Value Relevance of Book Value and Earnings: Evidence from Two Different Financial Reporting Regimes

Kadri, Mohd Halim; Aziz, Ramlan; Ibrahim, Muhd Kamil

doi:10.1108/19852510980000638

Cited by 32 publications

(6 citation statements)

References 18 publications

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“…This result implies that the accounting information of earnings and book value are irrelevant and insignificant for the decision-making purposes of foreign investors. The result is in line with Kadri et al (2009), which pointed out that earnings are irrelevant in the Malaysian capital market.…”

Section: Contemporary Management Research 247supporting

confidence: 87%

Earnings Quality and Foreign Investors in Gulf Cooperation Council Countries

Ani

2021

CMR

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This study aims to measure the earnings quality (EQ) in the Gulf Cooperation Council (GCC) countries using a sample of 1827 firm-year observations from 2008 to 2016 by using nine EQ measures. These measures are persistence, predictability, value relevance, earnings response coefficient (ERC), smoothness, earnings surprise, accrual quality, loss recognition timeliness and conservatism. The study also examines the effect of these nine EQ measures on attracting foreign investors. Data are collected from Capital IQ database, and some other data are calculated manually from the capital markets and firms in each country. In this quantitative research, the sample is analysed by using descriptive statistics, correlation, and generalized least squares (GLS) regression to verify the hypotheses and analyse the effect of EQ measures on attracting foreign investors. Findings show distinct effects on attracting foreign investors in different countries. Persistence, predictability, ERC, and accrual quality have a positive effect in Oman, whereas value relevance and ERC have a positive effect in Kuwait. Predictability, accrual quality, ERC, and conservatism negatively affect the Kingdom of Saudi Arabia. Finally, loss recognition timeliness, smoothness, and earnings surprise do not have any effect in all GCC countries.

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Section: Contemporary Management Research 247supporting

confidence: 87%

Earnings Quality and Foreign Investors in Gulf Cooperation Council Countries

Ani

2021

CMR

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“…(2019) observed that the impact of IFRS adoption in Brazil is only partial, as their research can find a positive relationship between IFRS adoption and some areas of information quality only. In Malaysia, Kadri et al. (2009) observed that during IFRS adoption, book value per share improved but no change reported on earnings per share.…”

Section: Theory Empirics and Hypothesis Developmentmentioning

confidence: 99%

Asymmetric financial reporting quality and firm size: conditional evidence from an emerging market

Saji

2021

JAAR

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PurposeThe mandatory adoption/convergence of IFRS has increased the information quality of reported earnings in equity markets across the globe. The purpose of the study is to explore whether the mandatory convergence of Indian Accounting Standards (Ind AS) with International Financial Reporting Standards (IFRS) affect the financial reporting quality of listed firms in India.Design/methodology/approachThe sample includes 355 non-financial publicly listed firms on National Stock Exchange (NSE) of India with 1,065 firm-year observations. The authors use models similar to Jones (1991), and DeFond and Jiambalvo (1994) to investigate value relevance in the period “1st January 2017 to 31st December 2019”. The study uses the quantile regression (QR) analysis to verify our hypothesis.FindingsThe findings suggest that IFRS convergence process adds value to accounting quality of reported earnings in Indian stock market. The authors' QR estimations produce collaborating evidence on the uneven impact of IFRS across quantiles and the financial reporting quality skewed in favour of investors of high-valued firms.Research limitations/implicationsThe effects of convergence with IFRS in value relevance of financial statements could be reinforced by considering alternate accrual models and incorporating more accounting measures on an expanded sample of stocks from several global markets.Practical implicationsPresently, convergence of local accounting standards to IFRS in India is only partial. The findings may produce useful insights for regulators and standard setters to further increase the value relevance of financial reports whilst they move towards full convergence.Originality/valueThe study explores the information quality of reported earnings of Indian listed firms in post-IFRS convergence period, which is not properly investigated in the literature. Moreover, the research is unique in terms of applying QR estimations to examine the value relevance of IFRS-converged financial reporting from the emerging market perspective.

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“…Hasil penelitian menunjukkan hubungan antara book values dan earnings adalah relevan (Kadri, Aziz, & Ibrahim, 2009). Besarnya book values dapat mempengaruhi capital gain suatu saham yang tercermin dari nilai return saham.…”

Section: Rasio Keuanganunclassified

Pengaruh Return On Equity (ROE), Debt To Assets Ratio (DAR), Price To Book Value (PBV) Dan Net Profit Margin (NPM) Terhadap Return Saham Perusahaan Sektor Perkebunan Yang Terdaftar Di Bursa Efek Indonesia Periode 2011-2017

Ristyawan

2019

JEBIK

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The financial condition of the plantation companies listed in the Indonesia Stock Exchange during 2011-2017 shows that the company has high asset value. The stock return of companies is experiencing a fluctuating condition. The sample in this study was taken using purposive sampling technique so that obtained 8 research samples. The data analysis tool used in this study is quantitative analysis. The results of the study are as follows: 1) Return on Equity (ROE) has significantly negatif effect on stock returns, 2) Debt to Assets Ratio (DAR) has not significantly positive effect on stock returns, 3) Price to Book Value (PBV) has significantly positive effect on stock returns, 4) Net Profit Margin (NPM) has not significantly positive effect on stock returns. In this study the ratio of PBV, and NPM proved to have no significant effect on stock returns, while ROE and DAR had a significant but opposite direction.

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Value Relevance of Book Value and Earnings: Evidence from Two Different Financial Reporting Regimes

Cited by 32 publications

References 18 publications

Earnings Quality and Foreign Investors in Gulf Cooperation Council Countries

Earnings Quality and Foreign Investors in Gulf Cooperation Council Countries

Asymmetric financial reporting quality and firm size: conditional evidence from an emerging market

Pengaruh Return On Equity (ROE), Debt To Assets Ratio (DAR), Price To Book Value (PBV) Dan Net Profit Margin (NPM) Terhadap Return Saham Perusahaan Sektor Perkebunan Yang Terdaftar Di Bursa Efek Indonesia Periode 2011-2017

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