Valuation of short-lived firms following waves of new listings

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yoshie Saito
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Spillover Effect ◽  
Convincing Evidence ◽  
Equity Financing ◽  
Content Type ◽  
High Expectations ◽  
Listed Firms ◽  
Quality Of Accounting Information

PurposeThe survival rate of newly listed firms is low, and there is evidence of a surge of poorly performing new listed firms leading up to the crash of the dot.com bubble. The author investigates this phenomenon and analyzes investors' ability to understand the quality of accounting information and to adjust their expectations.Design/methodology/approachThe author employs the dividend discount model in conjunction with clean surplus accounting discussed by Ohlson (1995) to compare the value relevance of earnings and research and development (R&D) expenditures for short and longer listed National Association of Security Dealer Automated Quotations (NASDAQ) firms between 1980 and 2014. The author also uses univariate tests and logistic regression to analyze both recently listed and short-listed firms. In this analysis, the author compares the differences in investors' expectations for the first five years for both types of firms.FindingsThe author provides convincing evidence that markets clearly placed lower valuation weights on accounting earnings and R&D expenditures for short-listed firms on NASDAQ. Market participants originally had high expectations for these ventures. But, they gradually understood the lower quality of accounting information and adjusted their expectations downward.Originality/valueThe author’s results show that optimistic expectations along with easy equity financing created a surge of new listings. My analysis of the interplay between the quality of accounting information and investors' expectations indicates a negative spillover effect where investors are overoptimistic about firms that rode on waves of new listings backed by liberal financing. The author shows that analysis of Tobin's Q and negative earnings can separate ill-prepared from longer-listed firms.

scholarly journals Η χρησιμότητα των χρηματοοικονομικών πληροφοριών και η επίδρασή τους στις αποδόσεις των μετοχών

2012 ◽  
Author(s):  
Παναγιώτης Δημητρόπουλος
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Cash Flows ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Quality Of Accounting Information ◽  
Valuation Process ◽  
Banking Institutions

The present doctoral thesis aims to study the issues of value relevance and quality of accounting information within the context of the Greek capital market. Using a sample of Greek listed firms from all business sectors (including banking institutions) and applying alternative methodologies, we examined the main factors (internal and exrternal) which shape and determine the value relevance of accounting information. Our empirical evidence indicate that earnings (more than any other accounting figure) cash flows, common equity and accruals seem to have significant impact on investor‟s desicions and contribute to the valuation process of the Greek listed firms. Also the quality of accounting information seems to be positively affected from the efficiency of corporate governance, the adoption of International Financial Reporting Standards (IFRS) and the quality of statutory audits. On the contrary, speculation and the adoption of the euro currency by the Greek government in 2001 have impacted negatively in the quality of accounting information.

scholarly journals Political and financial background in board interlocking and earnings management in Brazil

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cristian Baú Dal Magro ◽  
Roberto Carlos Klann
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Management Practices ◽  
Accounting Information ◽  
Real Earnings Management ◽  
The Political ◽  
Content Type ◽  
Quality Of Accounting Information

Purpose Although board interlocking underlying forces are largely hidden, the purpose of this paper is to provide managers, auditors, analysts, regulators and other stakeholders with sociological board interlocking information considering the different backgrounds of their members. Design/methodology/approach The research sample gathered 1,606 observations from 2010 to 2017. For data analysis, the direct and indirect board interlocking linkages, considering the different backgrounds of board members, established the centrality indicators. Subsequently, the authors used these indicators according to each measured background in the regression models. Findings The results indicate that the political background of board interlocking members is positively related to real earnings management practices, while the financial background has a mitigating effect on such practices. Research limitations/implications The findings suggest that individual skills and interests conveyed across the corporate social network have shaped corporate governance, with distinct impacts on the quality of accounting information. Practical implications The authors conclude that both backgrounds could have implications on agency conflicts, increasing (policy) or reducing (financial) information asymmetry between the company and its various stakeholders, which indicates that the authors must consider sociological and not just economic aspects within corporate governance. Social implications The sociological background of individuals is necessary for the congruence of monitoring mechanisms, and consequently, the quality of accounting information. Originality/value This study examines the influence of the political and financial background of board interlocking members on real earnings management practices in Brazilian publicly traded companies in the International Financial Reporting Standards post-adoption period.

