The value relevance of unrealized gains and losses recognized under IAS 39

Shamy, Mostafa A. El; Al-Hajri, Meshari O.; Al-Bassam, Sadik

doi:10.1108/ijcoma-06-2014-0066

Cited by 6 publications

(10 citation statements)

References 17 publications

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“…The value relevance (VR) of accounting information has received significant attention in the extant literature in both developed (Barth et al , 1996, 2001) and developing countries (Ahmed, 2015; Tahat and Alhadab, 2017). In terms of Kuwait, several studies have examined it (El Shamy and Al Qenaie, 2005; Al-Faraih et al , 2012; El Shamy et al , 2014); however, these studies do not consider how it might be affected by firm-level characteristics. In this regard, other studies (Cai and Zhang, 2011; Glezakos et al , 2012; Bahreini et al , 2013) identify specific firm characteristics (i.e.…”

Section: Introductionmentioning

confidence: 99%

“…Another reason is that Kuwait is one of the most westernised Arab countries. The business environment in Kuwait has been dynamic, evolving through different economic and political systems, which arguably have affected the VR of financial statements (El Shamy et al , 2014; Almujamed et al , 2017). Further, recent years have witnessed significant changes to the ownership structure of listed firms in the KSE, including the emergence of greater institutional ownership (Al Mutairi et al , 2011; Al-Faraih et al , 2012).…”

Section: Introductionmentioning

confidence: 99%

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Does institutional ownership affect the value relevance of accounting information?

Omran

Tahat

2020

IJAIM

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Purpose Drawing upon agency theory, this study aims to assess the value relevance (VR) of accounting information released by non-financial firms listed on the Kuwait stock exchange for the period of 2015-2018. Also, the influence of institutional ownership level and other explanatory variables, namely, book value per share, earnings per share, growth in assets and changes in financial leverage on share prices is examined. Design/methodology/approach To test the hypotheses, the Ohlson (1995) model is extended. This study uses panel data analysis and applies appropriate statistical techniques to measure empirical relationships. Findings The results show that the VR of accounting information released by the Kuwaiti non-financial listed firms varies over the period of 2015-2018. Book value and earnings have significant and positive effects on share prices. In recent years, the VR of book value information has been growing, while that of earnings information has been declining. Institutional ownership level has a significant and positive influence on the VR of accounting information released by the Kuwaiti non-financial listed firms. The findings confirm a positive power, signalling growth in assets regarding the share prices. However, no significant relationship between changes in financial leverage and share prices is found. Practical implications The findings of the study provide evidence of the linkage between VR and institutional ownership level, which promotes the understanding of the influence of institutional investors on a firm’s market value. Empirical evidence from Kuwait will have international implications and can serve as a guide for accounting researchers studying other emerging markets. Capital market regulators can provide guidelines in the form of information characteristics and elements of financial statements that need improvement. Finally, the findings assist non-financial listed firms to enhance the quality of accounting information by identifying the strengths and weaknesses in their financial reports. Originality/value This study extends the previous literature by investigating a relatively new set of data in more depth than that has been examined by prior research, which focusses on the relationship between accounting information and the firm’s market value.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Does institutional ownership affect the value relevance of accounting information?

Omran

Tahat

2020

IJAIM

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“…The other fundamental accounting information that warrants attention is book value of equity. Value relevance of book value of equity has improved followed by the adoption of IFRS accounting to various studies (e.g., Bao & Chow, 1999; Barth et al, 2008; Beisland & Knivsfla, 2015; Elshamy, Al-Hajri, & Bassam, 2014; Hung & Subramanyam, 2007; Iatridis, 2010; Jermakowicz et al, 2007; Kadri et al, 2009; Kargın, 2013; Türel, 2009). IFRS also have led to a decreased value relevance of book value of equity.…”

Section: Review Of Literaturementioning

confidence: 99%

IFRS Adoption and Value Relevance of Accounting Information: Evidence from a Developing Country

