Heterogeneous Investment Opportunities in Multiple-Segment Firms and the Incremental Value Relevance of Segment Accounting Data

2001 ◽  
Author(s):  
Peter F. Chen ◽  
Guochang Zhang
Keyword(s):  
Value Relevance ◽  
Accounting Data ◽  
Incremental Value ◽  
Investment Opportunities

Heterogeneous Investment Opportunities in Multiple-Segment Firms and the Incremental Value Relevance of Segment Accounting Data

2003 ◽  
Vol 78 (2) ◽  
pp. 397-428 ◽  
Author(s):  
Peter F. Chen ◽  
Guochang Zhang
Keyword(s):  
Value Creation ◽  
Value Relevance ◽  
Growth Potential ◽  
Capital Investments ◽  
Firm Level ◽  
Accounting Data ◽  
Incremental Value ◽  
Investment Opportunities ◽  
Level Information ◽  
Segment Data

Applying a real-options-based valuation approach, we develop and test a model that addresses the incremental value relevance of segment data beyond firmlevel accounting data. Prior studies (e.g., Zhang 2000; Biddle et al. 2001) show that equity valuation requires accounting data (in part) because accounting provides signals that guide capital investments underlying value creation. In this study, we establish that the usefulness of segment data beyond aggregate data relates to heterogeneity of investment opportunities across segments, caused by divergences of segment profitability and growth potential. Empirical results are consistent with the model's predictions. We also assess the magnitude of the valuation impact of segment information relative to that of firm-level information.

scholarly journals Value relevance of accounting data and financial crisis in Europe: an empirical analysis

2012 ◽  
Vol 2 (2) ◽  
pp. 201 ◽  
Author(s):  
Alain Devalle
Keyword(s):  
Financial Crisis ◽  
Positive Impact ◽  
Value Relevance ◽  
Net Income ◽  
Accounting Data ◽  
Book Value ◽  
Crisis Period ◽  
Comprehensive Income ◽  
The Impact ◽  
The Relationship

This paper aims at verifying the relationship between book value and  market value for a four years period (2006-2009) in Europe, under IFRS. In particular, I used value relevance approach to measure whether net income or comprehensive income are more useful to understand the relationship between market data and financial data. Moreover, the paper analyzes the impact of financial crisis on the value relevance of accounting data. The examination period runs from a pre-crisis period (2006-2007) to an in-crisis period (2008-2009). Results shows that comprehensive income is more value relevant than net income. Furthermore, the financial crisis has a positive impact on value relevance.  

Costs of Equity and Earnings Attributes

2004 ◽  
Vol 79 (4) ◽  
pp. 967-1010 ◽  
Author(s):  
Jennifer Francis ◽  
Ryan LaFond ◽  
Per M. Olsson ◽  
Katherine Schipper
Keyword(s):  
Value Relevance ◽  
Positive Association ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Operating Cycle ◽  
Accrual Quality ◽  
Accounting Data ◽  
Earnings Attributes ◽  
The Cost

We examine the relation between the cost of equity capital and seven attributes of earnings: accrual quality, persistence, predictability, smoothness, value relevance, timeliness, and conservatism. We characterize the first four attributes as accounting-based because they are typically measured using accounting information only. We characterize the last three attributes as market-based because proxies for these constructs are typically based on relations between market data and accounting data. Based on theoretical models predicting a positive association between information quality and cost of equity, we test for and find that firms with the least favorable values of each attribute, considered individually, generally experience larger costs of equity than firms with the most favorable values. The largest cost of equity effects are observed for the accounting-based attributes, in particular, accrual quality. These findings are robust to controls for innate determinants of the earnings attributes (firm size, cash flow and sales volatility, incidence of loss, operating cycle, intangibles use/intensity, and capital intensity), as well as to alternative proxies for the cost of equity capital.

scholarly journals A Reexamination of Earnings Persistence on the Incremental Value Relevance of Earnings Levels and Earnings Changes

2018 ◽  
Vol 8 (2) ◽  
pp. 126
Author(s):  
Simon Yang
Keyword(s):  
Stock Market ◽  
Stock Returns ◽  
Value Relevance ◽  
Relevant Information ◽  
Earnings Persistence ◽  
Incremental Value ◽  
Complementary Value ◽  
The U.S

This study reexaminesthe role of earnings persistence as to understand the incremental value relevance of earnings levels and earnings changes in explaining stock returns in the stock market of U.S. The results show that earnings levels and earnings changes together provide the higher value relevant information than each earnings variable alone in explaining stock returns. An increase in earnings persistence, approximated by different time-serial and firm-specific measures, puts more (less) value relevant weight on earning changes (levels). However, the complementary value relevance between earnings levels and earnings changes is somehow weak, implying that a possibly deteriorating valuation role for earnings levels and earnings changes may occur in the recent years for the U.S. stock market.

