The value relevance of earnings and book values in equity valuation: An international perspective ‐ The case of Kuwait

2005 ◽  
Vol 15 (1) ◽  
pp. 68-79 ◽  
Author(s):  
Mostafa A. El Shamy ◽  
Metwally A. Kayed
Keyword(s):  
Value Relevance ◽  
International Perspective ◽  
Equity Valuation ◽  
Book Values

The value relevance of intellectual capital disclosure: empirical evidence from Kuwait

2017 ◽  
Vol 25 (1) ◽  
pp. 22-38 ◽  
Author(s):  
Mishari M. Alfraih
Keyword(s):  
Empirical Evidence ◽  
Financial Reporting ◽  
Intellectual Capital ◽  
Value Relevance ◽  
Practical Implication ◽  
Listed Companies ◽  
Annual Reports ◽  
Equity Valuation ◽  
Content Type ◽  
Market Participants

Purpose Drawing on market efficiency theory and studies on intellectual capital (IC) disclosure, this study aims to examine if IC information provided in the corporate annual reports of Kuwait Stock Exchange (KSE) listed companies in 2013 is value-relevant. Design/methodology/approach The analysis is divided into two parts. First, the level of intellectual capital disclosure (ICD) of KSE-listed companies is examined using the content analysis method. Second, the value relevance of financial reporting is examined empirically using Ohlson’s (1995) valuation model. Findings The results reveal that ICD is positively and significantly associated with market value, suggesting that greater ICD is valued by KSE market participants, who incorporate it into their valuation models. Practical implications Given the importance of ICD in enhancing equity valuation, a practical implication of this study is to make managers aware of its positive and significant effect on equity valuation, which may encourage companies to increase their level of disclosure. Originality/value This is the first study of the association between the level of ICD and the value relevance of financial reporting for market participants in Kuwait. It therefore extends and confirms the prior literature by broadening its scope to include frontier markets. Furthermore, it provides empirical evidence in support of recent calls from regulators and professional bodies for information that supplements and complements traditional financial reporting.

scholarly journals The Differential Effect Of Auditor Type on the Value Relevance of Earnings and Book Values: Evidence from Listed Firms in Nigeria

2017 ◽  
Vol 6 (1) ◽  
pp. 187 ◽  
Author(s):  
Asmau Mahmood Baffa ◽  
Jibril Ibrahim
Keyword(s):  
Differential Effect ◽  
Value Relevance ◽  
Stock Exchange ◽  
Seemingly Unrelated Regression ◽  
Image Size ◽  
Audit Firm ◽  
Listed Firms ◽  
Type Variable ◽  
Audit Team ◽  
Book Values

A determining factor of investors’ decision is mostly represented by the auditing of financial statements carried out by a Big4 company, because investors appreciate the quality of the auditing service in terms of image, size and reputation of the auditing firm. This study examines the differential effect of auditor type classified as Single Big4 audit firm; Single Non-Big4 audit firm; and joint audit team of Big4/Non-Big4 audit firms, on the value relevance of earnings and book values of listed firms in Nigeria. A sample of one hundred and seventeen listed (117) firms trading on the floor of Nigerian Stock Exchange from 2009 to 2015 were examined. The study adopted Ohlson model (1995) modified to include auditor type variable and control variables. A simultaneous pooled OLS regression using the Seemingly Unrelated Regression Estimates (SUEST) approach was utilized in running the analysis of all relevant data collected. The findings of the study reveal that while Nigerian investors perceive the earnings of firms audited by a Single Big4 to be of high quality, they seem indifferent as to whether it is audited by a joint audit team of Big4/Non-big4, or a Single Non-Big4 audit firm. The study therefore recommends that investors looking for more value relevant EPS should focus on firms audited by single Big4, since they are more likely to have greater value relevant earnings with stronger positive connection to price.

Effect of eliminating mandatory reconciliation requirements for foreign issuers in the U.S.

2019 ◽  
Vol 17 (2) ◽  
pp. 271-291
Author(s):  
Gaurav Kumar ◽  
Jagjit S. Saini
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Standards ◽  
Discretionary Accruals ◽  
Accrual Quality ◽  
Content Type ◽  
The Usa ◽  
Reported Earnings ◽  
Book Values

Purpose The purpose of this paper is to examine the effect of choice of accounting standards on the value relevance and accrual quality of reported earnings and book values under International Financial Reporting Standards (IFRS) versus US Generally Accepted Accounting Principles (GAAP). Design/methodology/approach The authors examine the effect of choice of accounting standards on the value relevance and accrual quality of reported earnings and book values under IFRS versus US GAAP using 404 firms from 37 countries listed in the USA. They use the modified Jones (1991) model to measure accruals. Findings The authors find that value relevance of the book value of equity is increasing (significantly) when the sample firms use IFRS to prepare their financial statements. They also find some evidence in support of the mediating effect of the choice of accounting standards on the accrual quality of the sample firms. The results of this paper indicate that sample firms with lower accrual quality (larger discretionary accruals) experience higher returns during the fiscal year. However, the authors also find that the positive association between size of discretionary accruals and returns is decreasing in the use of IFRS by the sample firms. Originality/value This paper adds to prior literature on the harmonization of accounting standards and emphasizes the role of accounting standards in the quality of financial reporting. By using the financial data of all foreign registrants listed in the USA, the authors are able to provide deeper and more representative evidence.

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