Changing Business Environment and the Value Relevance of Accounting Information

Virginia Cortijo ； Dan Palmon ； Ari Yezegel

《Advances in Quantitative Analysis of Finance and Accounting》 7期 (2009/06) Pp. 49-69

https://doi.org/10.6293/AQAFA.2009.07.03

並列摘要

The R^2 of yearly regressions of prices on Earnings per Share (EPS) and Book Value per Share (BVPS) has commonly been used to measure the value relevance of accounting information. However, Brown, Lo & Lys (1999) analytically show that the scale effects that are present in levels regressions increase the R-square value and this causes it to be an unreliable measure of relevance. Accordingly, this study examines the value relevance of accounting using a different methodology that does not rely on R^2. Specifically, we measure value relevance using price deflated residuals derived from the estimation of the Ohlson (1995) valuation model. Empirical results based on this methodology clearly indicate the presence of a downward trend in the relevance of accounting during the past 51 years. Further, a comparison of High-Tech companies versus Low-Tech companies suggests accounting information to be less value relevant for companies belonging to high technology industries.

並列關鍵字

Capital markets ； Financial reporting ； Equity Valuation ； Econometric models

參考文獻

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