Information Content of Earnings in the Emerging Capital Market: Evidence from the Warsaw Stock Exchange

Abstract

This article investigates the association between stock returns and the annual earnings, derived from the new accounting and reporting standards, of firms listed on the Warsaw Stock Exchange between 1995 and 1997. Following a brief history of the Warsaw Stock Exchange, two major issues affecting the effectiveness of the Polish securities market are discussed. These are the transition process from public to private enterprise ownership, and the development of accounting and reporting standards compatible with the capital market requirements and the European Union regulation. The empirical results indicate a significant association between stock returns and annual earnings. Results are compared with those for more developed capital markets.

Earnings – returns relation in Greece: some evidence on the size effect and on the life-cycle hypothesis

“…If the size effect is to have a bearing on the earnings-returns relation the two differential coefficients are expected to be significantly different from zero. A similar procedure to test for the size effect has also been employed by Jermakowicz and Tomaszewski (1998).…”

Accounting‐based Valuation of Polish Listed Companies

“…Accounting standards in Poland have developed in response to a number of influences external to the Polish environment, such as the German Code, the French Napoleonic Code, the Soviet accounting system, and more recently the Directives of the EU, and the IAS. Several authors have made attempts to describe the development of Polish accounting standards including Berry and Jaruga (1985), Jaruga (1992), Krzywda, Bailey and Schroeder (1994), Rolfe and Doupnik (1995), Adams and McMillan (1997), Jermakowicz and Gornik-Tomaszewski (1998).…”

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“…There may be differences of impact of IFRS adoption depending on whether the economy is of developed or developing category. Niskanen et al [31 and 32] and Bartov et al [20] are some studies anchored in developed economy while Jermakowicz and Gornik-Tomaszewski, [33], ElShamy and Al-Qenae, [34], El-Shamy and Kayed, [35] and Chamisa et al [16] are some investigations in developing countries. It is therefore possible to view another four dimensions that analytical studies may focus.…”