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Accounting and capital markets: a survey of the European evidence

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  • Pascal Dumontier
  • Bernard Raffournier
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    Abstract

    The relationship between accounting information and capital markets has been the subject of numerous studies, especially in the US. The purpose of this article is to examine the corresponding evidence in Europe. This review classifies the European literature into three groups: studies of the market reaction to newly released accounting information; studies of the long-term association between stock returns and accounting numbers; studies devoted to the use of accounting data by investors and to the impact of market pressure on accounting choices. The paper reviews and summarizes the main results related to each of these topics. It also addresses some methodological issues and provides suggestions for future research.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/09638180220124761
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal European Accounting Review.

    Volume (Year): 11 (2002)
    Issue (Month): 1 ()
    Pages: 119-151

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    Handle: RePEc:taf:euract:v:11:y:2002:i:1:p:119-151

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Pascal Dumontier & Real Labelle, 1998. "Accounting earnings and firm valuation: the French case," European Accounting Review, Taylor & Francis Journals, vol. 7(2), pages 163-183.
    2. Bernard, Victor L. & Thomas, Jacob K., 1990. "Evidence that stock prices do not fully reflect the implications of current earnings for future earnings," Journal of Accounting and Economics, Elsevier, vol. 13(4), pages 305-340, December.
    3. Dušan Isakov & Christophe Pérignon, 2000. "Evolution of Market Uncertainty around Earnings Announcements," FAME Research Paper Series rp15, International Center for Financial Asset Management and Engineering.
    4. Nikos Vafeas & Lenos Trigeorgis & Xenia Georgiou, 1998. "The usefulness of earnings in explaining stock returns in an emerging market: the case of Cyprus," European Accounting Review, Taylor & Francis Journals, vol. 7(1), pages 105-124.
    5. James Patton & Ivan Zelenka, 1997. "An empirical analysis of the determinants of the extent of disclosure in annual reports of joint stock companies in the Czech Republic," European Accounting Review, Taylor & Francis Journals, vol. 6(4), pages 605-626.
    6. Murphy, Ann B., 1999. "Firm Characteristics of Swiss Companies that Utilize International Accounting Standards," The International Journal of Accounting, Elsevier, vol. 34(1), pages 121-131.
    7. Vergoossen, R. G. A., 1997. "Changes in accounting policies and investment analysts' fixation on accounting figures," Accounting, Organizations and Society, Elsevier, vol. 22(6), pages 589-607, August.
    8. Dechow, Patricia M., 1994. "Accounting earnings and cash flows as measures of firm performance : The role of accounting accruals," Journal of Accounting and Economics, Elsevier, vol. 18(1), pages 3-42, July.
    9. King, Raymond D. & Langli, John Christian, 1998. "Accounting diversity and firm valuation," The International Journal of Accounting, Elsevier, vol. 33(5), pages 529-567.
    10. Denis Cormier & Michel Magnan & Bernard Morard, 2000. "The contractual and value relevance of reported earnings in a dividend-focused environment," European Accounting Review, Taylor & Francis Journals, vol. 9(3), pages 387-417.
    11. Begona Giner & Carmelo Reverte, 1999. "The value relevance of earnings disaggregation provided in the Spanish profit and loss account," European Accounting Review, Taylor & Francis Journals, vol. 8(4), pages 609-629.
    12. Maria Jose Arcas Pellicer & William Page Rees, 1999. "Regularities in the equity price response to earnings announcements in Spain," European Accounting Review, Taylor & Francis Journals, vol. 8(4), pages 585-607.
    13. Subramanyam, K. R., 1996. "The pricing of discretionary accruals," Journal of Accounting and Economics, Elsevier, vol. 22(1-3), pages 249-281, October.
    14. Basu, Sudipta, 1997. "The conservatism principle and the asymmetric timeliness of earnings," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 3-37, December.
    15. Jean-Francois Gajewski & Bertrand Quere, 2001. "The information content of earnings and turnover announcements in France," European Accounting Review, Taylor & Francis Journals, vol. 10(4), pages 679-704.
    16. Jyrki Niskanen & Juha Kinnunen & Eero Kasanen, 1998. "A note on the information content of parent company versus consolidated earnings in Finland," European Accounting Review, Taylor & Francis Journals, vol. 7(1), pages 31-40.
    17. Easton, Peter D. & Harris, Trevor S. & Ohlson, James A., 1992. "Aggregate accounting earnings can explain most of security returns : The case of long return intervals," Journal of Accounting and Economics, Elsevier, vol. 15(2-3), pages 119-142, August.
    18. Thomas Plenborg, 1998. "A comparison of the information content of US and Danish earnings," European Accounting Review, Taylor & Francis Journals, vol. 7(1), pages 41-63.
    19. Ruud Vergoossen, 1993. "The use and perceived importance of annual reports by investment analysts in the Netherlands," European Accounting Review, Taylor & Francis Journals, vol. 2(2), pages 219-244.
    20. Ian Davidson & Chris Mallin, 1998. "The influence of earnings per share on capital issues: some evidence from UK companies," The European Journal of Finance, Taylor & Francis Journals, vol. 4(3), pages 305-309.
    21. Monique, W.M. Donders & Roy Kouwenberg & Ton, C. F. Vorst, 2000. "Options and earnings announcements: an empirical study of volatility, trading volume, open interest and liquidity," European Financial Management, European Financial Management Association, vol. 6(2), pages 149-171.
    22. Huffel, Gert van & Joos, P.P.M. & Ooghe, Hubert, 1996. "Semi-annual earnings announcements and market reaction: Some recent findings for a small capital market," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5661263, Tilburg University.
    23. G. Geoffrey Booth & John Broussard & Otto Loistl, 1997. "Earnings and stock returns: evidence from Germany," European Accounting Review, Taylor & Francis Journals, vol. 6(4), pages 589-603.
    24. Beaver, William & Lambert, Richard & Morse, Dale, 1980. "The information content of security prices," Journal of Accounting and Economics, Elsevier, vol. 2(1), pages 3-28, March.
    25. Teppo Martikainen & Juha-Pekka Kallunki & Jukka Perttunen, 1997. "Finnish earnings response coefficients: the information content of losses," European Accounting Review, Taylor & Francis Journals, vol. 6(1), pages 69-81.
    26. Juha-Pekka Kallunki, 1996. "Stock returns and earnings announcements in Finland," European Accounting Review, Taylor & Francis Journals, vol. 5(2), pages 199-216.
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    Citations

