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Valuation Effects Of Accounting Information Availability

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Author Info

  • Karol Marek Klimczak

    (Kozminski University - Kozminski University)

  • Grzegorz Szafrański

    (University of Lodz - University of Lodz)

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    Abstract

    In this paper, we extend comparative value relevance research by examining patterns in the value relevance of accounting numbers as a function of the month in which market values are observed. We stimate the residual income model on a sample of stock-exchange listed companies from Germany and France and find dramatically divergent patterns of fit. In France, accounting numbers have strong relevance for market valuation after publication of annual reports in February or March. In Germany, accounting numbers have stronger relevance during the fiscal year. We term the two effects forecast and coincident relevance, respectively. We argue that the divergence in patterns of fit may be a result of limited interim reporting in France before adoption of IFRS.

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    Bibliographic Info

    Paper provided by HAL in its series Post-Print with number hal-00481073.

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    Date of creation: 2010
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    Publication status: Published - Presented, Crises et nouvelles problématiques de la Valeur, 2010, Nice, France
    Handle: RePEc:hal:journl:hal-00481073

    Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00481073/en/
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    Related research

    Keywords: value relevance; accounting earnings; equity valuation; methodology;

    References

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    1. Ding, Yuan & Hervé, Stolowy & Hope, Ole-Kristian & Jeanjean, Thomas, 2005. "Differences between domestic accounting standards and IAS: measurement, determinants and implications," Les Cahiers de Recherche 826, HEC Paris.
    2. Carlos Alves & F. Teixeira Dos Santos, 2008. "Do First and Third Quarter Unaudited Financial Reports Matter? The Portuguese Case," European Accounting Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(2), pages 361-392.
    3. Kothari, S. P. & Shanken, Jay, 2003. "Time-series coefficient variation in value-relevance regressions: a discussion of Core, Guay, and Van Buskirk and new evidence," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 34(1-3), pages 69-87, January.
    4. Jean-Francois Gajewski & Bertrand Quere, 2001. "The information content of earnings and turnover announcements in France," European Accounting Review, Taylor & Francis Journals, Taylor & Francis Journals, vol. 10(4), pages 679-704.
    5. Mitchell A. Petersen, 2005. "Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches," NBER Working Papers 11280, National Bureau of Economic Research, Inc.
    6. Jordan, Ronald J., 1973. "An Empirical Investigation of the Adjustment of Stock Prices to New Quarterly Earnings Information," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 8(04), pages 609-620, September.
    7. Holthausen, Robert W. & Watts, Ross L., 2001. "The relevance of the value-relevance literature for financial accounting standard setting," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 31(1-3), pages 3-75, September.
    8. Ruland, William & Shon, John & Zhou, Ping, 2007. "Effective controls for research in international accounting," Journal of Accounting and Public Policy, Elsevier, Elsevier, vol. 26(1), pages 96-116.
    9. Ray Ball & Lakshmanan Shivakumar, 2008. "How Much New Information Is There in Earnings?," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 975-1016, December.
    10. Bin Ke & Kathy Petroni, 2004. "How Informed Are Actively Trading Institutional Investors? Evidence from Their Trading Behavior before a Break in a String of Consecutive Earnings Increases," Journal of Accounting Research, Wiley Blackwell, vol. 42(5), pages 895-927, December.
    11. 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, Elsevier, vol. 15(2-3), pages 119-142, August.
    12. Helena Isidro & John O'Hanlon & Steven Young, 2006. "Dirty surplus accounting flows and valuation errors," Abacus, Accounting Foundation, University of Sydney, vol. 42(3-4), pages 302-344.
    13. Dechow, Patricia M. & Hutton, Amy P. & Sloan, Richard G., 1999. "An empirical assessment of the residual income valuation model1," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 26(1-3), pages 1-34, January.
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