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.

scholarly journals Is There Any Value in the Banks Brand?

2018 ◽  
Vol 13 (12) ◽  
pp. 261
Author(s):  
Emanuel Bagna
Keyword(s):  
Stock Prices ◽  
Banking Sector ◽  
Value Relevance ◽  
Brand Value ◽  
Generation Process ◽  
Business Combinations ◽  
Allocation Process ◽  
Independent Expert ◽  
Brand Values ◽  
A Company

Traditionally the literature show that public brand value estimates (such as the ones published by Interbrand, Brand Finance or Brand Z), in the context of industrial quoted companies, are incorporated in stock prices, implying that brands significantly contributes to the value generation process in a company. No such study was carried out at the level of the banking sector. This could be due to the attribution of a marginal importance of brands, among other intangible assets, in the banking sector, as highlighted by the literature. In more recent years more and more evidences give evidence of the importance of brands in banking sector; it should be noted that: - many banks, as a result of the Purchase Price Allocation process - PPA (pursuant to IFRS 3 Business Combinations) consequent to banking aggregations (mergers or acquisitions), have booked in their financial statements (separate or consolidated) brand values; - reports published by independent parties such as Brand Finance, publishes brand values specifically for the banking sector. The aim of this article is therefore to assess if the brand contributes to the value generation process in the banking sector. To test our hypothesis we run a regression on a European sample between market capitalization of major banks and their brand value published by independent expert Brand Finance from 2008 to 2017, with a classic value relevance analysis. Our results demonstrate that brand contributes to the value generation process in the banking sector.

scholarly journals The Value Relevance and Reliability of Brand Assets Recognized by U.K. Firms

2004 ◽  
Vol 79 (1) ◽  
pp. 151-172 ◽  
Author(s):  
Sanjay Kallapur ◽  
Sabrina Y. S. Kwan
Keyword(s):  
Stock Price ◽  
Intangible Assets ◽  
Value Relevance ◽  
Financial Statements ◽  
Price Reaction ◽  
Market Values ◽  
Brand Recognition ◽  
Brand Values ◽  
Stock Price Reaction ◽  
Relevance And Reliability

We examine the value relevance and reliability of brand assets recognized by 33 U.K. firms, and the stock price reaction to the announcement of brand capitalization. We find that brand assets are value relevant, i.e., associated with market values. However, the market capitalization rates of brands of firms with low contracting incentives are higher than those of firms with high contracting incentives to capitalize and overstate brand values. Thus, there could be substantial differences in the extent of bias or error in brand valuations of firms with different levels of contracting incentives, i.e., brand asset measures might not be reliable. The stock price reaction during the 21 days surrounding the first announcement of brand recognition is significantly positively associated with the recognized brand amount. However, the brand coefficient is only a small fraction of what would be expected if markets did not impute any value to brands before firms recognized them. Few previous value-relevance studies have examined intangible assets recognized in financial statements, and none have examined the effects of contracting incentives on the reliability of the reported values of intangible assets.

The influence of IFRS mandatory adoption on value relevance of intangible assets in Italy

2020 ◽  
Vol 21 (3) ◽  
pp. 415-436
Author(s):  
Michela Cordazzo ◽  
Paola Rossi
Keyword(s):  
Intellectual Property ◽  
Research And Development ◽  
Stock Prices ◽  
Intangible Assets ◽  
Value Relevance ◽  
Accounting Standards ◽  
Content Type ◽  
Ifrs Adoption ◽  
Start Up ◽  
The Impact

PurposeFollowing the mandatory IFRS adoption in 2005, the Continental European accounting systems changed. This study investigates if it influenced the value relevance of intangible assets in Italy.Design/methodology/approachTo measure the value relevance of intangible assets of non-financial firms listed on Borsa Italiana from 2000 to 2015, this study isolates the impact of several classes of intangible assets on stock prices and then classifies firms according to intangible asset intensity.FindingsGoodwill, intellectual property and other rights, start-up costs or other intangible assets are significantly correlated with stock prices when Italian accounting standards were applied prior to 2005, whereas research and development expenditures are not associated with stock prices. The mandatory IFRS adoption has exerted positive effects only for goodwill and research and development expenditures, and it is negative for start-up costs. Further, when intangible-intensive firms are considered in the post-IFRS adoption period, declining value relevance exists relative to intellectual property and other rights or research and development expenditures; goodwill and other intangible assets increase in value relevance.Research limitations/implicationsThis study is subject to country-specific determinants and firm-specific characteristics. It treats accounting standards as exogenous, and the classification reflects the concentration of intangible assets in an industry. By relying on investors’ assessments of risk, it does not sufficiently explore the risk conveyed by future abnormal earnings and earnings volatility.Practical implicationsThis study offers insights for measuring and reporting intangible assets, by specifying that their value relevance depends on their level and aggregation.Originality/valueThis study investigates the value relevance of intangible assets in the post-IFRS period, in reference to intangible-intensive firms. It also divides intangible assets into several classes to specify the value relevance of goodwill.

scholarly journals Value relevance of Accounting Information and its Impact on Stock Prices: Case Study of Listed Banks at Karachi Stock Exchange

