This study examines the separate value relevance of earnings, book value and their components in profit and loss-making firms. The investigation take place in a context that both profit and loss-making firms have different features that might affect conclusions concerning the value relevance of earnings and book value partitions. Thus, we are establishing relationships between disaggregated accounting data and the market value of firms in the profit and loss-making firms in cross-sectional valuation models. These results suggest that for loss-making firms, earnings and book value partitions are not generally valuation relevant. However, for profit-making firms, the earnings partition into working capital from operations and non-current accruals is valuation relevant in almost all cross-sections. Book value partitions have also some valuation relevance for profit-making firms, in the presence of earnings partitions.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
5665.
Find related papers by JEL classification: M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
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