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    Cited by:
    1. Tayeb Saadi, 2007. "EVA Vs. résultat net : Quel contenu informationnel dans le contexte français ?," Post-Print halshs-00544950, HAL.
    2. Yuan Ding & Hervé Stolowy & Michel Tenenhaus, 2004. "Les déterminants de la stratégie de « capitalisation » des frais de recherche et développement en France," Revue Finance Contrôle Stratégie, revues.org, vol. 7(4), pages 87-106, December.
    3. Gaëlle Lenormand & Lionel Touchais, 2008. "La pertinence des actifs incorporels avec les IFRS," Revue Finance Contrôle Stratégie, revues.org, vol. 11(2), pages 173-201, June.
    4. M. Lambert & G. Hübner & P.-A. Michel & H. Olivier, 2006. "International Financial Reporting Standards and Market Efficiency: A European Perspective," LSF Research Working Paper Series 06-04, Luxembourg School of Finance, University of Luxembourg.
    5. André, Paul & Filip, Andrei & Paugam, Luc, 2013. "Impact of Mandatory IFRS Adoption on Conditional Conservatism in Europe," ESSEC Working Papers WP1311, ESSEC Research Center, ESSEC Business School.
    6. M. Lambert & G. Hübner & P.-A. Michel & H. Olivier, 2006. "The Impact of International Financial Reporting Standards on Market Microstructure in Europe," LSF Research Working Paper Series 06-02, Luxembourg School of Finance, University of Luxembourg.
    7. Frédéric Bertrand & Charlotte Disle & Nathalie Gonthier-Besacier & Stéphane Périer & Philippe Protin, 2012. "Business Model Et Information Financiere," Post-Print hal-00691184, HAL.
    8. Frédéric Bertrand & Charlotte Disle & Nathalie Gonthier Besacier & Stéphane Périer & Philippe Protin, 2012. "Business Model et information financière," Post-Print halshs-00853789, HAL.
    9. Patrick Boisselier & Dominique Dufour, 2007. "Comptabilite Et Valorisation A L'Introduction Sur Alternext (2005-2006)," Post-Print halshs-00544917, HAL.
    10. Mohamed Sellami, 2006. "Typologie des déterminants comptables de la valeur : Apports de l'approche économique de l'information dans la mesure de la valeur," Post-Print halshs-00558252, HAL.
    11. Laivi Laidroo & Zana Grigaliuniene, 2012. "Testing for asymmetries in price reactions to quarterly earnings announcements on Tallinn, Riga and Vilnius Stock Exchanges during 2000-2009," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(1), pages 61- 86, July.
    12. Pascal Dumontier, 2004. "Essor des marchés boursiers et croissance de l’immatériel:de nouveaux défis pour la comptabilité," Revue Finance Contrôle Stratégie, revues.org, vol. 7(2), pages 11-32, June.
    13. Serge Agbodjo & Isabelle Martinez, 2012. "La création de valeur actionnariale est-elle pertinente pour la prise de décision d'investissement ? Une étude empirique du SBF250 par secteurs d'activité," Post-Print hal-00935809, HAL.
    14. Eric Demolli & Dominique Dufour, 2009. "Divulgation Financiere Et Transition Aux Ias-Ifrs Le Role Du Comite D'Audit Et Des Auditeurs," Post-Print halshs-00460633, HAL.
    15. Filip, Andrei & Raffournier, Bernard, 2010. "The value relevance of earnings in a transition economy: The case of Romania," The International Journal of Accounting, Elsevier, vol. 45(1), pages 77-103, March.

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