Research on the Income Volatility of Listed Banks in China: Based on the Fair Value Measurement

Sun, Pingsheng; Liu, Xiaoyan; Cao, Yuan

doi:10.5539/ibr.v4n3p228

Cited by 6 publications

(3 citation statements)

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“…In this regard, previous empirical studies linked high ranks of earnings volatility with FVA (Bernard et al, 1995;Barth et al, 1995;Barth (2004); Hodder et al, 2006;Plantin et al, 2008;Magnan, 2009;Solé et al, 2009;Sun et al, 2011). Barth (2004) pointed out that financial statement volatility itself is not a signal of defective financial reporting.…”

Section: Literature Reviewmentioning

confidence: 98%

Fair value accounting and earnings quality (EQ) in banking sector: Evidence from Europe

Paoloni¹,

Paolucci²,

Menicucci³

2017

Afr. J. Bus. Manage.

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This research investigates the influence of fair value accounting (FVA) on earnings quality (EQ) inEuropean banking sector over the 2007 to 2016 period. As financial reporting system of banks is particularly exposed to FVA, we assume that FVA may produce significant effects on EQ for European banks. It can be expected that financial instruments' prices are not available in illiquid markets, so Fair Values are estimated by applying valuation models. The application of valuation models (that is, market to model) in estimating Fair Value gives managers the opportunity to manipulate values, and thus could bring through lower quality of earnings. This study develops a multidimensional concept of EQ, and measures it using a set of attributes as persistence, predictability, variability, and earnings smoothing. The findings suggest that European banks with large Fair Value reporting in financial statements have higher rank of aggregate EQ.

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Section: Literature Reviewmentioning

confidence: 98%

Fair value accounting and earnings quality (EQ) in banking sector: Evidence from Europe

Paoloni¹,

Paolucci²,

Menicucci³

2017

Afr. J. Bus. Manage.

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show abstract

“…Al-Khadash & Abdullatif (2009) have discovered that the application of fair value accounting may distort the financial result and mislead the users of financial statements in circumstances when the financial markets are inefficient and uncertain. The studies also prove that the application of fair value accounting leads to the increase in volatility of financial results (Novoa, Scarlata & Solé, 2009;Sun, Liu & Cao, 2011). Some researchers have endeavoured to contribute to resolving the dilemma between fair value accounting and historical cost accounting by investigating the application of fair value measurement and its impact on accounting policy choice.…”

Section: Literature Reviewmentioning

confidence: 99%

The Application of Fair Value Accounting in Bosnia and Herzegovina

Pobrić

2019

ACE

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This study investigates the application of fair value ac- counting in companies in Bosnia and Herzegovina. The study was conducted on a sample of 190 companies. The application of fair value accounting causes a lot of controversy related to the relevance and reliability of fair value information. It is believed that the extent to which fair value measurement is used reflects attitudes of financial statement preparers about the usefulness of this model at its best. The findings of this study sug- gest that most companies in Bosnia and Herzegovina do not have tendency to apply fair value accounting. It is found that half of the companies in the sample do not use fair value accounting at all. Almost half of the com- panies that use fair value accounting use it just because they own assets that require fair value measurement. Fair value accounting is much more used in financial and larger companies than in non-financial and smaller companies. Companies mostly use fair value accounting for the measurement of investment property. However, they use it for the measurement of intangible assets at a minimum. The findings also suggest that the application of fair value accounting increases the uncertainty in fi- nancial statements. The quality of fair value disclosures is very low. Numerous companies do not disclose infor- mation on fair value hierarchy and valuation techniques that were used for fair value measurement. Companies that disclose this information mostly use indirectly ob- servable inputs (Level 2) for fair value measurement and these create a lot of room for earnings management.

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“…The higher the level of stock prices, the higher the possibility of uncertainty of return on investment. Even so, some investors tend to like stocks with a high level because the opportunity to get capital gains will be even greater, on the other hand, the greater the risk that will also be obtained (Sari and Ridwan, 2017), (Pratama and Azzis, 2018), (Sun et al, 2010), (Sun et al, 2011), Many variables affect stock prices. The research aims to examine several variables, among others: the measurement of stock price/company value is influenced by the amount of earnings, namely earnings volatility, net income, comprehensive income on banks in the Indonesia Stock Exchange, the update in this study lies in the comprehensive income variable, due to previous research no one has put that variable yet.…”

Section: Introductionmentioning

confidence: 99%

The Effects of Earnigs Volatility, Net Income and Comprehensive Income on Stock Prices on Banking Companies on the Indonesia Stock Exchange

Rusdiyanto

Narsa

2019

IRMM

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This paper aims to analyze the effect of earnings volatilty, net income and comprehensive income on stock prices on banking companies on the Indonesia Stock Exchange in the period of 2011 to 2016. This paper uses a quantitative approach by using secondary data consisting of 174 data of commercial banks on the Indonesia Stock Exchange, from 2011 to 2016 obtained from the Indonesia Stock Exchange website www.idx.co.id. and www.yahoofinance.com, The analysis technique used in this study is multiple linear regression. hese results indicate that net income has a positive and significant effect on the level 5% statistic of stock prices, and could be used by investors in conducting fundamental analysis to have relevant information. While earnings volatility and comprehensive income do not have an influence on stock prices, meaning that even though high earnings volatility and comprehensive income tend to have no value relevance to stock prices. Previous research has done a lot to tests of earning volatility, net income on stock prices, the results conclude that earnings volatility, net income affect stock prices. So the novelty in this study is to include a comprehensive income variable, because the Statement of Financial Accounting Standards No. 1 changes the terminology of the income statement into a statement of comprehensive income.

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Research on the Income Volatility of Listed Banks in China: Based on the Fair Value Measurement

Cited by 6 publications

References 0 publications

Fair value accounting and earnings quality (EQ) in banking sector: Evidence from Europe

Fair value accounting and earnings quality (EQ) in banking sector: Evidence from Europe

The Application of Fair Value Accounting in Bosnia and Herzegovina

The Effects of Earnigs Volatility, Net Income and Comprehensive Income on Stock Prices on Banking Companies on the Indonesia Stock Exchange

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