Valuing Loss Firms

Joos, Peter R.; Plesko, George A.

doi:10.2139/ssrn.562043

Cited by 74 publications

(140 citation statements)

References 14 publications

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“…The incremental contribution of R&D to the model's R 2 is particularly noticeable in the PP and PL contexts, i.e., in successful or high growth opportunities firms (as discussed in Section 5.1). This is consistent with the findings in prior literature (e.g., Lev and Sougiannis 1996;Chan et al 2001;Joos and Plesko 2005;Darrough and Ye 2007).…”

Section: Data Insupporting

confidence: 93%

Searching for value relevance of book value and earnings: a case of premium versus discount firms

Aleksanyan

Karim

2012

Rev Quant Finan Acc

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Section: Data Insupporting

confidence: 93%

Searching for value relevance of book value and earnings: a case of premium versus discount firms

Aleksanyan

Karim

2012

Rev Quant Finan Acc

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“…Moreover, prior studies have evidenced significant differences between the earnings coefficients of loss-and profit-making companies (Hayn, 1995;Joos & Plesko, 2005). To control for such differences, a binary variable LOSS is used, which equals one if the company is loss-making and zero otherwise.…”

Section: = α0 + A1bvi + A2nibti + εImentioning

confidence: 99%

Goodwill under IFRS: Relevance and disclosures in an unfavorable environment

Baboukardos

Rimmel

2014

Accounting Forum

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The accounting treatment of purchased goodwill under IFRS has been severely criticized due to the extensive use of fair value accounting. The purpose of this study is to enrich the ongoing debate upon this issue by drawing attention to the market valuation implications of goodwill in a country outside the Anglo-Saxon accounting paradigm, where the application of fair value accounting has been seen as more problematic. The results indicate that, in the case of purchased goodwill, fair value accounting generates relevant accounting numbers but only in companies that comply highly with IFRS disclosure requirements.

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“…The liquidation option theory has been questioned by more recent studies, for instance, by Joos and Plesko (2005) and Darrough and Ye (2007). Joos and Plesko (2005) find that losses often are rather persistent, and that larger persistent losses actually can correspond to higher stock returns.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

“…Several studies propose that negative earnings (losses) have a very low association with contemporaneous stock returns (Basu, 1997;Darrough and Ye, 2007;Hayn, 1995;Joos and Plesko, 2005). The explanations for this phenomenon are generally related to earnings persistence.…”

Section: Introductionmentioning

confidence: 99%

The value relevance of losses revisited: the importance of earnings aggregation

Beisland

2011

GBER

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Prior research has suggested that earnings explain a larger portion of the variation in stock returns when disaggregated into components. This study shows that the increase in explanatory power stems primarily from disaggregation of negative earnings. When accounting earnings are sufficiently disaggregated into items, there is no longer a statistical difference in the value relevance of positive and negative earnings. Thus, negative earnings are also useful to stock investors. The findings are attributed to earnings persistence; even if losses are not persistent on an aggregate level, it may be the case that individual earnings items can provide information with respect to the future cash flow-generating capabilities of the firm. *I would like to thank Frøystein Gjesdal, Kjell H. Knivsflå, John C. Langli, Peder FredslundMøller, Frank Thinggaard, Ken Peasnell and three anonymous referees for helpful suggestions and comments. JEL Classification Code: M41 Accounting

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Valuing Loss Firms

Cited by 74 publications

References 14 publications

Searching for value relevance of book value and earnings: a case of premium versus discount firms

Searching for value relevance of book value and earnings: a case of premium versus discount firms

Goodwill under IFRS: Relevance and disclosures in an unfavorable environment

The value relevance of losses revisited: the importance of earnings aggregation

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