2014 ◽  
Vol 1 (3) ◽  
pp. 6-9 ◽  
Author(s):  
Khurram Shehzad ◽  
Aisha Ismail
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Banking Sector ◽  
Value Relevance ◽  
Stock Exchange ◽  
Accounting Information ◽  
Relevant Information ◽  
Accounting Data ◽  
Economic Decisions ◽  
Future Events

This study primary investigates the value relevance of accounting information in banking sector of Pakistan. The study employed the pooled regression technique on nineteen private banks from the period of 2008 to 2012. The findings show that earning per share is more value relevant than book values, while accounting data explains a high proportion of the stock price. The relevant information is such that it influences the economic decisions of users by helping them evaluate past, present and future events.

scholarly journals The Impact of the Disclosed R & D Expenditure on the Value Relevance of the Accounting Information: Evidence from Greek Listed Firms

Mathematics ◽  
2020 ◽  
Vol 8 (5) ◽  
pp. 730 ◽  
Author(s):  
Petros Kalantonis ◽  
Sotiria Schoina ◽  
Spyros Missiakoulis ◽  
Constantin Zopounidis
Keyword(s):  
Stock Prices ◽  
Value Relevance ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Empirical Studies ◽  
Accounting Information ◽  
Listed Firms ◽  
Prior Literature ◽  
Athens Stock Exchange ◽  
The Impact

Although many empirical studies have focused on R & D performance models for markets globally, the available financial information for R & D expenditure is limited. In other words, can we assume that the reported accounting information for R & D investment is adequate and valuable? This study empirically investigates the effect of R & D reported information on the value relevance of the accounting information of firms’ financial statements. Specifically, using Ohlson’s equation, it is examined whether changes in stock prices are explained better when R & D factors are included in models, in conjunction with changes in book value and abnormal earnings. We focus on listed firms on the Athens Stock Exchange in order to explore whether R & D expenses are value relevant, in a market which has been affected for a long period by the global economic crisis of 2007. In our findings, we observe that the reported R & D expenses do not have any significant influence on the investors’ choices, in contrast to expectations based on the prior literature. Moreover, the panel data analysis employed in the paper overcomes common methodological problems (such as autocorrelation, multicollinearity, and heteroscedasticity) and allows the estimation of unbiased and efficient estimators.

scholarly journals RELEVANSI NILAI AKUNTANSI AKRUAL VERSUS KAS

2020 ◽  
Vol 19 (1) ◽  
pp. 183-197
Author(s):  
Muhammad Ali Fikri ◽  
Zuhrotul Isnaini ◽  
Rahmi Sri Ramadhani
Keyword(s):  
Cash Flow ◽  
Capital Market ◽  
Stock Prices ◽  
Value Relevance ◽  
Balance Sheet ◽  
Accounting Information ◽  
Measurement Methods ◽  
Qualitative Approach ◽  
Independent Variable ◽  
The Relationship

Value relevance specifically explains the relationship between the dependent variable, which is based on the price of a security, and the independent variable of accounting information. There are two common measurement methods used by investors to determine the value of accounting information, namely the profit and loss approach and the balance sheet approach which are both accrual-based. This study uses a qualitative approach, which employed respondents of lecturers of Capital Market subjects, Accountants/consultants, and members of the IAI of NTB Region. The results of the study generally states that the accrual approach has a small impact on changes in stock prices and different from the cash flow.

The value relevance of financial instruments disclosure: evidence from Jordan

2016 ◽  
Vol 24 (4) ◽  
pp. 445-473 ◽  
Author(s):  
Yasean Tahat ◽  
T. Dunne ◽  
S. Fifield ◽  
D. Power
Keyword(s):  
Value Relevance ◽  
Balance Sheet ◽  
Fair Value ◽  
Listed Companies ◽  
Financial Instruments ◽  
Policy Makers ◽  
Content Type ◽  
Market Values ◽  
Related Information ◽  
Ifrs 7

Purpose The purpose of this paper is to: examine the value relevance of financial instruments disclosure (FID) provided by Jordanian listed companies under International Financial Reporting Standard (IFRS 7) as compared to that supplied under IAS 30/32; provide evidence about the value relevance of high vs low levels of FID; and investigate which components of FI-related information are more value relevant. Design/methodology/approach A sample of 70 Jordanian listed companies is used in this monograph. A disclosure index checklist was constructed to measure FI information provided by the sample companies. In addition, a valuation model is employed to test the association between FID and market value. Findings Although evidence is provided that FI information was value relevant over the two periods of investigation, the information supplied after the implementation of IFRS 7 was more strongly associated with market values. An analysis of the sub-components of FID reveals that the details about balance sheet, fair value and risk information matter when valuing equity. Overall, the results indicate that investors value FI-related information when making their equity pricing decisions. The result suggests that compliance with IFRS mandatory disclosure requirements does produce relevant financial statements. Research limitations/implications The results of the current study have a number of implications for policy makers. First, they provide a great deal of insight for the IASB about the relevance of its standards to countries outside the western context. In addition, the findings provide valuable insights for policy makers in Jordan who are concerned about the implications of mandatory disclosures. Originality/value The analysis of FID in developing countries in general, and in Jordan in particular, has been overlooked by the extant literature and therefore this study is the first of its kind to examine this research issue for a sample of Jordanian firms.

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.  

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