Value relevance of accounting information: comparative study of Indian public and private sector banks

Bhatia, Meena; Mulenga, Mwila J.

doi:10.1504/ijicbm.2019.096922

Cited by 7 publications

(5 citation statements)

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“…This study has used Ohlson's (1995) model to operationalize the dependent variable, consistent with the previous studies (Bhatia & Mulenga, 2019;Kwon, 2018a;Mirza et al, 2019bMirza et al, , 2019c. This study also controlled variables, i.e., firm size, leverage and growth that is in line with previous studies (Mirza et al, 2019b(Mirza et al, , 2019c.…”

Section: Methodology Measurement Of Variablessupporting

confidence: 55%

“…The issue of the decreasing value relevance of EPS and more reliance on BVE for the investment decisionmaking was initially observed by Collins, Maydew, and Weiss (1997), who claimed, value relevance of EPS has been decclined and increase in BVE is observed due to the fact that EPS can be maipulated through acounting policies. Later research by other authors such as, Callao et al (2016), Mostafa (2017) and Whelan and McNamara (2004) also observed similar findings, that EM practices reduces value relevance of EPS (Barth et al, 2018;Bhatia & Mulenga, 2019;Mirza et al, 2020).…”

Section: Introductionsupporting

confidence: 64%

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Value Relevance of Financial Information in Malaysian Listed Firms: Real Earnings Management’s Perspective

Mirza

Abbas²

2022

JAFEE

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Purpose: This study investigates the value relevance of financial information i.e., earnings (EPS), the book value of equity (BVE), and cash flow from operations (CFO). The study further investigates the influence of real EPS management (REM) on the value relevance of financial information because firms are now switching toward real earnings management rather than accrual-based earnings management (ABEM). Methodology: A sample of 250 public listed companies was used to test the hypotheses over the period 2014-2018. Using Driscoll-Kraay regression. Findings: This study finds that earnings, the book value of equity, and cash flow from operations are value relevant, and real earnings management moderates the value relevance of EPS, book value of equity, and cash flow from operations. Implications: This study has specific policy implications for regulators to push auditors to detect real earnings management to improve the value relevance of financial information.

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Section: Methodology Measurement Of Variablessupporting

confidence: 55%

Section: Introductionsupporting

confidence: 64%

Value Relevance of Financial Information in Malaysian Listed Firms: Real Earnings Management’s Perspective

Mirza

Abbas²

2022

JAFEE

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“…Both internal bank-specific attributes, such as the quality of assets, capital, nontraditional bank activities, management insights, liquidity, and bank size, etc., and external macroeconomic determinants, such as economic growth, financial crisis, and inflation, etc., are the influential variables of profitability. The majority of the literature on these subjects has indicated that the stated determinants held a clear impact on bank profitability globally (Sufian and Habibullah 2008;Athanasoglou et al 2008;Bhatia et al 2012;Nisar et al 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

Bank-Specific and Macroeconomic Determinants of Profitability of Islamic Shariah-Based Banks: Evidence from New Economic Horizon Using Panel Data

Gazi,

Karim,

Senathirajah

et al. 2024

Economies

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The purpose of this study is to analyze significant variables that permit us to ascertain the profitability of Bangladeshi Shariah-based banks. In doing so, two profitability measurements, namely, return on asset (ROA) and return on equity (ROE), have been used as dependent variables, while capital adequacy, asset management quality, operational efficiency, credit risk, liquidity, and the size of the bank have been considered as bank-specific independent variables. In addition, the rate of interest, inflation, and GDP growth rate have also been taken as macroeconomic independent variables. This study examined panel data of eight Shariah-based Islamic banks over a thirteen-year period spanning from 2010 to 2022, applying different kinds of linear regression models, including pooled ordinary least squares (OLS), fixed effects, and random effects. Subsequently, the generalized method of moments (GMM) approach is also applied to assess the robustness of the findings. The results revealed that the profitability of Bangladeshi Shariah-based Islamic banks is positively associated with asset management quality, liquidity, and credit risk. In contrast, capital adequacy, operational efficiency, and bank size are negatively correlated with the bank’s profitability. Concerning the macroeconomic factors, the findings indicated a notable positive correlation between the profitability of Shariah-based banks in Bangladesh and both the inflation rate and the interest rate spread. However, this study has also found that the profitability of the sample banks of Bangladesh is not significantly influenced by GDP growth. By providing fresh empirical data, the current research aimed to close a significant vacuum in the body of knowledge on banks and provide important insights for policymakers, managers, and other stakeholders by focusing on particular bank-specific and macroeconomic aspects that influence the profitability of Shariah-based Islamic banks in Bangladesh.

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“…Ahmadi and Bouri (2018) find that earnings and book value are significantly associated with firm value. Under Indian institutional settings, Bhatia and Mulenga (2019) and Khanna (2014) document that earnings influence stock prices, whereas Sharma et al (2012) report that earnings do not influence stock prices, hence having lesser value relevance. The degree to which the Indian capital market makes use of earnings data is an important question that is addressed by this hypothesis: H4.…”

Section: Earnings and Stock Returnsmentioning

confidence: 99%

“…However, unlike prior studies, we are examining the relationship jointly by taking a uniform sample of firms over the same period. Besides, there are numerous studies available on value relevance in developed markets; however, literature is scarce in developing countries (Dorantes Dosamantes, 2013), and this scarcity is found to be higher in India (Bhatia and Mulenga, 2019). Therefore, the unique Indian capital market's features and related literature in developing nations motivate us to conduct this study under the Indian institutional framework.…”

Section: Introductionmentioning

confidence: 99%

Predictive view of the value relevance of earnings in India

Bashir

Bansal

Kumar

2021

JFRA

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Purpose This study aims to examine the value relevance of earnings in terms of predicting the value variables such as cash flow, capital investment (CI), dividend and stock return under the Indian institutional settings. Design/methodology/approach The study used panel Granger causality tests to examine causality relationships among variables and panel data regression models to check the statistical associations between earnings and value variables. Findings Based on a data set of 7,280 Bombay Stock Exchange-listed firm-years spanning over ten years from March 2009 to March 2018, the results show higher sensitivity of earnings toward cash flows, CI, divided and stock return and vice-versa. Further, the findings deduced from the empirical results demonstrate that earnings are positively related to value variables. Overall, the results established that earnings are value-relevant and have predictive ability to forecast the value variables that facilitate investors in portfolio valuation. The results are consistent with the predictive view of the value relevance of earnings. Several robustness checks confirm these results. Originality/value This study brings new empirical evidence from a distinct capital market, India, and provides a new facet to the value relevance debate in terms of its prediction view. The study is among earlier attempts that jointly measure the ability of earnings in forecasting different value variables by taking a uniform sample of firms at the same period. Hence, the study provides a comprehensive view of the predictive ability of reported earnings.

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Value relevance of accounting information: comparative study of Indian public and private sector banks

Cited by 7 publications

References 0 publications

Value Relevance of Financial Information in Malaysian Listed Firms: Real Earnings Management’s Perspective

Value Relevance of Financial Information in Malaysian Listed Firms: Real Earnings Management’s Perspective

Bank-Specific and Macroeconomic Determinants of Profitability of Islamic Shariah-Based Banks: Evidence from New Economic Horizon Using Panel Data

Predictive view of the value relevance of earnings in India

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