The Impact of IFRS Adoption on the Quality of Accounting Information: Systematic Literature Review

2021 ◽  
pp. 5-15
Author(s):  
Achmad Farid Dedyansyah ◽  
◽  
Sri Pujiningsih ◽  
Satia Nur Maharani ◽  
◽  
...  
Keyword(s):  
Literature Review ◽  
Systematic Literature Review ◽  
Value Relevance ◽  
Accounting Information ◽  
Test Model ◽  
European Continent ◽  
Theoretical Approaches ◽  
Quality Of Accounting Information ◽  
The Impact

The quality of accounting information cannot be separated from the adopted accounting standards. More than 87% of countries worldwide have implemented IFRS standards as financial guidelines in their countries. The goal of IFRS is to make companies more transparent and flexible in producing accounting information based on which users can predict future investment values. The purpose of this article is a systematic literature review on the quality of accounting information associated with adopting IFRS. The sample of this study - 125 articles reviewed in four main classifications: research subject areas, measurement of accounting information quality, theoretical approaches, and research methods. Previous research was obtained from online databases such as Science Direct, Emerald Group, Sage Journal, and Taylor & Francis. The PICO framework in this study was applied to minimize bias from previous studies. The analysis results show that average the most articles on the quality of accounting information were found in journals categorized in the accounting field. Most studies have been found on the European continent regarding the quality of accounting information – 52 (37.7%). Determining the quality of accounting information requires several tests. As a result, 49 (38.8%) and 47 (37.1%) articles emphasize the accrual test model and value relevance model in assessing the quality of accounting information. The results show that 56 articles (44.8%) use the regression analysis method to test value relevance, accrual, and timely loss reporting models.

scholarly journals Hedge Accounting in the Brazilian Stock Market: Effects on the Quality of Accounting Information, Disclosure, and Information Asymmetry

2016 ◽  
Vol 27 (71) ◽  
pp. 202-216 ◽  
Author(s):  
Silas Adolfo Potin ◽  
Patrícia Maria Bortolon ◽  
Alfredo Sarlo Neto
Keyword(s):  
Stock Market ◽  
Information Asymmetry ◽  
Value Relevance ◽  
Accounting Information ◽  
Econometric Models ◽  
Hedge Accounting ◽  
Earnings Informativeness ◽  
Information Relevance ◽  
Quality Of Accounting Information

ABSTRACT This paper investigates, in the Brazilian stock market, the effect of hedge accounting on the quality of financial information, on the disclosure of derivative financial instruments, and on the information asymmetry. To measure the quality of accounting information, relevance metrics of accounting information and book earnings informativeness were used. For executing this research, a general sample was obtained through Brazilian companies, non-financial, listed on the Brazilian Securities, Commodities, and Futures Exchange (BM&FBOVESPA), comprising the 150 companies with highest market value on 01/01/2014. Through the general sample, samples were compiled for applying the econometric models of value relevance, informativeness, disclosure, and information asymmetry. The sample for relevance had 758 companies-years observations within the period from 2008 to 2013; the sample for informativeness had 701 companies-years observations with the period from 2008 to 2013; the sample for disclosure had 100 companies-years observations, within the period from 2011 to 2012; the sample for information asymmetry had 100 companies-years observations, also related to the period from 2011 to 2012. In addition to the econometric models, the propensity score matching method was applied to the analyses of the hedge accounting effect on disclosure and information asymmetry. The evidence found for the influence of hedge accounting indicates a relation: (i) positive and significant concerning accounting information relevance and disclosure of derivatives; (ii) negative and significant for book earnings informativeness. Regarding information asymmetry, although the coefficients showed up as expected, they were not statistically significant.

