) is affected by the information environment. By applying analyst coverage as a main proxy for firms' information environment, this study finds that analyst following contributes to reducing information asymmetry and increasing information preciseness and investors' comprehension, thus it is positively associated with the value relevance of CI or OCI information. We also document that a few OCI items have incremental explanatory power to firm valuation in the Chinese market, which is mainly for those firms with greater analyst coverage. We therefore conclude that the information environment should be taken into consideration in evaluating the value relevance of CI reporting.

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Comparative Value Relevance Studies: Country Differences Versus Specification Effects

Cited by 21 publications

References 48 publications

The Impact of IFRS 8 Adoption on the Usefulness of Segment Reports

The Impact of IFRS 8 Adoption on the Usefulness of Segment Reports

Acquisitions and the value versus growth phenomenon

Analyst Following, Information Environment and Value Relevance of Comprehensive Income: Evidence from China

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