scholarly journals RELEVANSI NILAI DAN KEMUNGKINAN DETERIORASI: KAJIAN LITERATUR SISTEMATIK

2020 ◽  
Vol 7 (1) ◽  
pp. 107-123
Author(s):  
Randy Kuswanto
Keyword(s):  
Value Relevance ◽  
Future Prospect ◽  
Historical Information ◽  
Incremental Value ◽  
Other Information ◽  
Ohlson Model

The paper presents the review of the value relevance literatures used Ohlson model (1995). The popularity of value relevance topic nowadays is principally driven by the adoption IFRS which changed how companies measure its income and assets. Although this topic is still in debate whether it useful or not, this paper tried to conclude a summary from many prior value relevance researches. First, I seek to review some of the significant literature on value relevance during 2009-2019. The emphasis is on results and empirical contributions relating incremental value relevance. The second part of this paper is discussion about eight different studies from more than 10 countries about evidence of value relevance phenomenon in their setting. This paper finds that the concept of value relevance really exists in many countries but it is deteriorating / declining over the period. Further research could test other information to prevent this deterioration of value relevance such as future prospect attributes rather than historical information only

scholarly journals THE MEDIATION INFLUENCE OF VALUE RELEVANCE OF ACCOUNTING INFORMATION, INVESTMENT DECISION AND DIVIDEND POLICY ON THE RELATIONSHIP BETWEEN PROFITABILITY AND THE COMPANY’S VALUE

2017 ◽  
Vol 21 (2) ◽  
pp. 170 ◽  
Author(s):  
Harnovinsah Harnovinsah ◽  
Sustari Alamsyah
Keyword(s):  
Dividend Policy ◽  
Value Relevance ◽  
Investment Decision ◽  
Accounting Information ◽  
Sampling Technique ◽  
Negative Influence ◽  
Positive Influence ◽  
Analysis Technique ◽  
Investment Opportunities ◽  
The Relationship

This study aimed to analyze the influence of profitability on the company's value, and determine whether this influence intervenes the value relevance of accounting information, investment opportunities and dividend policy, assuming that investors act rationally so that the fundamental aspects of the financial statements become major factor in the shares investment decision. The contribution of this research is to provide input to the management about the importance of maintaining and improving performance in order to give satisfaction to investors and provide expectations for the return on investment which can ultimately increase the company’s value. This study design is causality with the unit of analysis is the samples taken by purposive sampling technique on a population of listed companies on the IDX Kompas 100 index from 2011 - 2014. The analysis technique used is Path Analysis. The results from this study are: 1. Profitability has significant and positive influence on the company’s value; 2. Profitability has no significant and positive influence on the value relevance of accounting information; 3. Profitability has negative and significant influence on investment opportunities; 4. Profitability has significant and positive influence on the dividend policy; 5. The value relevance of accounting information has significant and negative influence on the company’s value; 6. The investment opportunities have no significant and positive influence on company’s value; 7. Dividend policy has no significant and positive influence on company’s value; 8. The value relevance of accounting information, investment opportunities and dividend policy have not been able to mediate the influence of profitability on company’s value.

scholarly journals Empirical Evidence on the Value Relevance of Brand Values across Countries

2018 ◽  
Vol 11 (2) ◽  
pp. 197
Author(s):  
Grazia Dicuonzo ◽  
Andrea Perrone ◽  
Vittorio Dell'Atti
Keyword(s):  
Stock Prices ◽  
Intangible Assets ◽  
Value Relevance ◽  
Empirical Studies ◽  
Balance Sheet ◽  
Business Success ◽  
Accounting Data ◽  
Related Information ◽  
Consulting Firms ◽  
Brand Values

Stock prices reflect firms-related information differently depending on the environmental and institutional context. However, previous empirical studies test mainly accounting data. Since intangible assets became a crucial element for business success and brands are considered critical for value creation, correlated disclosure is proven to be value relevant for investors. The majority of accounting standards do not allow to recognize internally generated intangible assets in the balance sheet and therefore more and more practitioners, both investors and analysts, use brand values provided by third independent parties, such as consulting firms. The purpose of this paper is to investigate whether and how brand-related information differs across countries testing the value relevance of brand values published in Brand Finance’s Reports. This study aims to open a new stream of literature regarding the value relevance of non-accounting information across countries.

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