Does Investor Sentiment Affect the Value Relevance of Accounting Information?

He, Wen; Hong, Ki Hoon; Wu, Eliza

doi:10.1111/abac.12203

Cited by 11 publications

(3 citation statements)

References 71 publications

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“…The literature on behavioral finance has extensively explored whether investor sentiment affects trading decisions, leads to irrational trading behavior, and affects stock prices (e.g., Baker and Wurgler 2006 ; Beer and Zouaoui 2012 ; Chau et al 2016 ; Cormier et al 2010 ; Fang and Peress 2009 ; He et al 2020 ; Hong and Stein 2007 , 1999 ; Kaniel et al 2008 ; Long et al 1990 ; Palomino 1996 ; Shleifer and Vishny 1997 ). Bollen et al ( 2011 ) find that investors’ trading behavior is directly shaped by their perceptions about future market development.…”

Section: Literature Review and Research Questionsmentioning

confidence: 99%

COVID-19 pandemic and capital markets: the role of government responses

2022

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This paper analyzes the moderation effect of government responses on the impact of the COVID-19 pandemic, proxied by the daily growth in COVID-19 cases and deaths, on the capital market, i.e., the S&P 500 firm’s daily returns. Using the Oxford COVID-19 Government Response Tracker, we monitor 16 daily indicators for government actions across the fields of containment and closure, economic support, and health for 180 countries in the period from January 1, 2020 to March 15, 2021. We find that government responses mitigate the negative stock market impact and that investors’ sentiment is sensitive to a firm’s country-specific revenue exposure to COVID-19. Our findings indicate that the mitigation effect is stronger for firms that are highly exposed to COVID-19 on the sales side. In more detail, containment and closure policies and economic support mitigate negative stock market impacts, while health system policies support further declines. For firms with high revenue exposure to COVID-19, the mitigation effect is stronger for government economic support and health system initiatives. Containment and closure policies do not mitigate stock price declines due to growing COVID-19 case numbers. Our results hold even after estimating the spread of the pandemic with an epidemiological standard model, namely, the susceptible-infectious-recovered model.

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Section: Literature Review and Research Questionsmentioning

confidence: 99%

COVID-19 pandemic and capital markets: the role of government responses

2022

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“…Furthermore, they discovered expenditure has similar characteristics to capitalised intangible assets, unlike research and development (R&D). [15,16,17] Meanwhile, Holthausen and Watts critically evaluated standard-setting inferences drawn from value relevance studies. They drew 62 value relevant research papers from high-quality accounting journals from 1980 to 2000.…”

Section: Value Relevance Studymentioning

confidence: 99%

Adoption of new accounting information in nigeria: is accounting information more relevant?

Alkali

Okoh

2022

J.M.S

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This paper discussed whether accounting information has an incremental value relevance among Nigerian financial institutions. The study is motivated by the Report on the Observance of Standard Code (ROSC) of 2014 and 2011, which report that Nigerian accounting reporting has been marred with non-compliance, non-update, and nondisclosures of accounting information. These have contributed to the sudden fall of the Nigerian stock market from 2008 to 2009 and Nigerian financial institutions that made investors lose confidence in the Nigerian capital markets. This situation provided an opportunity to study the value relevance of accounting information among Nigerian financial institutions. The study uses 52 listed financial institutions in Nigeria. The stock price model used in value relevance studies is employed for data analysis. Data is collected from Bank Scope and Thompson Reuters Data Stream. The study findings provide more value relevance of accounting information under IFRS. Furthermore, assets and liabilities provide positive and negative significant relationships with stock returns, respectively. Lastly, the study provides evidence of the value relevance of accounting information after adopting IFRS.

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“…The third and fourth are more relevant when accounting information shows the statistical association between accounting numbers and returns or prices. [15,16,17,18] To (or "intending to")expand the research on value relevance in other fields, like expenditure for advertisement in the pharmaceutical business, Gu and Li investigated the contribution of growing demand for expenditures in pharmaceutical companies with firm value. They believe that stock investors understand pharmaceutical firms advertisements as a source of economic benefit.…”

Section: Value Relevance Studymentioning

confidence: 99%

Adoption of new accounting information in nigeria: is accounting information more relevant?

Alkali

Hussaini

Aliyu³

et al. 2022

J.M.S

View full text Add to dashboard Cite

This paper discussed whether there is an incremental value relevance of accounting information among Nigerian financial institutions. The study is motivated by the Report on the Observance of Standard Code (ROSC) of 2014 and 2011, which report that Nigerian accounting reporting has been marred with non-compliance, non-update, and non-disclosures of accounting information.These have contributed to the sudden fall of the Nigerian stock market from 2008 to 2009 and Nigerian financial institutions that made investors lose confidence in the Nigerian capital markets. This situation provided an opportunity to study the value relevance of accounting information among Nigerian financial institutions. The study uses 52 listed financial institutions in Nigeria. The stock return model used in value relevance studies is employed for data analysis. Data is collected from Bank Scope and Thompson Reuters Data Stream. The study findings provide more value relevance of accounting information under IFRS. Furthermore, assets and liabilities provide positive and negative significant relationships with stock returns, respectively. Lastly, the study provides evidence of the value relevance of accounting information after adopting IFRS.

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Does Investor Sentiment Affect the Value Relevance of Accounting Information?

Cited by 11 publications

References 71 publications

COVID-19 pandemic and capital markets: the role of government responses

COVID-19 pandemic and capital markets: the role of government responses

Adoption of new accounting information in nigeria: is accounting information more relevant?

Adoption of new accounting information in nigeria: is accounting information more relevant?

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