Does institutional ownership affect the value relevance of accounting information?

2020 ◽  
Vol 28 (2) ◽  
pp. 323-342
Author(s):  
Mohamed Omran ◽  
Yasean A. Tahat
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Market Value ◽  
Institutional Ownership ◽  
Financial Leverage ◽  
Content Type ◽  
Book Value ◽  
Share Prices ◽  
Listed Firms ◽  
Positive Effects

Purpose Drawing upon agency theory, this study aims to assess the value relevance (VR) of accounting information released by non-financial firms listed on the Kuwait stock exchange for the period of 2015-2018. Also, the influence of institutional ownership level and other explanatory variables, namely, book value per share, earnings per share, growth in assets and changes in financial leverage on share prices is examined. Design/methodology/approach To test the hypotheses, the Ohlson (1995) model is extended. This study uses panel data analysis and applies appropriate statistical techniques to measure empirical relationships. Findings The results show that the VR of accounting information released by the Kuwaiti non-financial listed firms varies over the period of 2015-2018. Book value and earnings have significant and positive effects on share prices. In recent years, the VR of book value information has been growing, while that of earnings information has been declining. Institutional ownership level has a significant and positive influence on the VR of accounting information released by the Kuwaiti non-financial listed firms. The findings confirm a positive power, signalling growth in assets regarding the share prices. However, no significant relationship between changes in financial leverage and share prices is found. Practical implications The findings of the study provide evidence of the linkage between VR and institutional ownership level, which promotes the understanding of the influence of institutional investors on a firm’s market value. Empirical evidence from Kuwait will have international implications and can serve as a guide for accounting researchers studying other emerging markets. Capital market regulators can provide guidelines in the form of information characteristics and elements of financial statements that need improvement. Finally, the findings assist non-financial listed firms to enhance the quality of accounting information by identifying the strengths and weaknesses in their financial reports. Originality/value This study extends the previous literature by investigating a relatively new set of data in more depth than that has been examined by prior research, which focusses on the relationship between accounting information and the firm’s market value.

scholarly journals The Association: Early Adoption of IFRS and Value Relevance of Accounting Information

2019 ◽  
pp. 9-15
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Early Adoption ◽  
Quality Of Accounting Information ◽  
The Impact

The objective of this article is to analyze the impact of the early adoption of IFRS on the value relevance of accounting information among the CAC 40 listed companies.In our study we adopted the Ohlson (1995) models in order to study the value relevance of accounting information. Our data was collected manually .The period 2002-2004 was used as the pre anticipation of the IFRS and the period 2004-2006 was used as the post anticipation of the IFRS .The problem therefore of our research is the following is: What is the effect of the early adoption of IFRS on the quality of the accounting information?In the study, our estimates focused on two panels: panel A and panel B. After analyzing the various estimates we found that the early adoption of IFRS has enabled companies in panel A, companies which adopted IFRS in an anticipated manner, to provide investors with accounting information with greater value relevance compared to the companies of panel B.Thanks to this study we can confirm that the early adoption of IFRS significantly enhanced the quality of accounting information for panel A.

The impact of corporate governance on earnings quality: evidence from Peru

2019 ◽  
Vol 9 (4) ◽  
pp. 527-541
Author(s):  
Mauricio Melgarejo
Keyword(s):  
Corporate Governance ◽  
Earnings Quality ◽  
Accounting Information ◽  
Content Type ◽  
Good Corporate Governance ◽  
Self Selection ◽  
Quality Of Accounting Information ◽  
Governance Practices ◽  
The Impact

