Product Differentiation, Market Dynamics and the Value Relevance of Trade Payables: Evidence from UK Listed Firms

Afrifa, Godfred Adjapong; Gyapong, Ernest; Monem, Reza

doi:10.2139/ssrn.3250434

Cited by 2 publications

(3 citation statements)

References 54 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In the first measure, we follow Aktas et al (2012) and Ferrando and Mulier (2013) by calculating the ratio of accounts payable scaled by total sales (TC1). In the second measure (TC2), we follow Love et al (2007) , Molina and Preve (2012) , Afrifa et al (2018) , Li et al (2020) and Costa and Habib (2020) by cacluating the ratio of accounts payable (AP) scaled by cost of goods sold (COGS).…”

Section: Methodsmentioning

confidence: 99%

Firm-level trade credit responses to COVID-19-induced monetary and fiscal policies: International evidence

Al‐Hadi

Al-Abri

2022

Research in International Business and Finance

View full text Add to dashboard Cite

Section: Methodsmentioning

confidence: 99%

Firm-level trade credit responses to COVID-19-induced monetary and fiscal policies: International evidence

Al‐Hadi

Al-Abri

2022

Research in International Business and Finance

View full text Add to dashboard Cite

“…Tehran Stock Market survey between the periods of 2000 and 2012, shows that inflation does not have a significant influence on the accounting information content. Afrifa et al (2018) use a sample of 2,559 UK listed firms over the period 2005-2014 and document a positive relationship between trade payables and firm performance, highlighting that trade payables increase (decrease) performance in firms with differentiated products and demand uncertainty (larger market share). Ryu and Won's (2018) study indicates that the efficiency has a positive relationship with the stock price of a firm and decreases (or increases) the value relevance of book value per share or earnings per share.…”

Section: Empirical Reviewmentioning

confidence: 94%

“…Others, however, find that fair value is more relevant to investors (Kirkulak and Balsari, 2009;Enahoro and Jayeoba, 2013), highlighting that current cost accounting stimulates the operating capability of the firm. Put differently, the traditional cost accounting method overstates firm's profitability, dividends and tax pay-outs (Kirkulak and Balsari, 2009;Fodio and Salaudeen, 2012;Bessong and Charles, 2012), thereby misrepresenting the relative financial strengths and viability of the firm (Thies and Sturrock, 1987) by contemporary evidence considers value-relevance and intellectual capital (Chen et al, 2005;Vafaei et al, 2011), product differentiation, market dynamics (Afrifa et al, 2018), competitive advantage and segmental reporting (Mardini et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Has traditional accounting information lost its relevance?

Appiah

Acheampong

2019

JFRA

View full text Add to dashboard Cite

Purpose This paper aims to examine whether traditional accounting information has lost its relevance in the context of sub-Sahara Africa. Specifically, the study examines whether historical cost and inflation-adjusted data are related to the market value of equity and stock returns on the Ghana Stock Exchange (GSE). Design/methodology/approach The authors collect firm-specific data from annual reports of 20 listed firms from the GSE over the period 2007-2012. The authors use ordinary least squares and two stage least square (2SLS) to examine the value relevance of historical and inflation-adjusted income and equity. Findings The results suggest that the market equity is related to both historical-cost and inflation-adjusted earnings. Market return is also associated with both historical-cost and inflation-adjusted earnings and book value. Overall, the authors conclude that inflation-adjusted information content is more value relevant than the traditional cost accounting information. Research limitations/implications The findings are a wake-up call to policymakers and practitioners in formulating financial reporting policies. This study, however, focuses on only non-financial listed firms on the GSE. Thus, the results may not be valid for all companies in Ghana. Practical implications The finding has an implication on the choice of valuation used in the preparation and reporting of financial statements. Accordingly, the authors offer policy directions to financial reporting regulatory authorities to enhance the value relevance of accounting information. Social implications Regulators, especially the GSE may improve life of investors if the recommendations are transformed into directives that will help enhance the quality of financial reporting. Originality/value The findings suggest that inflation-adjusted data are more relevant in countries with extreme inflationary trend and lax International Financial Reporting Standards compliance enforcement. The results also lend support for the current cost accounting theory.

show abstract

Product Differentiation, Market Dynamics and the Value Relevance of Trade Payables: Evidence from UK Listed Firms

Abstract: The version in the Kent Academic Repository may differ from the final published version. Users are advised to check http://kar.kent.ac.uk for the status of the paper. Users should always cite the published version of record.

Cited by 2 publications

References 54 publications

Firm-level trade credit responses to COVID-19-induced monetary and fiscal policies: International evidence

Firm-level trade credit responses to COVID-19-induced monetary and fiscal policies: International evidence

Has traditional accounting information lost its relevance?

Contact Info

Product

Resources

About