Nijam

Jahfer

2018

Global Business Review

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The purpose of this study is to investigate the impact of International Financial Reporting Standard (IFRS) adoption on value relevance of accounting information in Sri Lanka by comparing value relevance of accounting information in pre- and post-IFRS adoption periods. This study employs Ohlson (1995, Contemporary Accounting Research, 11(2), 661–687) price regression model to explain value relevance of accounting information. It explains market value per share (MVPS) using earning per share (EPS) and book value of equity per share (BVEPS). The pre-IFRS period is designated as 2010 through to 2011, and the post-IFRS period is designated as 2012 through to 2014. The sample comprises 188 firms and 935 firm-year observations which nearly constitute to all firms listed in Colombo Stock Exchange except those not having at least two annual reports before and after the year 2012 and those having extreme and incomplete data. It is found that both BVEPS and EPS significantly and positively explain MVPS during the periods followed by IFRS adoption although EPS was not a significant predictor of MVPS prior to IFRS adoption. Pooled regression with data of both regimes, however, maintains that BVEPS and EPS significantly and positively explain MVPS. Although the overall predictive power of value relevance model improved in the years that followed IFRS adoption, value relevance of BVEPS has declined in post-IFRS implementation. However, the decline in value relevance of BVEPS perhaps has been compensated by improved quality of earning thereby making EPS as a significant predictor of market value of equity in the post-IFRS periods. These findings were not rebutted or changed even at the exclusion of the transitional year of 2012 from the sample. This study contributes to the extant value relevance literature and IFRS studies by investigating the impact of IFRS adoption in a developing economy and for the first time in Sri Lanka.

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“…In other words, the study investigates if comprehensive income is relatively more associated with market price than net income using a methodology developed by Collins et al (1997) that is based on Ohlson (1995) equity valuation model and Theil (1971) technique. This methodology has been used extensively by prior studies (see e.g., Collins, Pincus and Xie 1999;Elshamy & Kayed, 2005;El Shamy, Al-Hajri, and Al-Bassam 2014;and Kanagaretnam, Mathieu and Shehata 2009) to assess the impact of including other comprehensive income on net income on its incremental explanatory power for stock prices.…”

Section: Introductionmentioning

confidence: 99%

Is Comprehensive Income Superior To Net Income In Equity Valuation? Evidence From The Capital Market Of Kuwait

Elshamy

Alyousef

Al-Mudhaf

2019

JABR

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The study examines whether comprehensive income numbers reported under International Financial Reporting Standards (IFRS) have value relevance over net income in equity valuation. We use a sample of firms that are listed in Kuwait Stock Exchange from banking, investment, real estate, industrial, basic materials, telecommunications, consumer services, oil & gas and health care sectors during the years 2012-2015.The study applies a methodology used by Collins, Maydew and Weiss (1997) that is based on Ohlson (1995) equity valuation model and Theil (1971) technique to measure and compare the relative and the incremental explanatory power of comprehensive income and net income. The study provides evidence that comprehensive income is not superior to net income in equity valuation. Reporting other comprehensive income gains and losses as elements of the income statement produces a measure of earnings that decreases the explanatory power of the valuation model; decreases the incremental information content of earnings. Other comprehensive income gains and losses when added as an explanatory variable to the valuation model did not enhance significantly its explanatory power.The results we obtained supports the current requirement by the IFRS and US GAAP of deferring other comprehensive gains and losses and contributes to the literature on the value relevance of other comprehensive income gains and losses in emerging capital markets.

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The value relevance of unrealized gains and losses recognized under IAS 39

Cited by 6 publications

References 17 publications

Does institutional ownership affect the value relevance of accounting information?

Does institutional ownership affect the value relevance of accounting information?

IFRS Adoption and Value Relevance of Accounting Information: Evidence from a Developing Country

Is Comprehensive Income Superior To Net Income In Equity Valuation? Evidence From The Capital Market Of Kuwait

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