Purpose The purpose of this paper is to explore whether firms with good corporate governance practices in countries with high levels of political and economic uncertainty, such as Peru, present a higher quality of accounting information. Design/methodology/approach This study uses a multivariate regression analysis to investigate the impact of good corporate governance practices on the quality of accounting information for the firms listed in the Lima Stock Exchange (LSE). Findings Firms included in the Good Corporate Governance Index, in the LSE, present more value relevant, more persistent and more conservative accounting reports. These results hold after controlling for a self-selection bias. Originality/value It is the first paper to explore the impact of good corporate practices on earnings quality in Peru. Also, this study uses a two-state regression methodology to control for the self-selection bias in the sample.

scholarly journals The Impact Of Country-Level vs Firm-Level Factors On The Effectiveness Of IFRS Adoption: The Case Of European Union

2011 ◽  
Vol 10 (10) ◽  
pp. 79 ◽  
Author(s):  
Kanogporn Narktabtee ◽  
Suntaree Patpanichchot
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Firm Characteristics ◽  
Firm Level ◽  
Book Value ◽  
Ifrs Adoption ◽  
Country Level ◽  
Quality Of Accounting Information ◽  
Mandatory Adoption

The mandatory adoption of IFRS has been encouraged worldwide, with the objective to enhance the quality of accounting information. However, this effort is challenged by the argument that several factors affecting financial reporting incentives still vary across countries. Also, Gaio (2010) indicates that firm-level factors also have significant explanatory power on earning quality. Therefore, it is doubtful whether the mandatory adoption of IFRS can always lead to better quality of accounting information. This paper examines the effect of country-level and firm-level factors on value relevance of earnings and book value of equity. Among several country-level factors, this paper focuses on investor protection - proxied by anti-director right index (La Porta et al., 1998). In this study, firm-level factors refer to firm characteristics which allow or induce high use of managerial discretion. These characteristics are proxied by firm size, cash flow volatility, sales volatility, and incidence of negative earnings. Different from prior literatures which focus on level of value relevance, this paper examines the effect of country-level and firm-level factors on change in value relevance of earnings and book value of equity, arisen from the mandatory adoption of IFRS in the year 2005. By comparing value relevance of earnings and book value of equity among European Union countries during the years 1999-2007, the results indicate that the adoption of IFRS leads to improvement in value relevance. In addition, both country-level and firm-level factors have significant influence on the degree of improvement in value relevance from the IFRS adoption. In particular, the firms which operate in a weak investor protection environment and have firm characteristics which induce or allow the managers to use high managerial discretion (i.e., small size, high cash flow volatility, high sales volatility, and frequent incidences of loss) do not experience significant improvement in value relevance from IFRS adoption. The results imply that the IFRS adoption does not ensure better quality of accounting information. The improvement of the quality of accounting information depends on both country and firm characteristics, which influence financial reporting incentives.

scholarly journals KUALITAS INFORMASI AKUNTANSI SEKTOR INDUSTRI SEBELUM DAN SELAMA PANDEMI COVID-19: STUDI NEGARA-NEGARA ASEAN

2021 ◽  
Vol 26 (2) ◽  
pp. 1-8
Author(s):  
Slamet Sugiri ◽  
Retno Yuni Nur Susilowati
Keyword(s):  
Information Quality ◽  
Value Relevance ◽  
Earnings Quality ◽  
Accounting Information ◽  
The Philippines ◽  
Accrual Quality ◽  
Quality Of Accounting Information ◽  
Asean Countries ◽  
The Impact

The purpose of this paper is to examine the effect of the Covid-19 pandemic on the quality of accounting information in terms of accrual quality and value relevance. This study uses a sample of companies listed on stock exchanges in five ASEAN countries, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, for the period 2009-2020. OLS pooled regression model was estimated with panel data. The results showed that the COVID-19 pandemic impacted earnings quality, but not on value relevance of accounting information quality. Enforcement of accounting and auditing standards can reduce the impact of the COVID-19 pandemic in improving earnings quality. However, investor protection is not adequate to improve the quality of accounting information during the COVID-19 pandemic.

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