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Yielding to relevance: How treasury yields impact accounting relevance

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  • Cao, Min
  • Schaberl, Philipp D.

Abstract

The rapid shifts in Treasury yields from 2020 to 2024 necessitate an understanding of the value relevance of accounting information under different yield levels. We examine whether and how Treasury yields impact the price relevance of two key accounting constructs: the book value of equity and earnings. Our findings reveal positive relationships between Treasury yields and the combined relevance of book value and earnings, as well as the relevance of book value alone in price-based relevance models. Further analysis using decomposition and normalization shows that rising Treasury yields shift valuation weights from earnings to book value. These effects are particularly pronounced for high-leverage firms. Our results are consistent with the abandonment hypothesis. This study contributes to the understudied area of how macroeconomic factors influence the usefulness of accounting information in market valuations and has important implications for investors, analysts, and policymakers in interpreting financial statements under varying economic conditions.

Suggested Citation

  • Cao, Min & Schaberl, Philipp D., 2026. "Yielding to relevance: How treasury yields impact accounting relevance," Economics Letters, Elsevier, vol. 260(C).
    • Handle: RePEc:eee:ecolet:v:260:y:2026:i:c:s0165176526000017
    DOI: 10.1016/j.econlet.2026.112807
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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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