"The Value Relevance of Earnings in Transportation Industry"(in Japanese)

This paper investigates the value relevance of earnings in four transportation industries (railroad, transportation by land, shipping, and warehouse). The business environments in those industries are not the same as those in manufacturing industry, since a part of transportation business in influenced by the industrial regulation. Moreover, the transportation industries have a characteristic of the network industry. This paper especially focuses on the issue whether the value relevance of earnings in transportation industries is different from those in the manufacturing industry. First, by adopting various regression models and by examining across industries and among periods, we find some distinctive results in the transportation industries. In the railroad industry, earnings is valued as if investors expect that earnings will be smoothed by the rate-regulation. On the other hand, although earnings is not so highly relevant in the shipping industry, earnings is value relevant in recent period. Second, the value relevance of earnings in transportation industries does not depend on the relative performance compared with that of the manufacturing industry. We cannot detect the evidence that the performance of transportation industries is evaluated in comparison with the manufacturing industry. Third, in railroad and transportation-by-land industries, the value relevance of earnings differs in the size of network, which is measured by sales volume. In some industry-periods, while earnings for the larger firms is value relevant, earnings for the smaller firms is not relevant. The observed results in this paper re-confirm that the value relevance of earnings considerably differs in industries and period.