Gjerde, Øystein () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) Knivsflå, Kjell Henry () (Dept. of Accounting, Auditing and Law, Norwegian School of Economics and Business Administration) Sættem, Frode () (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
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This article focuses on the value relevance of financial statements in Norway over the 40-year period from 1964 to 2003. Since Norwegian generally accepted accounting principles are based on an earnings-oriented conceptual view rather than a balance-oriented conceptual framework, like the ones adopted by the IASB and the FASB, this study provides interesting empirical evidence on the value relevance of earnings-oriented conceptual frameworks. Our main finding is that the value relevance of financial reporting for investors trading on the Oslo Stock Exchange has increased significantly over the past four decades. This result is obtained by evaluating the adjusted R2-metric from a stock market return regression over time using deflated earnings and deflated change in earnings as explanatory variables, and controlling for changes in underlying economic variables over the period. A significant time trend is consistent with the view that Norwegian accounting regulators and standard setters have been successful in achieving more value relevant financial statements over time. Norway is an example where employing an earnings-oriented conceptual framework has improved the value relevance of accounting information.
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Paper provided by Department of Finance and Management Science, Norwegian School of Economics and Business Administration in its series Discussion Papers with number
2005/23.
Length: 32 pages Date of creation: 23 Dec 2005 Date of revision: Handle: RePEc:hhs:nhhfms:2005_023
Contact details of provider: Postal: NHH, Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway Phone: +47 55 95 92 93 Fax: +47 55 95 96 50 Email: Web page: http://www.nhh.no/for/ More information through EDIRC
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